Estee Lauder Cos Inc, a leading cosmetics manufacturer, has reported disappointing sales for the quarter, mainly due to a decrease in demand for makeup products. However, the company experienced growth in its skincare brands, which can be attributed to the shift in consumer preferences towards self-care during the COVID-19 pandemic.

Despite showing an overall gain of approximately 18% this year, Estee Lauder’s shares faced a decline of 3.5% in premarket trade. The decline in cosmetics and makeup sales can be attributed to the stay-at-home lifestyle adopted by consumers, resulting in lower sales of popular brands like M.A.C. and Bobbi Brown, particularly in the foundation and lipstick categories.

To adapt to this change in consumer behavior, Estee Lauder has redirected its focus and investments towards skincare products. This strategic move proved successful, as the company’s skincare segment experienced a significant boost, with sales increasing by 31% to reach $2.26 billion. In contrast, the makeup segment saw an 11% decline, generating $1.02 billion in sales.

Despite missing analysts’ estimates, Estee Lauder maintains a positive outlook for its full-year sales growth potential. The company projects a growth rate between 9% and 10%, excluding currency fluctuations. This projection is slightly lower than analysts’ anticipated increase of 11.8% to $15.99 billion in sales, according to Refinitiv IBES data.

For the third quarter ended March 31, Estee Lauder reported a 16% rise in total net sales, reaching $3.86 billion. However, this figure fell short of analysts’ expectations of $3.94 billion.

The performance of Estee Lauder highlights the ongoing challenges faced by the cosmetics industry due to the impact of the pandemic on consumer behavior. However, the company’s strategic focus on skincare has proven beneficial, offsetting the decline in makeup sales. As the world gradually recovers from the effects of the pandemic, Estee Lauder remains hopeful for continued growth and success in meeting the evolving beauty needs of consumers.

Useful links:

Estee Lauder Official Website
Refinitiv IBES data