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About Aveda Corporation

Estée Lauder sells cosmetics, fragrances, and skin and hair care products including upscale brands such as Estée Lauder, Clinique, M.A.C, La Mer, and Origins, as well as professional Bobbi Brown and luxurious Tom Ford beauty and fragrance lines. The company’s products are sold in over 150 countries through its network of upscale department stores, via specialty retailers, and online. Estée Lauder also operates a chain of freestanding retail stores (primarily for its M.A.C, Origins, and Aveda brands). More than 60% of the company's revenue is generated outside the US.

Operations

Estee lauder’s Makeup segment accounts for approximately 40% of total sales. Its lineup includes a full array of makeup from lipsticks to foundation, eye shadows, powders, and nail polish. Its well-known brands include M.A.C, Estée Lauder, Too Faced, Smashbox, Tom Ford Beauty, Bobbi Brown, and BECCA. Another 40% of net sales is generated by the Skin Care segment, which offers a range of products such as moisturizers, acne care, facial masks, body care, and cleansing devices. Its top brands include La Mer, Origins, GLAMGLOW, and Clinique.

The company's Fragrance segment (roughly 15%) comprises products sold in various forms in addition to perfume sprays and colognes. These include lotions, powders, creams, and candles that are infused with a particular fragrance. Its brands include Jo Malone, Aramis, Tommy Hilfiger, DKNY, and Michael Kors. The company also has a Hair Care segment (not more than 5%) that offers shampoos, conditioners, styling products, hair treatment, finishing sprays, and hair color products. Brands in this segment include Aveda and Bumble and bumble.

Geographic Reach

Based in New York City, Estée Lauder products are sold in more than 150 countries and territories. The Europe, Middle East, and Africa (EMEA) region is the company’s largest market accounting for more than 40% of revenue, followed by the Americas (primarily the US), which represents more than 35%. The Asia-Pacific region represents about 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, UK, and China.

Estée Lauder operates approximately 1,500 freestanding stores. More than 650 of these stores are operated by third parties.

Sales and Marketing

The company depends on advertising and promotions to grow sales and 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 are often conducted through in-store displays.

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. Estée Lauder's online sales are mainly through company-owned and operated e-commerce and m-commerce sites and through various websites in approximately 40 countries. 

The company spent $3.5 billion on advertising, merchandising, sampling, promotion, and product development in 2018, up significantly from the previous two years.

Financial Performance

Estée Lauder's net revenue has seen an upward trend over the last several years. Sales in 2018 reached $13.7 billion, a whopping 16% increase over the previous year. Growth was driven by a 24% increase in the company's Skin Care segment, led by product sales of its Advanced Night Repair from Estée Lauder and Crème de La Mer from La Mer. The makeup segment showed a slower 11% growth rate but benefited from strong demand in China and Hong Kong.

Net income, however, has remained flat with an 11% drop to $1.1 billion in 2018 compared with 2017 profits. Negatively affecting net income was an $863 million income tax provision as a result of the Tax Cuts and Jobs act. Earnings before income taxes actually increased by 22% over 2017.

Cash at the end of fiscal 2018 was $2.2 billion, a more than $1 billion increase from the prior year. Cash from operations contributed $2.6 billion to the coffers, while investing activities used $369 million, mainly for capital expenditures related to cosmetics counters. Financing activities used another $1.2 billion for dividends to stockholders and the company's stock repurchase program.

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 through e-commerce and m-commerce (mobile commerce) channels. The company continues to build its Makeup product segment through the introduction of new product offerings, including the launch of Advanced Night Repair Eye Concentrate Matrix, strengthening its market leadership in the eye treatment category. 

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, Mexico, India, and Russia. In China, it is leveraging digital distribution channels like Tmall and increasing its social media campaigns in the region.

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.

Company Background

Estée Lauder (then Josephine Esther Mentzer) started her beauty career by selling skin care products formulated by her Hungarian uncle, John Schotz, during the 1930s. Eventually she packaged and peddled her variations of his formulas, which included face cream and a cleansing oil.

With the help of her husband, Joseph Lauder, she set up her first office in Queens, NY in 1944 and added lipstick, eye shadow, and face powder to the line. Joseph oversaw production, and Estée sold her wares to beauty salons and department stores, using samples and gifts to win customers. Throughout the 1950s, Estée traveled cross-country, at first to sell her line to high-profile department stores such as Neiman Marcus, I. Magnin, and Saks, and later to train saleswomen in these stores.

In 1964, Estée Lauder introduced Aramis, a fragrance for men, and in 1968, Clinique, a hypoallergenic skin care line. Estée Lauder created the Prescriptives skin care and makeup line for young professional women in 1979 and in 1990, unveiled its Origins botanical cosmetics line. The company launched the All Skins cosmetics line in 1991 and in 1994, bought a controlling stake in hip Make-Up Art Cosmetics (M.A.C).

The company went public in 1995. Estée Lauder died in 2004 but family members still serve as executives and board members of both Estée Lauder Companies and Clinique.

 

Aveda Corporation

4000 PHEASANT RIDGE DR NE
Blaine, MN 55449-7106
Phone: 1 (763) 783-4250

Stats

Employer Type: Privately Owned
Salon Spa Development Partner: Kirby Fort
Salon Development Partner: Sue Gilbert
Vice President Global Marketing and Design Planning: Beth Maracotta
Employees (This Location): 300
Employees (All Locations): 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
Edina, MN
Minneapolis, MN
Winston Salem, NC
Bridgewater, NJ
Garden City, NY
New York, NY
Roseville, NY
Portland, OR
Pittsburgh, PA
Franklin, TN
Nashville, TN
Plano, TX
Robinson, TX
Alexandria, VA
Arlington, VA
Bellevue, WA
Seattle, WA