QUOTE AND NEWS
StreetInsider.com  Sep 9  Comment 
The following is a list of notable articles to help get you through the lunch hour: Traders Eye Philip Morris Int'l (PM) Amid Recent Weakness -> Read this! Mobileye N.V (MBLY) Price Target Raised to $65 at Morgan Stanley -> Read...
Market Intelligence Center  Aug 29  Comment 
With bullish technical indicators and a 3 STARS (out of 5) hold ranking from Standard & Poor’s, Estee Lauder Companies Inc. (EL) could be an attractive play for investors according to MarketIntelligenceCenter.com's patented option-trade picking...
SeekingAlpha  Aug 22  Comment 
By Team Money Research: In this article, we're focusing on Procter & Gamble (NYSE:PG) and assessing its strengths and weaknesses in comparison to Estee Lauder (NYSE:EL). While the two companies are of very different sizes, with Procter & Gamble...
SeekingAlpha  Aug 19  Comment 
By The Value Investor: Investors in Estee Lauder (NYSE:EL) hardly reacted to the very strong fourth quarter results which have been posted by the firm last week. Headline results have been impacted by one-time favorable items which are expected to...
SeekingAlpha  Aug 16  Comment 
By Renee Butler: Estee Lauder (EL) can't catch a break. The company's earnings on Friday came in strong over the same quarter last year, but it missed analyst estimates. The news caused the company's share price to dip to a day low of $74.50 from...
Jutia Group  Aug 15  Comment 
[at noodls] - NEW YORK--(BUSINESS WIRE)--Aug. 15, 2014-- The Estée Lauder Companies Inc. (NYSE:EL) will pay a quarterly dividend of $.20 per share on the Company's Class A and Class B Common Stock on September 15, 2014 ... Read more on this. The...
MarketWatch  Aug 15  Comment 
Shares of Estee Lauder rose 1.5% in premarket trade after the beauty products maker reported better-than-expected profit. For the fiscal fourth-quarter, profit came in at $257.7 million, or 66 cents a share, up from $94 million, or 24 cents a...
Benzinga  Aug 15  Comment 
Mike Khouw said on CNBC's Options Action that there was a a big put options volume in Estee Lauder Companies Inc (NYSE: EL) on Thursday. Options volume reached 10 times its average daily volume and put options volume reached 13.5 times its...
DailyFinance  Aug 15  Comment 
The Estée Lauder Companies Inc. (NYSE:EL) will pay a quarterly dividend of $.20 per share on the Company’s Class A and Class B Common Stock on September 15, 2014 to stockholders of record at the close of business on August...
StreetInsider.com  Aug 14  Comment 
The Trading Radar highlights key earnings and economic announcements for the next trading session: Before Markets Open: Economics: 8:30am EDT PPI - Street sees 0.2% Core PPI - Street sees 0.2% Empire Manufacturing - Street sees 15.5 9:00am...




 

The Estee Lauder Companies (NYSE: EL) manufactures and sells skin care, makeup, fragrance, and hair care products in 140 countries. EL distributes its products through a variety of different channels, including large department store retailers, smaller boutique retailers, beauty salons and spas, and direct-selling through company-owned stores, online websites, and TV informercials. [1] For fiscal 2010, EL reported net sales of $7.80 billion and net income of $478.3 million.

EL's sales figures were affected by a poor global retail environment, which resulted in fewer sales of its heritage products as well as adverse currency exchange rates. EL posted decreases in sales throughout all of its product segments seeing its net income drop over 50% in the 2009. [2] Notably, FY2009 saw a strong increase in its Asian markets, with sales increasing 10% from 2008.[2]

However, as EL continues to acquire more brands, especially in its fragrance division, its products face the risk of cannibalization by competing with each other for clients from the same market segment. Competition in the mid to low-end markets also continues to be a challenge for EL.


Business Overview

The Estee Lauder Companies is a manufacturer and retailer of skin care, makeup, fragrance, and hair care products worldwide. EL distributes its products through various channels appropriate for the market position and audience of its different products. These channels include department stores such as Macy's, beauty retailers such as Sephora, perfumeries and pharmacies, beauty salons and spas, and direct-selling through company stores, online websites and TV infomercials. [1]

EL owns more than 20 skin care and makeup brands as well as a variety of fragrance brands. Its core cosmetics brands include Estee Lauder, Clinique, Prescriptives, Origins, MAC, Bobbi Brown, Darphin, La Mer, and Tom Ford. EL also owns global licenses to market fragrances under brand names such as Tommy Hilfiger, Donna Karan Cosmetics, Sean John Cosmetics, and Aramis. [1]

Business Segments

Geographic Presence

EL markets its products in 140 countries around the world. A breakdown of geographic sales is below:

Fiscal 2010 Performance (ended June 30, 2010)

  • Estee Lauder reported net sales of $7.80 billion, a 6% increase compared with $7.32 billion in 2009.
  • EL reported net income of $478.3 million for the year, compared with $218.4 million last year.[4]

Trends and Forces

Diverse Brand Names Target Different Market Niches

EL's primary strength lies in the variety of brands that it has acquired in the last two decades, since each brand has its own market niche, brand image, as well as regional appeal. Skin care brands Clinique and Origins appeal to customers that want products with organic, natural, and allergen-free ingredients. Makeup lines M.A.C. and Bobbi Brown target fashion-conscious customers who prefer professional-grade makeup products and tools. In the high-end market, La Mer and Darphin have substantial brand recognition as prestige skin care and makeup brands, while the newly acquired brand BeautyBank, with makeup brands and products such as AmericanBeauty and Flirt, targets more low-end consumers. The popularity of its professional-grade makeup brands and high-end products have helped to offset the hit from the global economic downturn. [1]

Spending on Discretionary Items Projected to Recover

As a member of the discretionary item industry, EL saw sales and income decrease during the poor economic climate as consumer confidence and disposable income both decreased dramatically. This increase is in line with many of the discretionary item companies that have seen sales drops during the 2009 recession. A better economic climate and an increase in disposable income will mean that EL will see its prices increase.

In 2009, EL launched a four-year strategical program to cut its costs and improve operating margins. The program includes re-size and reorganize the organization and exit unprofitable operations.

Large Presence in Global Market Exposes EL to Currency Fluctuation Risks

Since 53% of EL's sales revenues come from markets outside of the United States, exchange rates play a major role in EL's sales performance. As the firm doesn't engage in any significant hedging activity against exchange rate risk, the final amount of its sales and profits are greatly exposed to fluctuations in the value of the U.S. dollar . weakening of the dollar against foreign currencies would allow AVP products to become more competitively priced in global markets, thus positively affecting sales revenue from foreign markets; however, a weak dollar would also mean higher costs for products manufactured overseas.

Competition

EL's brands face substantial competition in the cosmetics industry. Although its professional makeup brands such as M.A.C and Bobbi Brown face little competition due to the specialized clientele that it targets, its all-natural brands face competition from Bare Essentials, and its most popular mid-end brands such as Estee Lauder face competition from the myriad of products from Revlon, Avon, and Elizabeth Arden. In addition, the cosmetics industry faces challenges from small, private companies with specialized offerings that can also fight for market share. [5]

Major Competitors

References

  1. 1.0 1.1 1.2 1.3 EL 2008 SEC Filing 10-K
  2. 2.0 2.1 Estee Lauder 2009 Annual Report
  3. http://media.corporate-ir.net/media_files/irol/10/109458/2010AR/ELC-AnnualReport2010-web/index.html
  4. http://media.corporate-ir.net/media_files/irol/10/109458/2010AR/ELC-AnnualReport2010-web/index.html
  5. Estee Lauder's Competitive Landscape
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