Estee Lauder saw sales increase for the first time since the coronavirus pandemic almost a year ago, and saw a series of three quarterly declines in a row.
The shares of the New York-based cosmetics company had their biggest trading day since March after sales rose 5% in the holiday quarter, beating both management and Wall Street expectations.
Estee Lauder posted fiscal second quarter revenue of $ 4.85 billion and earnings per share of $ 2.61. The beauty brand had issued guidelines for sales of around $ 4.48 billion in the upper price segment.
In an interview on Friday on CNBC, CEO Fabrizio Freda said skincare sales, e-commerce and Asian markets are the main drivers.
“Consumers are using more skin care products,” he told Jim Cramer, Mad Money host. “During the pandemic, when most of us are working from home, closed in their homes, we have time to pamper, we need more skin care benefits … This is working all over the world, especially Asia.”
Estee Lauder’s business in the Asia-Pacific region more than made up for lost sales in the rest of the world. Although sales in the Americas decreased 14.5% year over year and Europe, the Middle East and Africa decreased 2.4%, the company grew 34.6% in the Asian market. Sales in the region rebounded after an initial decline in the January-March 2020 quarter, the first period hit by the coronavirus pandemic.
Revenue in America declined in the second quarter from $ 1.23 billion a year ago to $ 1.05 billion.
Freda attributed the decline in consumer demand for makeup to closed restaurants and less in-person events like parties where people were more likely to dress up. However, the use of conference call applications like Zoom and Cisco Webex is driving demand for skin care products, he said.
Skin care sales made up for the decline in Estee Lauder’s makeup segment. Skin care sales increased nearly 28% for the quarter, while makeup sales decreased 25%. Skin care has been Estee Lauder’s best segment since the global health crisis began.
“Skin care works well because the Asian population is the most demanding consumer of skin and is driving most of this global trend,” said Freda. “The other big driver is online. As you can imagine, many, many more people have shopped online and we were ready and we could get online all over the world very quickly.”
Prior to the three-month period ended December 31, Estee Lauder’s quarterly sales were down nearly 17% from pre-pandemic levels.
Due to the ongoing uncertainty surrounding the health crisis, Estee Lauder declined to provide guidance for the full year 2021.
Estee Lauder shares rose more than 7% on Friday, hitting an all-time high of $ 272.81. This year the share recorded an increase of 2.5% and thus an increase of 29% compared to the previous year.