Estee Lauder Companies (EL)

As pressures from the economic downturn recede, continued weakness in the dollar and the return of duty-free shopping have helped raise EL's outlook for the year. EL's strong reputation, brand recognition, and steady performance throughout the recession has also allowed it to gain market share from reduced competition in the industry. Analysts from BofA, Piper Jaffray, etc. have upgraded EL on recent outlook after higher-than-expected earnings were released for Q1 2010.

Estee Lauder responded to growth in the global skin care market and increased demand for anti-aging skin care with a wide range of anti-aging skin care products, which led to increased skin care sales, such as FY 2010 Q1’s skin care sales increase of 17% from the same quarter of last year. This has been especially important for EL as skin care contributes approximately 52% to its stock value. Following closely behind is EL’s makeup segment, which contributes about 38%. With positive performance from EL’s makeup artist brands, such as MAC and Smashbox, makeup sales increased 11% during first quarter from Q1 2009. This could lead to an increase in EL’s makeup market share to 12%.

Although the Estee Lauder and Clinique brands are mature in the U.S., the firm possesses significant opportunities to expand the distribution of these products overseas. With 60% of sales coming from abroad, EL still has a lot of expansion to do.

Estee Lauder, EL's flagship brand, announced in November 2009 that it has hired world-renowned makeup artist Tom Pecheux as its new Creative Makeup Director. Under Pecheux's direction, new product lines will launch in Sprin 2010, along with a new advertising campaign. Pecheux's extensive experience and reputation in the industry brings added prestige and brand power to EL's new product line.