This company's Estée and Bobbi are counted among some of the closest friends to women worldwide. Estée Lauder sells cosmetics, fragrances, and skin and hair care products, with brands including upscale Estée Lauder and Clinique, as well as professional Bobbi Brown and luxurious Tom Ford beauty and fragrance lines. Its products are sold in upscale department stores, specialty retailers, online, and 690 company-operated single-brand stores and 130 multi-brand stores. Estée Lauder operates a chain of freestanding retail stores (primarily for its M.A.C, Origins, and Aveda brands). Fabrizio Freda, a veteran of Procter & Gamble, heads Estée Lauder as CEO.
In fiscal 2015 (ended June), the company operated some 1,060 freestanding stores; another 360 stores were operated by third parties.
Estée Lauder products are sold in more than 150 countries and territories. The Americas (primarily the US) is the company's largest market, representing more than 40% of sales. Europe, the Middle East, and Africa combined accounted for more than a third.
Sales and Marketing
Advertising and promotions are key in the ultra competitive personal care products market. The company's marketing creed is to provide "high-touch" service to build customer loyalty. Estée Lauder advertises on TV, in magazines and newspapers, on digital and social media sites, and on billboards and via direct mail. Promotional activities include in-store displays. The company's largest customer is department store operator Macy's, representing about 10% of fiscal 2015 (ended June) sales.
Other sales channels include the company's freestanding stores, upscale salons and spas, and duty-free shops in airports or on cruise ships.
The company has fluctuated over the last few years. In fiscal 2015 (ended June) net revenue declined 2% to $10.8 billion due to lower sales of Clinique and Estée Lauder skin care products. The negative impact of foreign currency exchange rates also hurt earnings. This was somewhat counteracted by higher sales of the La Mer line of products, as well as added sales from recent acquisitions.
After rising for four years, net income decreased by 10% to $1.1 billion in 2015 due to both the lower revenues and higher operating expenses.
Estée Lauder's operating cash flow increased by 27% to $1.9 billion in 2015, driven by supply chain improvements and an increase in accounts payable, primarily due to the timing of payments.
The company focuses on geographic AND product portfolio expansion, and on strengthening its distribution. It is also pushing brand awareness and sales by expanding its digital presence (e-commerce and m-commerce, and digital and social media). The company also continues to build its makeup product category through the introduction of new product offerings, including new collections from makeup artist brands and Pure Color Sculpting lipstick from Estée Lauder and the fragrance category via new launches and innovation, such as Estée Lauder Modern Muse and new fragrances from Michael Kors and Tory Burch. In addition the company is continuing to expand its hair care brands both in salons and in other retail channels.
Despite its ranking and market share, Estée Lauder and the Lauder family have been working to breathe new life into its flagship brand as competition has heated up. While Coty, Elizabeth Arden, and L'Oréal are enlisting the help of celebrities to elevate and give credibility to their brands, Estée Lauder sewed up its brand rejuvenation with a boost from fashion. The company is banking on a multi-year partnership with former Gucci Group creative director and fashion talent Tom Ford to continue its successful Tom Ford-inspired Estée Lauder line. The company has expanded its customer base to include younger shoppers through its M.A.C and Clinique cosmetics lines.
Estée Lauder's geographic growth is focused on emerging markets such as China, the Middle East, Eastern Europe, Brazil and South Africa, and consumers who purchase in the travel retail channel, in stores at their travel destinations or when they return to their home markets.
As part of its strategy, Estée Lauder is shifting its category mix to more high-margin products that have global growth potential. To this end, the company is focused on skin care products -- its most profitable category. Also, Estée Lauder has been penning licensing agreements to boost its brand and reach.
In 2014 the company launched the Jo Malone London brand in China, at the Mitsukoshi store in Beijing. In 2013 Estée Lauder teamed up with Somaly Mam Foundation and AFESIP to launch the Somaly Mam Beauty Salon in Cambodia.
Mergers and Acquisitions
To underscore its panache for high-touch service and its growing portfolio of prestige brands, Estée Lauder in late 2014 acquired Le Labo, which specializes in distinctively French high-end fragrance and sensory items that have earned a loyal consumer following for its exclusivity and personalized service. With offices in London and New York, Le Labo has freestanding stores in New York, London, Paris, Los Angeles, San Francisco, Tokyo, and Hong Kong.
In 2014 the company acquired RODIN olio lusso, a luxury skin care brand founded by New York stylist Linda Rodin. Early the following year it acquired Editions de Parfums Frédéric Malle, a famous fragrance brand established by perfumer Frédéric Malle.
Also in 2015, Estée Lauder acquired GLAMGLOW, a high-end skin care brand focusing on facial masks.