About Aveda Corporation

Estée Lauder sells cosmetics, fragrances, and skin and hair care products, with brands including upscale Estée Lauder, Clinique, and Origins, as well as professional Bobbi Brown and luxurious Tom Ford beauty and fragrance lines. The company's products are sold through its network of upscale department stores, via specialty retailers, and online. Estée Lauder operates a chain of freestanding retail stores (primarily for its M.A.C, Origins, and Aveda brands).

Operations

In fiscal 2017(ended June), Estée Lauder operated approximately 1,430 freestanding stores; more than 500 stores were operated by third parties.

Geographic Reach

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 accounted for nearly 40% and Asia/Pacific (20%) of the company's total sales. Estée Lauder manufactures its products primarily in the US, Belgium, Switzerland, the UK, and Canada. The majority of the company's online sales are generated in the US and UK.

Sales and Marketing

Advertising and promotions are key in the ultra-competitive personal care products market. Estée Lauder'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.

Estée Lauder sells its products from most of its brands directly to consumers online through company-owned and operated e-commerce and m-commerce sites and through various website in approximately 35 countries.

The company's largest customer is department store operator Macy's, representing about nearly 10% of fiscal 2017 (ended June) sales.

Estée Lauder's sales channels consist primarily of department stores, specialty multi-brand retailers, upscale perfumeries and pharmacies, and prestige salons and spas. Other sales channels include the company's freestanding stores, upscale salons and spas, and duty-free shops, in-flight, in airports or on cruise ships.

The company spent $2.91 billion on advertising, merchandising, sampling, promotion, and product development in fiscal 2017, up from $2.82 billion in fiscal 2016.

Financial Performance

Estée Lauder's net revenue has been increasing for the last six years (2012-17), except for a marginal decrease in fiscal 2015.

For fiscal 2017 net revenue increased to $11.8 billion, up from $11.3 billion in fiscal 2016. Net sales in fiscal 2017 increased in each major product category, except hair care, and grew in each geographic region.

Net income has been increasing for the last six years (2012-17), except for a decrease in fiscal 2015. In fiscal 2016 Estée Lauder's net income increased to $1.25 billion from $1.11 billion in fiscal 2016 due to higher net revenue.

In fiscal 2017, the company's cash flow from operations increased slightly from $1.79 billion to $1.8 billion.

Strategy

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 its 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 and consumers who purchase in the travel retail channel, in stores at their travel destinations or when they return to their home markets. The company is increasing its presence in countries such as China, the Middle East, Eastern Europe, Brazil, Russia, India, Mexico and South Africa.

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. Each of the company's product categories have benefited from targeted expanded consumer reach, new product offerings, and growth from emerging markets and online channels.

Mergers and Acquisitions

In 2017 Estée Lauder invested in Toronto, Ontario -based DECIEM, a fast-growing, vertically integrated multi-brand company.

To underscore its panache for high-touch service and its growing portfolio of prestige brands, Estée Lauder in 2016 acquired by Kilian, the Paris-based prestige fragrance brand. In 2015 it acquired Editions de Parfums Frédéric Malle, a famous fragrance brand established by perfumer Frédéric Malle, and GLAMGLOW, a high-end skin care brand focusing on facial masks.

In 2016, The Estée Lauder Companies Inc. acquired Irvine, California based Too Faced, the feminine makeup brand for $1.4 billion. Too Faced has more than 7.6 million Instagram followers and is among the top eight makeup brands in the specialty-multi channel in the US. That same year the company acquired New York based BECCA, a high-growth makeup brand offering complexion and color products. The combination of the two deals should elevate Lauder's profile in the Millennial rich multi-unit specialty store and key digital channels and strengthen its leadership position in the fast-growing prestige makeup category globally.

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Aveda Corporation

4000 Pheasant Ridge Dr Ne
Blaine, MN 55449-7106
Phone: 1 (763) 783-4250
Fax: 1 (763) 783-4110

Stats

  • Employer Type: Public
  • Pres: Dominique Consiel
  • Salon Development Partner: Sue Gilbert
  • Salon Development Partner: Debbie Nelson
  • Employees: 1,700

Major Office Locations

  • Blaine, MN

Other Locations

  • Phoenix, AZ
  • Scottsdale, AZ
  • Berkeley, CA
  • Costa Mesa, CA
  • Encino, CA
  • Glendale, CA
  • San Francisco, CA
  • San Mateo, CA
  • Santa Barbara, CA
  • Santa Clara, CA
  • Ventura, CA
  • Woodland Park, CO
  • Farmington, CT
  • Aventura, FL
  • Palm Beach Gardens, FL
  • Chicago, IL
  • Schaumburg, IL
  • Skokie, IL
  • Novi, MI
  • Troy, MI
  • Edina, MN
  • Minneapolis, MN
  • Winston Salem, NC
  • Bridgewater, NJ
  • Garden City, NY
  • New York, NY
  • Portland, OR
  • Pittsburgh, PA
  • Franklin, TN
  • Nashville, TN
  • Plano, TX
  • Robinson, TX
  • Alexandria, VA
  • Arlington, VA
  • Bellevue, WA
  • Seattle, WA
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