On Friday morning, Estée Lauder Companies reported its sales numbers for its second quarter of fiscal year 2018 — and they're impressive. For the quarter that ended on December 31, 2017, revenues rose 17 percent, amounting to $3.74 billion in net sales (as compared with $3.21 billion in the same quarter for the previous year). What does this excellent showing mean? For one, it serves as validation of the company's 2016 acquisition spree, as the report cited the addition of Too Faced and Becca to Lauder's portfolio and explicitly credited the two cosmetics brands for bumping 2 percentage points of the reported sales growth.
However, despite sales being up, earnings for the company were down quite a bit to $123 million, as compared with the previous year's $428 million, the result of a one-time charge of $394 million related to the U.S. Tax Cuts and Jobs Act enacted in December. The company expects to make up for this with what it calls "future benefits" from the TCJA. "Our strong results, combined with future benefits we expect from the passage of the new Tax Cuts and Jobs Act... enhance our ability to strategically invest in faster-growing areas of prestige beauty to attract new consumers," said Lauder CEO and President Fabrizio Freda in a statement. "Our strategy is sound and effective, and we have the brands, resources and talent to continue above-industry growth in our second half and full fiscal year."
Where skin care had been a somewhat flailing sector of Lauder's business in previous years, for this quarter, it was the company's fastest growing, on par with the overall prestige market. (For 2017, skin care grew 9 percent, whereas makeup grew only 6 percent, according to a report from the NPD Group.) In the category, Lauder saw 20 percent gains from the prior-year period with $1.49 billion in sales, while makeup sales spiked 16 percent to $1.5 billion, fragrance sales 14 percent to $565 million and hair-care 5 percent to $144 million. Gains in the skin-care market were spread across many of Lauder's brands: Estée Lauder, Origins, Clinique, Glamglow and La Mer each saw gains of 10 percent or more. So, despite what viral stories from strange corners of the internet may be claiming, skin care appears to very much be on the up-and-up, and Estée Lauder is holding its own.
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