Hong Kong
The Estée Lauder Companies Reports Strong Adjusted Constant Currency Sales and Earnings Growth in Fiscal 2015 Fourth Quarter and Full Year
Press Release, Aug 17, 2015
– Net Sales in Line with Expectations, EPS Better Than Anticipated –
– Fiscal 2016 Sales and Earnings Outlook Remains Strong –
The Company’s fourth quarter sales benefited from innovative new
products and growth in emerging and developed markets. The Company
generated strong gains in the U.S., after adjusting for the accelerated
orders, and constant currency double-digit gains in the
For the year, the Company achieved net sales of
“Our sales grew at a faster rate than global prestige beauty, due to the
success of our multiple engines of growth. Standout performances
generated double-digit sales gains in most of our makeup and luxury
brands and the online, specialty-multi and freestanding store channels.
By geography, emerging markets, the
“I am proud of our accomplishments. Importantly, we are well-positioned for continuing growth through our unique creativity and consumer appeal for our brands and innovative products. Global prestige beauty is a dynamic industry, and we will continue to anticipate and target the areas with the greatest potential. In fiscal 2016, we expect constant currency net sales growth of 6% to 8% and double-digit earnings per share growth, after adjusting for the accelerated sales orders.”
During fiscal 2015 and 2014, the Company recorded remeasurement charges
of
Full Year Results by Product Category |
||||||||||||||||||||||||
Year Ended June 30 | ||||||||||||||||||||||||
(Unaudited; Dollars in millions) | Net Sales | Percent Change |
Operating |
Percent |
||||||||||||||||||||
2015 | 2014 |
Reported |
Constant |
2015 | 2014 |
Reported |
||||||||||||||||||
Skin Care | $ | 4,478.7 | $ | 4,769.8 | (6 | )% | (2 | )% | $ | 832.2 | $ | 975.8 | (15 | )% | ||||||||||
Makeup | 4,304.6 | 4,210.2 | 2 | 7 | 659.3 | 715.9 | (8 | ) | ||||||||||||||||
Fragrance | 1,416.4 | 1,425.0 | (1 | ) | 5 | 82.8 | 104.1 | (20 | ) | |||||||||||||||
Hair Care | 530.6 | 515.6 | 3 | 7 | 37.9 | 33.7 | 12 | |||||||||||||||||
Other | 50.1 | 48.1 | 4 | 9 | (5.9 | ) | (4.8 | ) | (23 | ) | ||||||||||||||
Subtotal | 10,780.4 | 10,968.7 | (2 | ) | 3 | 1,606.3 | 1,824.7 | (12 | ) | |||||||||||||||
Adjustments associated with |
— | 0.1 | — | 2.9 | ||||||||||||||||||||
Total | $ | 10,780.4 | $ | 10,968.8 | (2 | )% | 3 | % | $ | 1,606.3 | $ | 1,827.6 | (12 | )% | ||||||||||
Net sales and operating income in each of the Company’s product categories were unfavorably impacted by the strength of the U.S. dollar in relation to most currencies. Total operating income in constant currency decreased 5%.
The change in net sales and operating income in the Company’s product
categories were unfavorably impacted by the shift in orders from certain
retailers due to the Company’s implementation of SMI, as previously
mentioned. Additionally, operating results were unfavorably impacted by
the
Adjusting for these factors:
- Reported basis net sales in skin care, makeup, fragrance and hair care would have increased/(decreased) (2)%, 5%, 2% and 3%, respectively.
- Operating results in skin care, makeup, fragrance and hair care would have increased/(decreased) (1)%, 2%, (2)% and 13%, respectively.
Skin Care
- Skin care net sales decreased, reflecting the negative impact of foreign currency translation and lower sales of significant products from the Estée Lauder and Clinique brands that were launched in the prior-year period. Sales declines from these two brands were partially offset by recent launches such as Re-Nutriv Ultimate Diamond products from Estée Lauder and Clinique Smart custom-repair serum.
- Also partially offsetting these decreases were higher sales from La Mer, one of the Company’s luxury skin care brands, and from Origins, as well as incremental sales from recent acquisitions.
- Operating income decreased, driven by the impact of the accelerated orders and a difficult comparison to the prior year’s significant launch activity by the Estée Lauder and Clinique brands.
Makeup
-
Higher makeup sales were primarily driven by excellent growth from the
Company’s makeup artist brands and strong double-digit growth from
Smashbox and
Tom Ford . These sales increases resulted from new product offerings, as well as expanded distribution in a number of channels, including freestanding retail stores, travel retail and specialty multi-brand retailers. -
The Company’s makeup category is experiencing strong growth in product
areas such as lipsticks and foundations, as well as increased prestige
makeup usage in
Asia . - While new product offerings in the category, such as Beyond Perfecting foundation and concealer from Clinique and the Pure Color Envy line of lip products from Estée Lauder contributed sales gains, both of these brands posted overall lower makeup sales.
- The decrease in makeup operating income was primarily due to lower results from heritage brands, reflecting, in part, the impact of the accelerated orders, partially offset by improved results from makeup artist brands.
Fragrance
- In fragrance, sales decreased due to the negative impact of foreign currency translation and lower sales of certain Estée Lauder, Clinique and designer fragrances.
-
Michael Kors and luxury brands Jo Malone London andTom Ford recorded strong double-digit sales gains, partially driven by new product launches and expanded distribution. - Fragrance operating income decreased, reflecting the lower launch activity from certain designer fragrances and heritage brands as well as the impact of the accelerated orders, partially offset by higher results from luxury fragrance brands.
Hair Care
- The hair care category’s growth benefited from expanded global distribution, primarily in salons, freestanding stores and travel retail for Aveda and from specialty-multi brand retailers for Bumble and bumble.
- Hair care also reflects net sales growth of Smooth Infusion Naturally Straight by Aveda and the expansion of Bumble and bumble’s Hairdresser’s Invisible Oil line of products.
- Hair care operating income increased, primarily reflecting higher net sales driven by expanded global distribution and new product launches, as well as lower investment spending as compared with the higher level of spending in the prior-year period to support Aveda’s Invati line of products.
Full Year Results by Geographic Region |
|||||||||||||||||||||||
Year Ended June 30 | |||||||||||||||||||||||
(Unaudited; Dollars in millions) | Net Sales | Percent Change |
Operating |
Percent |
|||||||||||||||||||
2015 | 2014 |
Reported |
Constant |
2015 | 2014 |
Reported |
|||||||||||||||||
The Americas | $ | 4,513.8 | $ | 4,572.3 | (1 | )% | 2 | % | $ | 302.3 | $ | 537.3 | (44 | )% | |||||||||
Europe, the Middle East & Africa. | 4,086.4 | 4,163.7 | (2 | ) | 5 | 943.3 | 938.3 | 1 | |||||||||||||||
Asia/Pacific | 2,180.2 | 2,232.7 | (2 | ) | 1 | 360.7 | 349.1 | 3 | |||||||||||||||
Subtotal | 10,780.4 | 10,968.7 | (2 | ) | 3 | 1,606.3 | 1,824.7 | (12 | ) | ||||||||||||||
Adjustments associated with |
— | 0.1 | — | 2.9 | |||||||||||||||||||
Total | $ | 10,780.4 | $ | 10,968.8 | (2 | )% | 3 | % | $ | 1,606.3 | $ | 1,827.6 | (12 | )% | |||||||||
The change in net sales and operating income in the Company’s geographic
regions was unfavorably impacted by the shift in orders from certain
retailers due to the Company’s implementation of SMI, as previously
mentioned. Additionally, operating results were unfavorably impacted by
the
Adjusting for these factors:
-
Reported basis net sales in the
Americas ,Europe , theMiddle East &Africa andAsia/Pacific would have increased 2%, 1% and 0%, respectively. -
Operating income in the
Americas ,Europe , theMiddle East &Africa andAsia/Pacific would have increased/(decreased) (31)%, 13% and 16%, respectively.
The
-
Sales in
the United States decreased, due to the impact of the accelerated orders, as well as a difficult comparison with the prior-year period that featured significant launches of reformulated iconic products from certain heritage brands. - Strong sales increases were generated from the Company’s makeup, luxury and hair care brands, driven in part by new product introductions and expanded distribution, and partially offset by decreases from certain heritage brands. Sales in the Company’s online business grew strong double digits.
-
In constant currency, sales in
Canada were flat, due to the impact of the accelerated orders, while sales grew strongly inLatin America , primarily from higher sales inVenezuela andBrazil . -
Operating income in the
Americas declined, due to the lower sales as noted above, higher general and administrative costs and acquisition-related expenses. This decrease was partially offset by lower advertising, merchandising and sampling spending by heritage brands due to the lower level of launch activity and the mix of spending among media formats, as well as lower charges related to the remeasurement of net monetary assets inVenezuela .
- The Company estimates that it continued to outperform prestige beauty in most markets in the region.
-
All countries recorded constant currency sales growth, led by
double-digit gains in the
United Kingdom , Benelux, the Balkans, and a number of emerging markets, includingRussia , theMiddle East ,Turkey andSouth Africa . - In travel retail, net sales decreased, driven by the impact of the accelerated orders and softness of some key foreign currencies affecting the mix of travelers and their consumption. Excluding this impact, travel retail net sales increased and continues to benefit from new launch initiatives, an increase in global airline passenger traffic and expanded distribution.
-
Operating income increased slightly, with higher operating results
posted in the
United Kingdom , theMiddle East ,France ,Russia ,India andSwitzerland . Lower operating results were recorded primarily in travel retail, due to the accelerated orders, andGermany .
-
Sales in the region increased in constant currency, with double-digit
growth in
Australia ,New Zealand andthe Philippines . -
Higher constant currency sales were also recorded in
China ,Korea ,Thailand andTaiwan . The higher sales inChina were primarily from certain heritage, luxury and makeup artist brands as a result of expanded distribution. -
Lower sales were reported in a few countries, including
Japan andHong Kong . The lower sales inJapan reflected the impact of the accelerated orders. InHong Kong , social instability continued to affect tourism and negatively impact business, and the Company remains cautious of the near-term slower growth there. -
In
Asia/Pacific , operating income increased, led by higher results inChina ,Korea andAustralia . Lower operating results were posted primarily inJapan ,Hong Kong andSingapore .
Full-Year Cash Flows
-
For the 12 months ended
June 30, 2015 , net cash flows provided by operating activities increased 27% to$1.94 billion , compared with$1.54 billion in the prior year. - The improvement primarily reflected an increase in cash from certain working capital components, partially offset by lower net earnings due to the impact of foreign currency and the accelerated orders.
Outlook for Fiscal 2016 First Quarter and Full Year
The Company expects to grow ahead of the industry by focusing on fast growing opportunities in product categories, channels and countries. The Company also expects to leverage its strong sales growth and increase its cash flow from operations.
While the Company’s business is performing well overall, it continues to
experience economic challenges in certain countries around the world.
The Company is cautious of slower retail growth in
The comparison of the Company’s fiscal 2016 first quarter and full year
results with the prior-year periods will be affected by the previously
mentioned
First Quarter Fiscal 2016
- Net sales are forecasted to increase between 13% and 14% in constant currency.
- Reflecting the strength of the U.S. dollar, foreign currency translation is expected to negatively impact sales by approximately 6% to 7% versus the prior-year period.
- The accelerated retailer orders as previously mentioned will affect the comparison between the fiscal 2016 and fiscal 2015 first quarter sales by approximately 7%.
- Net sales adjusting for the effect of the accelerated retailer orders are forecasted to grow between 6% and 7% in constant currency.
-
The acquisitions the Company made beginning in the second quarter of
fiscal 2015 are forecast to contribute approximately 90 basis points
to the Company’s overall sales growth in its fiscal 2016 first
quarter. Acquisitions are estimated to dilute earnings per share by
approximately
$.01 . - During the fiscal 2016 first quarter, the Company expects to increase investment spending above the prior-year period to continue to build momentum, drive growth and gain share. This planned spending coincides with the cadence of new product launches and supports successful existing products, as well as enhanced initiatives to reignite growth in the Estée Lauder and Clinique brands and continue momentum in the fastest growing brands and markets. The Company also expects to increase spending behind capability-building initiatives, such as information technology.
-
Diluted net earnings per share, including the negative impact of
foreign currency translation and acquisitions, are projected to be
between
$.66 and $.69 . -
The approximate 6% to 7% negative currency impact on the sales growth
equates to about
$.09 of earnings per share. On a constant currency basis and adjusting for the effect of the accelerated retailer orders, diluted earnings per share are expected to decrease 3% to 6%.
Full Year Fiscal 2016
- Net sales are forecasted to grow between 8% and 10% in constant currency.
- Reflecting the strength of the U.S. dollar, foreign currency translation is expected to negatively impact sales by approximately 3% to 4% versus the prior-year period.
- The accelerated retailer orders will affect the comparison between the fiscal 2016 and fiscal 2015 full year sales by approximately 2%.
- Net sales adjusting for the effect of the accelerated retailer orders are forecasted to grow between 6% and 8% in constant currency.
-
The Company’s recent acquisitions are forecast to contribute
approximately 50 basis points to the Company’s overall sales growth.
Acquisitions are estimated to dilute earnings per share by
approximately
$.05 . -
Diluted net earnings per share, including the negative impact of
foreign currency translation and acquisitions, are projected to be
between
$3.10 to $3.17 . -
The approximate 3% to 4% negative currency impact on the sales growth
equates to about
$.18 of earnings per share. On a constant currency basis and adjusting for the effect of the accelerated retailer orders, diluted earnings per share are expected to grow between 8% to 10%.
|
Diluted Earnings Per Share | |||||||||||||||||||||||
Reconciliation between GAAP and |
Three Months |
Twelve Months June 30 | ||||||||||||||||||||||
(Unaudited) |
2015(F) |
|
2014 |
2016(F) |
|
2015 | ||||||||||||||||||
Forecast / actual results including the |
$ | .66 - $69 |
(1 |
) |
$ | .59 |
(1 |
) |
$ | 3.10 – 3.17 |
(1 |
) |
$ | 2.82 |
(1 |
) |
||||||||
Non-GAAP |
||||||||||||||||||||||||
Venezuela charge | — | — | — | .01 | ||||||||||||||||||||
Impact of fiscal 2015 accelerated orders |
— | .21 | — | .21 | ||||||||||||||||||||
Results excluding the Venezuela charge |
.66 - .69 | $ | .80 | 3.10 – 3.17 | $ | 3.05 | ||||||||||||||||||
Impact of foreign currency on earnings |
.09 | .18 | ||||||||||||||||||||||
Forecasted constant currency earnings
per share |
$ | .75 - $.78 | $ | 3.28 - $3.35 | ||||||||||||||||||||
(1)Represents GAAP forecast or actual results. |
||||||||||||||||||||||||
(F) Represents forecast | ||||||||||||||||||||||||
Amounts may not sum due to rounding. | ||||||||||||||||||||||||
Reconciliation between GAAP |
Three Months Ending September 30, 2015 | Year Ending June 30, 2016 | ||||||||||||||||||||||||||||
Net Sales Growth | Diluted EPS Growth | Net Sales Growth | Diluted EPS Growth | |||||||||||||||||||||||||||
(Unaudited) |
Reported |
Constant |
Reported |
Constant |
Reported |
Constant |
Reported |
Constant |
||||||||||||||||||||||
Forecast including the fiscal 2015 |
6-8 | %(1) | 13-14 | % | 12-17 | %(1) | 27-32 | % | 4-7 | %(1) | 8-10 | % | 10-12 | %(1) | 16-19 | % | ||||||||||||||
Non-GAAP | ||||||||||||||||||||||||||||||
Impact of fiscal 2015
accelerated orders |
~(7 | )% | ~(7 | )% | ~(30)-(31 | )% | ~(33)-(35 | )% | ~(2 | )% | ~(2 | )% | ~(8) | % | ~(8)-(9 | )% | ||||||||||||||
Forecast excluding the fiscal 2015 |
(1)-1 | % | 6-7 | % | (18)-(14) | % | (6)-(3) | % | 2-5 | % | 6-8 | % | 2-4 | % | 8-10 | % | ||||||||||||||
(1)Represents GAAP forecast. |
||||||||||||||||||||||||||||||
Amounts may not sum due to rounding. | ||||||||||||||||||||||||||||||
Conference Call
The Estée Lauder Companies will host a conference call at
Cautionary Note Regarding Forward-Looking Statements |
|||
The forward-looking statements in this press release, including those containing words like “expect,” “plans,” “may,” “could,” “anticipate,” “estimate,” “projected,” “forecasted,” those in Mr. Freda’s remarks and those in the “Outlook for Fiscal 2016 First Quarter and Full Year” section involve risks and uncertainties. Factors that could cause actual results to differ materially from those forward-looking statements include the following: |
|||
(1) | increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses, some of which have greater resources than the Company does; | ||
(2) | the Company’s ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in the Company’s business; | ||
(3) | consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell the Company’s products, an increase in the ownership concentration within the retail industry, ownership of retailers by the Company’s competitors or ownership of competitors by the Company’s customers that are retailers and our inability to collect receivables; | ||
(4) | destocking and tighter working capital management by retailers; | ||
(5) | the success, or changes in timing or scope, of new product launches and the success, or changes in the timing or the scope, of advertising, sampling and merchandising programs; | ||
(6) | shifts in the preferences of consumers as to where and how they shop for the types of products and services the Company sells; | ||
(7) | social, political and economic risks to the Company’s foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States; | ||
(8) | changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, the Company’s business, including those relating to its products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action the Company may take as a result; | ||
(9) | foreign currency fluctuations affecting the Company’s results of operations and the value of its foreign assets, the relative prices at which the Company and its foreign competitors sell products in the same markets and the Company’s operating and manufacturing costs outside of the United States; | ||
(10) | changes in global or local conditions, including those due to the volatility in the global credit and equity markets, natural or man-made disasters, real or perceived epidemics, or energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase the Company’s products while traveling, the financial strength of the Company’s customers, suppliers or other contract counterparties, the Company’s operations, the cost and availability of capital which the Company may need for new equipment, facilities or acquisitions, the returns that the Company is able to generate on its pension assets and the resulting impact on its funding obligations, the cost and availability of raw materials and the assumptions underlying the Company’s critical accounting estimates; | ||
(11) | shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture nearly all of the Company’s supply of a particular type of product (i.e., focus factories) or at the Company’s distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives or by restructurings; | ||
(12) | real estate rates and availability, which may affect the Company’s ability to increase or maintain the number of retail locations at which the Company sells its products and the costs associated with the Company’s other facilities; | ||
(13) | changes in product mix to products which are less profitable; | ||
(14) | the Company’s ability to acquire, develop or implement new information and distribution technologies and initiatives on a timely basis and within the Company’s cost estimates and the Company’s ability to maintain continuous operations of such systems and the security of data and other information that may be stored in such systems or other systems or media; | ||
(15) | the Company’s ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom; | ||
(16) | consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation; | ||
(17) | the timing and impact of acquisitions, investments and divestitures; and | ||
(18) | additional factors as described in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2014. | ||
The Company assumes no responsibility to update forward-looking statements made herein or otherwise. |
The Estée
An electronic version of this release can be found at the Company’s website, www.elcompanies.com.
THE ESTÉE LAUDER COMPANIES INC. | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||||||||
(Unaudited; In millions, except per share data and percentages) | |||||||||||||||||||||||||||
Three Months Ended |
Percent |
Year Ended June 30 |
Percent |
||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||
Net Sales | $ | 2,524.4 | $ | 2,725.3 | (7 | )% | $ | 10,780.4 | $ | 10,968.8 | (2 | )% | |||||||||||||||
Cost of Sales | 488.0 | 533.8 | 2,100.6 | 2,158.2 | |||||||||||||||||||||||
Gross Profit | 2,036.4 | 2,191.5 | (7 | )% | 8,679.8 | 8,810.6 | (1 | )% | |||||||||||||||||||
Gross Margin | 80.7 | % | 80.4 | % | 80.5 | % | 80.3 | % | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||
Selling, general and administrative (A) | 1,808.1 | 1,812.0 | 7,073.5 | 6,985.9 | |||||||||||||||||||||||
Restructuring and other charges | — | (0.7 | ) | — | (2.9 | ) | |||||||||||||||||||||
1,808.1 | 1,811.3 | 0 | % | 7,073.5 | 6,983.0 | 1 | % | ||||||||||||||||||||
Operating Expense Margin | 71.6 | % | 66.4 | % | 65.6 | % | 63.6 | % | |||||||||||||||||||
Operating Income | 228.3 | 380.2 | (40 | )% | 1,606.3 | 1,827.6 | (12 | )% | |||||||||||||||||||
Operating Income Margin | 9.1 | % | 14.0 | % | 14.9 | % | 16.7 | % | |||||||||||||||||||
Interest expense | 15.0 | 15.2 | 60.0 | 59.4 | |||||||||||||||||||||||
Interest income and investment income, net | 5.8 | 2.6 | 14.3 | 8.6 | |||||||||||||||||||||||
Earnings before Income Taxes | 219.1 | 367.6 | (40 | )% | 1,560.6 | 1,776.8 | (12 | )% | |||||||||||||||||||
Provision for income taxes | 65.3 | 109.2 | 467.2 | 567.7 | |||||||||||||||||||||||
Net Earnings | 153.8 | 258.4 | (40 | )% | 1,093.4 | 1,209.1 | (10 | )% | |||||||||||||||||||
Net earnings attributable to noncontrolling interests | (0.8 | ) | (0.7 | ) | (4.5 | ) | (5.0 | ) | |||||||||||||||||||
Net Earnings Attributable to The Estée Lauder |
$ | 153.0 | $ | 257.7 |
(41 |
)% | $ | 1,088.9 | $ | 1,204.1 | (10 | )% | |||||||||||||||
Net earnings attributable to The Estée Lauder Companies |
|||||||||||||||||||||||||||
Basic | $ | .41 | $ | .67 | (40 | )% | $ | 2.87 | $ | 3.12 | (8 | )% | |||||||||||||||
Diluted | .40 | .66 | (40 | )% | 2.82 | 3.06 | (8 | )% | |||||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||||||
Basic | 377.0 | 383.0 | 379.3 | 386.2 | |||||||||||||||||||||||
Diluted | 383.7 | 389.8 | 385.7 | 393.1 | |||||||||||||||||||||||
In the fiscal 2014 fourth quarter some retailers accelerated sales
orders in advance of the Company’s
(A) During the third quarter of fiscal 2014, based on changes to
Venezuela’s foreign currency exchange rate regulations made at that
time, the Company changed the exchange rate used to remeasure its
Venezuelan net monetary assets to a newly enacted SICAD II rate.
Accordingly, the Company recorded a remeasurement charge of
During the fiscal 2015 third quarter, the Venezuelan government
introduced a new open market foreign exchange system, SIMADI, which
effectively replaced the SICAD II mechanism. As a result, the Company
changed the exchange rate used to remeasure the net monetary assets of
its Venezuelan subsidiary to the SIMADI rate. Accordingly, the Company
recorded a remeasurement charge of
THE ESTÉE LAUDER COMPANIES INC. | |||||||||||||||||||||||||
SUMMARY OF CONSOLIDATED RESULTS | |||||||||||||||||||||||||
(Unaudited; Dollars in millions) | |||||||||||||||||||||||||
Three Months Ended June 30 | |||||||||||||||||||||||||
Net Sales | Percent Change |
Operating |
Percent |
||||||||||||||||||||||
2015 | 2014 |
Reported |
Constant |
2015 | 2014 |
Reported |
|||||||||||||||||||
Results by Geographic Region |
|||||||||||||||||||||||||
The Americas | $ | 1,087.7 | $ | 1,103.3 | (1 | )% | 3 | % | $ | 14.5 | $ | 117.6 | (88 | )% | |||||||||||
Europe, the Middle East & Africa. | 982.4 | 1,132.1 | (13 | ) | (3 | ) | 213.9 | 264.9 | (19 | ) | |||||||||||||||
Asia/Pacific | 454.3 | 489.9 | (7 | ) | (2 | ) | (0.1 | ) | (3.1 | ) | 97 | ||||||||||||||
Subtotal | 2,524.4 | 2,725.3 | (7 | ) | 0 | 228.3 | 379.4 | (40 | ) | ||||||||||||||||
Adjustments associated with |
— | — | — | 0.8 | |||||||||||||||||||||
Total | $ | 2,524.4 | $ | 2,725.3 | (7 | )% | 0 | % | $ | 228.3 | $ | 380.2 | (40 | )% | |||||||||||
Results by Product Category |
|||||||||||||||||||||||||
Skin Care | $ | 1,011.9 | $ | 1,205.4 | (16 | )% | (9 | )% | $ | 123.0 | $ | 217.2 | (43 | )% | |||||||||||
Makeup | 1,024.6 | 1,064.4 | (4 | ) | 3 | 120.7 | 151.4 | (20 | ) | ||||||||||||||||
Fragrance | 336.1 | 309.3 | 9 | 18 | (21.2 | ) | 8.6 | (100 | )+ | ||||||||||||||||
Hair Care | 139.8 | 134.9 | 4 | 10 | 5.8 | 4.4 | 32 | ||||||||||||||||||
Other | 12.0 | 11.3 | 6 | 13 | — | (2.2 | ) | 100 | |||||||||||||||||
Subtotal | 2,524.4 | 2,725.3 | (7 | ) | 0 | 228.3 | 379.4 | (40 | ) | ||||||||||||||||
Adjustments associated with |
— | — | — | 0.8 | |||||||||||||||||||||
Total | $ | 2,524.4 | $ | 2,725.3 | (7 | )% | 0 | % | $ | 228.3 | $ | 380.2 | (40 | )% | |||||||||||
Net sales and operating income in each of the Company’s product categories and geographic regions were unfavorably impacted by the strength of the U.S. dollar in relation to most currencies. Total operating income in constant currency decreased 30%.
The change in net sales and operating income for the three months ended
______________
This earnings release includes some non-GAAP financial measures relating
to adjustments associated with restructuring activities, the
The Company operates on a global basis, with the majority of its net
sales generated outside
THE ESTÉE LAUDER COMPANIES INC.
As part of SMI, the Company implemented the last major wave of SAP-based
technologies in
This action created an unfavorable comparison between the fiscal 2015
and fiscal 2014 full year of approximately
Reconciliation of Certain Consolidated Statements of Earnings
Accounts Before and After |
||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | |||||||||||||||||||||||||||||||||||||||||||
As |
Returns/ |
SMI |
Before |
Impact of |
Constant |
As |
Returns/ |
SMI |
Before |
% Change |
% |
|||||||||||||||||||||||||||||||||
Net Sales | $ | 2,524.4 | $ | — | $ | — | $ | 2,524.4 | $ | 193.3 | $ | 2,717.7 | $ | 2,725.3 | $ | 0.0 | $ | (178.3 |
) |
|
$ |
2,547.0 | (1 | )% | 7 | % | ||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Cost of sales | 488.0 | — | — | 488.0 | 533.8 | 0.1 | (35.1 |
) |
|
498.8 | ||||||||||||||||||||||||||||||||||
Gross Profit | 2,036.4 | — | — | 2,036.4 | 2,191.5 | (0.1 |
) |
|
|
(143.2 |
) |
|
2,048.2 | (1 | )% | |||||||||||||||||||||||||||||
Gross Margin | 80.7 | % | 80.7 | % | 80.4 | % | 80.4 | % |
|
|||||||||||||||||||||||||||||||||||
Operating expenses | 1,808.1 | — | — | 1,808.1 | 1,811.3 | 0.7 | (16.0 |
) |
|
1,796.0 | 1 | % | ||||||||||||||||||||||||||||||||
Operating Expense Margin |
71.6 | % | 71.6 | % | 66.4 | % | 70.5 | % | ||||||||||||||||||||||||||||||||||||
Operating Income | 228.3 | — | — | 228.3 | 380.2 | (0.8 |
) |
|
|
(127.2 |
) |
|
252.2 | (9 | )% | |||||||||||||||||||||||||||||
Operating Income Margin | 9.1 | % | 9.1 | % | 14.0 | % | 9.9 | % |
|
|||||||||||||||||||||||||||||||||||
Provision for |
65.3 | — | — | 65.3 | 109.2 | (0.2 |
) |
|
(45.3 |
) |
|
63.7 | ||||||||||||||||||||||||||||||||
Net Earnings |
|
153.0 | — | — | 153.0 | 257.7 | (0.6 |
) |
|
|
(81.9 |
) |
|
175.2 |
(13 | )% |
|
|||||||||||||||||||||||||||
Diluted net earnings |
.40 | — | — | .40 | .07 | .47 | .66 | .00 | (.21 |
) |
|
|
.45 |
(11 |
)% |
4 |
% | |||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Amounts may not sum due to rounding. |
||||||||||||||||||||||||||||||||||||||||||||
THE ESTÉE LAUDER COMPANIES INC. |
||||||||||||||||||||||||||||||||||||||||||||
|
Year Ended June 30, 2015 | Year Ended June 30, 2014 | ||||||||||||||||||||||||||||||||||||||||||
As |
Returns/ Charges |
SMI
Adjust |
Before
Charges /SMI |
Impact of |
Constant |
As |
Returns/ |
SMI |
Before |
% Change |
% |
|||||||||||||||||||||||||||||||||
Net Sales | $ | 10,780.4 | $ | 0.0 | $ | 178.3 | $ | 10,958.7 | $ | 519.8 | $ | 11,478.5 | $ | 10,968.8 | $ | (0.1 |
) |
|
$ | (178.3 |
) |
|
$ | 10,790.4 | 2 | % | 6 | % | ||||||||||||||||
Cost of sales | 2,100.6 | 0.0 | 35.1 | 2,135.7 | 2,158.2 | (0.1 |
) |
|
(35.1 |
) |
|
2,123.0 | ||||||||||||||||||||||||||||||||
Gross Profit | 8,679.8 | 0.0 | 143.2 | 8,823.0 | 8,810.6 | 0.0 | (143.2 |
) |
|
8,667.4 | 2 | % | ||||||||||||||||||||||||||||||||
Gross Margin | 80.5 | % | 80.5 | % | 80.3 | % | 80.3 | % | ||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Operating expenses | 7,073.5 |
(5.3 |
) |
|
16.0 | 7,084.2 | 6,983.0 | (35.4 |
) |
|
(16.0 |
) |
|
6,931.6 | 2 | % |
|
|||||||||||||||||||||||||||
Operating Expense Margin. | 65.6 | % | 64.6 | % | 63.6 | % | 64.2 | % |
|
|||||||||||||||||||||||||||||||||||
Operating Income | 1,606.3 | 5.3 | 127.2 | 1,738.8 | 1,827.6 | 35.4 | (127.2 |
) |
|
1,735.8 | 0 | % | ||||||||||||||||||||||||||||||||
Operating Income Margin | 14.9 | % | 15.9 | % | 16.7 | % | 16.1 | % | ||||||||||||||||||||||||||||||||||||
Provision for |
467.2 | 0.0 | 45.3 | 512.5 | 567.7 | (1.1 |
) |
|
(45.3 |
) |
|
521.3 | ||||||||||||||||||||||||||||||||
Net Earnings |
|
1,088.9 | 5.3 | 81.9 | 1,176.1 | 1,204.1 | 36.5 | (81.9 |
) |
|
1,158.7 | 2 | % | |||||||||||||||||||||||||||||||
Diluted net earnings |
2.82 | .01 | .21 | 3.05 | .24 | 3.29 | 3.06 | .09 | (.21 |
) |
|
2.95 | 3 | % | 12 | % | ||||||||||||||||||||||||||||
Amounts may not sum due to rounding. |
||||||||||||||||||||||||||||||||||||||||||||
THE ESTÉE LAUDER COMPANIES INC.
The impact on net sales and operating results of accelerated orders from
certain retailers associated with the Company’s implementation of SMI,
as well as the impact of the
|
Accelerated Sales Orders |
Venezuela |
|||||||||||||
Three Months and Year Ended |
Operating Results | ||||||||||||||
Year Ended June 30 | |||||||||||||||
(Unaudited; In millions) | Net Sales | Operating Results | 2015 |
2014 |
|||||||||||
Product Category: | |||||||||||||||
Skin Care | $ | 91 | $ | 72 | $ | 2 | $ | 12 | |||||||
Makeup | 65 | 41 | 2 | 16 | |||||||||||
Fragrance | 21 | 14 | 1 | 10 | |||||||||||
Hair Care | 1 | — | — | — | |||||||||||
Other | — | — | — | — | |||||||||||
Total | $ | 178 | $ | 127 | $ | 5 | $ | 38 | |||||||
Geographic Region: | |||||||||||||||
The Americas | $ | 84 | $ | 53 | $ | 5 | $ | 38 | |||||||
Europe, the Middle East & Africa | 68 | 53 | — | — | |||||||||||
Asia/Pacific | 26 | 21 | — | — | |||||||||||
Total | $ | 178 | $ | 127 | $ | 5 | $ | 38 | |||||||
Excluding the impact of the shift in orders, the adjustments associated
with restructuring activities and, for the full fiscal year, the
Three Months Ended June 30, 2015 | Year Ended June 30, 2015 | ||||||||||||||||||
(Unaudited) | Net Sales As Adjusted |
Operating |
Net Sales As Adjusted |
Operating |
|||||||||||||||
Reported |
Constant |
Reported |
Constant |
||||||||||||||||
Product Category: | |||||||||||||||||||
Skin Care | (9 | )% | (2 | )% | (15 | )% | (2 | )% | 2 | % | (1 | )% | |||||||
Makeup | 3 | 10 | 10 | 5 | 10 | 2 | |||||||||||||
Fragrance | 17 | 26 | (100 | )+ | 2 | 8 | (2 | ) | |||||||||||
Hair Care | 4 | 10 | 35 | 3 | 7 | 13 | |||||||||||||
Other | 7 | 14 | 100 | 4 | 9 | (28 | ) | ||||||||||||
Total | (1 | )% | 7 | % | (9 | )% | 2 | % | 6 | % | 0 | % | |||||||
Geographic Region: | |||||||||||||||||||
The Americas | 7 | % | 12 | % | (78 | )% | 2 | % | 6 | % | (31 | )% | |||||||
Europe, the Middle East & Africa | (8 | ) | 3 | 1 | 1 | 8 | 13 | ||||||||||||
Asia/Pacific | (2 | ) | 4 | 100 | 0 | 4 | 16 | ||||||||||||
Total | (1 | )% | 7 | % | (9 | )% | 2 | % | 6 | % | 0 | % | |||||||
Total operating income in constant currency for the three months and
year ended
THE ESTÉE LAUDER COMPANIES INC. | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(Unaudited; In millions) | |||||||||||
June 30 |
June 30 |
||||||||||
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 1,021.4 | $ | 1,629.1 | |||||||
Short-term investments | 503.7 | — | |||||||||
Accounts receivable, net | 1,174.5 | 1,379.3 | |||||||||
Inventory and promotional merchandise, net | 1,215.8 | 1,294.0 | |||||||||
Prepaid expenses and other current assets |
553.1 | 522.8 | |||||||||
Total Current Assets | 4,468.5 | 4,825.2 | |||||||||
Property, Plant and Equipment, net |
1,490.2 | 1,502.6 | |||||||||
Other Assets | 2,280.5 | 1,541.0 | |||||||||
Total Assets | $ | 8,239.2 | $ | 7,868.8 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities | |||||||||||
Current debt | $ | 29.8 | $ | 18.4 | |||||||
Accounts payable | 635.4 | 524.5 | |||||||||
Other accrued liabilities | 1,470.4 | 1,513.8 | |||||||||
Total Current Liabilities | 2,135.6 | 2,056.7 | |||||||||
Noncurrent Liabilities | |||||||||||
Long-term debt | 1,607.5 | 1,324.7 | |||||||||
Other noncurrent liabilities | 841.8 | 618.0 | |||||||||
Total Noncurrent Liabilities | 2,449.3 | 1,942.7 | |||||||||
Total Equity | 3,654.3 | 3,869.4 | |||||||||
Total Liabilities and Equity | $ | 8,239.2 | $ | 7,868.8 | |||||||
SELECT CASH FLOW DATA | |||||||||||
(Unaudited; In millions) | |||||||||||
Year Ended June 30 | |||||||||||
2015 | 2014 | ||||||||||
Cash Flows from Operating Activities | |||||||||||
Net earnings | $ | 1,093.4 | $ | 1,209.1 | |||||||
Depreciation and amortization | 409.3 | 384.6 | |||||||||
Deferred income taxes | (52.6 | ) | (56.4 | ) | |||||||
Loss on Venezuela remeasurement | 5.3 | 38.3 | |||||||||
Other items | 139.7 | 154.9 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Decrease (increase) in accounts receivable, net | 103.2 | (196.2 | ) | ||||||||
Increase in inventory and promotional merchandise, net | (26.2 | ) | (156.8 | ) | |||||||
Decrease (increase) in other assets, net | 7.8 | (45.2 | ) | ||||||||
Increase in accounts payable and other liabilities | 263.4 | 202.9 | |||||||||
Net cash flows provided by operating activities | $ | 1,943.3 | $ | 1,535.2 | |||||||
Capital expenditures | $ | 473.0 | $ | 510.2 | |||||||
Payments to acquire treasury stock | 982.8 | 667.2 | |||||||||
Dividends paid | 349.9 | 301.8 | |||||||||
Acquisition of businesses and other intangible assets | 241.0 | 9.2 | |||||||||
Proceeds from disposition (purchases) of investments, net | (902.2 | ) | 7.8 | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20150817005232/en/
Source: Estée
Estée Lauder
Investor Relations:
Dennis D’Andrea,
212-572-4384
or
Media Relations:
Alexandra Trower,
212-572-4430