EL - Earnings call transcript Q3 2021 | The Estée Lauder Companies Inc.

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Operator

Good day, everyone and welcome to The Estée Lauder Company's Fiscal 2021 Third Quarter Conference Call. Today's call is being recorded and webcast.

For opening remarks and introductions, I'd like to turn the call over to Senior Vice President of Investor Relations, Ms. Rainey Mancini. Please go ahead.

Rainey Mancini

Hello. Fabrizio Executive and Financial Vice are and Executive Officer. call Travis, Tracey President today's Freda, Chief President Officer On and Chief me actual with the Since forward-looking where forward-looking you'll press remarks statements. our that SEC, differ and refer could materially factors let these cause release filed many our to you reports today our find to results of statements, contain from other on charges discussion of adjustments before our our commentary financial the the is results facilitate our To restructuring in business, and and disclosed press expectations and underlying release. currency growth Unless impacts results all all of net otherwise the stated, numbers sales are exclude in constant and acquisitions. organic

You the can in on Investors measures section non-GAAP of GAAP find reconciliations our and and our press release website. between

sales through It products our a make we As of estimated websites. sales directly our third-party platforms. site reminder, consumers and also through includes our retailer’s our sales references to through include Brand.com to online

that we of to session, call yourself you over turn we limit the the the within to And you respond During can this now time scheduled I'll ask Q&A call. please for so to Fabrizio. question one all

Fabrizio Freda

you Thank your good everyone. and a that pleasure you, families speak you today. I hope health. Rainey are with in It's And to hello, and

can Our support in experiencing and we Brazil, to our by severe committed communities. hearts that employees these resurgences. COVID-XX, with to impacted places are what doing are those and particularly like India We remain

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Tracey Travis

echo to progression certainly I Fabrizio. statement recovery. that of forward and look you, Thank our the continued

pandemic, For our quarter, net the and we Asia region onset sales delivered growth and third left the skin exceptional and fragrance COVID in care the fiscal categories. XX% rose as in the Pacific of

quarter. channel distribution were online our North and Conversely, delivered While continue regions. challenged throughout soft traffic, experience formats growth in America to foot all brick-and-mortar the our Europe, strong Latin America and Western all environments of across the parts

online favorability channel Our negative were quarter by basis the points skin compared tester driven as gross well to margin growth, increased year XX and prior and partially and as our related this lower and in products. COVID mix under makeup care category facilities obsolescence, costs offset points manufacture Operating year reflecting currency by cost recovery the prior improved sales to year. largely the that quarter, fixed expenses improved leverage compared basis of primarily by XXX

offset deleverage sudden will prior recall fully the despite in You took the when at to the actions struck that that the drop in quarter, created cost year and sales expense pandemic time. was dramatic we difficult that

due longer a spending to and reflected also brick-and-mortar our momentum. of acceleration benefits the continued stores, extension as shift resurgence new selling in to to prudently store until markets of and product EMEA consistent in the some and brick-and-mortar subsidies from percent on cost markets. our We store the some a key strong and management gaining as and substantially part temporary shift as was Latin recovery virus in in in Valentine's furlough more digits, Women's the managed American and We the our was as hires online. and new shopping and closures lower recovery see affected we We've grew of Day realize continued both operating benefited savings, we from in markets. certain from of online to staffing Day. double This such invested Year, predominantly launches, Lunar teams, to response sales to Advertising New support temporary costs This certain term our is focused well spending. sales to in moments quarter, as a online on digital levels which

basis our a basis XXX operating fiscal margin which level. to XX.X%, 'XX result, As points was points rose above XX

came rate a continued higher of cost company's EPS exceeded increased The year. management XX% operations. tax on in Our for sales, prior $X.XX was due to expectations compared the due primarily rate for at rate the lower foreign XX.X%. rate. the lower EPS quarter to to our effective lower quarter primarily tax the and a tax Diluted the effective

Latin areas related and plans under of our channels. and program exit in global and three our we employee distribution Our main in online and post-COVID have distribution brick-and-mortar to capabilities, products, the including footprint are business retail, costs to BECCA including acceleration travel actions progressing. taken EMEA realign Year-to-date, America resources adjust between to

beginning these already benefits actions. are from to realize the We modest

the As retail further to rationalize footprint, markets. our program expect continues, Western primarily brick-and-mortar we in

cash year, months, which higher For from million investment improvements. well net net in operating technology, Conversely, the We from in billion issued the including We primarily expenditures equivalents, DECIEM, areas $X.XX and as counters above equity we in capital to on in substantially to million billion key like distribution was X invested to less including and activities, cash business. finalized. $XXX and capital online generated working ended prior flows the stores. and increased investment we cash deal support earnings production $XXX the as due period once senior support with in was March the notes approximately cash and far spent capacity our $X.X

our of of in paid cash buyback million down we $XXX the used $XXX debt to we in repurchase million reinstated fourth maturing $XXX end the program quarter, March in in pay and million also stock quarter. share cash to We and the our utilized After dividends.

to remain opportunities still we growth after these in year, this pursue generation strong cash a further strong position our actions. Given very

to turn outlook. So our now, let's

in are to In we throughout and leading are certain And seeing occasions travel higher at social edge ease engagements activities the hesitancy have the business the be China, and markets sequential and fiscal improvement as seen which of on optimistic begin encouraged in by Israel, continue year. gradually and professional that increases. will we makeup vaccine social to coverage steadily we restrictions our increasing sales with are as Australia, normalize. recovery, usage We

U.S. even addition in our For almost level pre-pandemic have returned freestanding to brands The lipstick for further Sephora us to for giving expansion drivers represent the sales stores normal. the are DECIEM growth our recovery as upcoming and with business in cause and sales pandemic back beauty in from in we and shock, of portfolio the the additional of our Ulta optimism. to example, progress Israel us

We have strengths, which with team our and the we are and same could our values our amazing proactively at strategic our areas. control addressed areas led we while time ensuring have where growth protecting

of traffic tight from the expected distribution, growth growth. Jart, approximately more the to kept of month over Dr. approximately and protect of control in of sales points year to currency. the challenging expectations percentage add growth reflecting growth, of expect the very pound result, for we to to to of translation for rates needed X.XX our X.XX long-term the X% Mindful for acquisition this year end XXXX a reported brick-and-mortar resumption X from months to for the points costs of X expected percentage DECIEM XXXX, we sales investments a the our and between Euro, XX% Yuan. year. As gradual approximately fiscal in in X.XX X with incremental and December context constant the X are is of Currency contributing environment for

Some we costs and XXX translation points be $X.XX, year with $X.XX reflects an roughly currency an doors return dilution quarter fourth more temporarily engagements. social basis cut restructuring to advertising spending XX.X%, operating XXXX. to of approximately meaningfully before approximately consumers from This expected charges. will margin improvement above we as in EPS and fiscal diminish $X.XX said, end and our between up expect ramp to subsidies $X.XX other That acquisitions. correspondingly from gradually of to plan will fiscal professional is return we the as this open, year Full of and accretion and

well recovery to quarter fourth sales X the approximately This reflects the outlook points be month the is prior many approximately and manufacturing Currency contribute X expected to be $X.XX, most XX% DECIEM parts an between easier would of up are to in sales than $X.XX the by percentage the in the Our pandemic. from -- against between currency. and XX% Fourth as innovate addition and accretive both of period points Asia. increased growth. rise comparison support of reflecting X and and quarter by less sales of year to the constant is our percentage to impacted as EPS investments sales world capabilities expected innovation expected ramp in

In the the Continued resulting short our addition high DECIEM quarter context investment is advertising the add the pleased Currency in drive the recovery, of are to operating given for of our EPS, in support mid and third a to is business immaterial we quarter, timeframe a more typical with quarter. promotion levels the online to $X.XX to the and of closing, accounting. margin in expected single-digit to performance challenging of macro and purchase pre-pandemic our in backdrop. with

skin brands proven experience be with enhanced during consumers fragrance this time, services and Our care online and as to sites. increased on digital shifted our the resilient we have

the long-term year, stakeholders. are value through investing near-term in of recovery navigate our we drivers we final for of both sustainable the our months As that create and the fiscal multiple growth

continue we'll difficult growth of agility operate at to to to have normal. While confident can gives it and time. this the near-term, to share nimbly as the with we global prepared we to the new beauty we take and our the be remarks allocate resources happy your prestige recovery are gain That is in as that predict questions concludes demonstrated way

Operator

comes line from question with of first Barclays. Lauren the Lieberman [Operator Instructions] Our

Lauren Lieberman

Great, morning. thanks. Good

Fabrizio Freda

morning. Good

Lauren Lieberman

see talk I things you on from that slower trends as about than a a were strong a bit we quarter. were I probably probably holiday the Pacific Asia, people little little much Chinese bit New aggregate little bigger quarter XX.XX because morning. hoping slower expected. in Asia a basis, was X-year are, Year. a this you have Good But the as that's know shopping could bit things second level fiscal than

other So there, us with that shopping down. China used areas maybe may little trends a overlapping purchases overseas things where to should have were it was there whether bit And be Hainan? thoughts in I as on describing repatriating give could just Kong, Mainland Japan, -- China, things say versus also might any you Hong more color slowed other which that happen purchases other Hainan and the those more to Asian in now markets travelling are maybe to Thanks. degree Chinese

Fabrizio Freda

Yes, sure.

Let Tracey me accelerated will super perspective. The is we China I start we -- then believe strong. of and mean, all, decisively. -- first have

growth, is number double reported Our XX% quarter. almost which is last

So strong. China mainland is very, very

in these and Jart brand -- strong which portfolio. is a our also Dr. a is part growing of Now numbers now include Asia

So good. all

continues grow. also Now, really look consumer. we and And on your and Hainan say, strong manage to question Hainan, the Chinese was as we

very class middle which also the we the consumer this important cities, which X, meaning sell And becoming in they multiple they growth, Hainan them And serving their in demand more for we continuous. and to cities, the the to The we Tier cities So are from the multiple there's cities. is their X growing to travel. in to we Chinese -- when sell and serving opportunity growing the consumption Tier consumers their are they where continue are groups. them different travel sell of when smaller

a in We are serving way. when positive in and very these travel both the Hainan mainland in

in trend. very strong China very and So continue a our will strong, opinion is

COVID on I is And important because -- brick-and-mortar us see my represent which in in is of ahead in also thing to remarks China the is China The this also people is of the digits. brick-and-mortar. regions to go grew on seen, with today more back positive we we confidence said obviously normal. as the that the other sales and into control makeup, And the so prepared what in of in the will new double that recovery which for in cap, West other going impact shopping the back recovery encouraging

and question is And, was is of to part in than total. about lower. your obviously Kong Hong what recovery other be The Asia used smaller yes, the

And be. is being Kong it's to the so for at been least getting better, what time but Hong used resized to

a means historical closures limit And was of again, makeup. a on wave. which is the still brick-and-mortar new very social big and drag was a So hit lot there life shopping to definitely impact in And to new limit government versus levels. any the by Japan activity activity, way

contrary, had And -- a another place Korea, better recovery, the brick-and-mortar Australia the its definitely on is the the quarter, more life. quarter. the because and reopening and way so of the of Australia, social start better the of visible By makeup recovery a where

markets, very a China, better summary, was hard Asia Zealand, some emerging So in very New and Hong Korea, mixed Kong. Hainan. of It's Australia, the pack better very strong very Japan hit and strong still

Tracey Travis

And you covered it, Fabrizio.

Fabrizio Freda

Okay.

Operator

Your Murphy next question is from Erinn with Piper Sandler.

Erinn Murphy

-- renaissance hoping little to new consumer in bit Are spoke you to is a you embrace? interacting there the with trends more of makeup Great, thanks. they're particular. China starting could the Just behind about behavior and there? was How live on morning. Fabrizio, ways or that some are I the selling do in samples share anticipate of they or then there. the of try-on And sticking Good that coming category back? of curious testers with and streaming, shopping or like social you the virtual category some new

Fabrizio Freda

like is together. -- and recovery of omni-channel experience see does we of first on shopping is -- makeup to brick-and-mortar shopping people the that particularly the interact all, benefits with And the the like of because particularly products so recovery of what well, the

one is And really so this driver.

Australia again, see makeup see of what -- core another happens speak in at of all, And active some used place it way. and go China, so unleash. cases. because I signs to we some about by the not What not the first terms the and may for fresh recovery. are and and getting product, China consistent signs people also in their all. And have that recovery time the during be stronger as they this people we of Israel we back And these anymore is where see where in

of a these huge there a from the back a They to to mascaras purchased to that normal. interest of foundation, mode the people in which newness, difficult go is also they’re core. different when lot you back now a obviously So want want want past. year very to is to a there to proportion But back back lipstick, depending of back. as But They region And is an to and needs be standpoint this that new don't go forget world, in is know. actually a future. to new this emotional recovery to subcategories

for why So for and when region world of every in plan, are And happen. will where our novelty. both the this recovery newness, renaissance they in look that's planning we

to looks be in your core most to about looks, only are consistent And which fresh the your an life new and core to consumer new outstanding at and with makeup use to life, is having educations It's renaissance clear, the to social occasions of back product the shopping. are emotional user because of importantly, the professional shopping not makeup. -- way the idea, the habits, is about products. We breakthrough time, innovation, their mix bring ready allow use our core what same reload makeup,

for and occasions interest those occasion And back region. makeup of by And are newness so the come studying of each how core occasions. and are kind different which we is

excessive during precisions today level our subcategories this other these good ensuring comeback, that we pool preparing words, call show, a wrong with manage investments ability a our is with specific. In so renaissance, focus. the the And of are very avoid return of and recovery. is avoiding analytics, which to the And we what

to giving on. Our to analytics, is what's anticipate are what to is thanks only happen, has but to dramatically increased, which what to are more working us us that's data do going happening data and giving ability that understand more we not

Erinn Murphy

Great. Thank you.

Operator

Modi next RBC with Nik Your from is question Markets. Capital

Nik Modi

everyone. morning, Good Hi.

Fabrizio Freda

Good morning.

Nik Modi

Good has morning. for new ask obviously, I the the for the wanted from outside. I that well about mean, to in recent the the years. brought done hire business over online incredibly online XX-plus last you've President you

the outside your have to priorities And so leadership, get they given especially retail? that what Thanks. for do on will on thoughts just perspective CPG both new be wanted kind and of

Fabrizio Freda

sure. Yes,

new to exceptional months in -- some lead our hire our -- organization. in by new level. now and business is bring an leader, Gibu all, He and of since a will online now next is integrated well First

well As to here completely new done he level. it bring but years, we have you said, many is a for to

each growth in And that circulation what's every brand.com, huge continue of the so in in channel, third pure from all, plays, the the single world, the sure doing, -- is leverage what first and technology parties, more and are in doing. these we or practices around add and competitive. priority learn this in the in really, acceleration But to our in is, high we center the and consumer even of our third-party all in world, of every of are angle touch quality in would this both retail.com in in have happening make best of the in the one business I experience that to making to really retailers say competition order more points

to So the consumer is focus level. on the next taking the experience

and to try-on, to positive. continue to of make that in of the we is more do be very particularly, online. drive live across a virtual key the digital will that are in and finally, one for we be past also, of And to is that great but we And all -- these become it about to to because speaking opportunities brands, can the and surprise consumer eCommerce will year's consistent our by services needed. very we better advertising, because going time in And make that will will frictionless. effective. with experience possible need sure efficient be way challenges need the but so and and happens me the streaming, and And of we continue only way the to single driven if is will the conversion the of our every we because of advertise linked also, You that fast push traffic, also efficient world one in our our outstanding scale more of key next this priorities online time become this correctly, and of which attract not a the experiences technology that innovation, great online world many and to online other better over chats, the and traffic to heard because

Operator

Stanley. with Your Morgan next Dara is Mohsenian from question

Dara Mohsenian

guys. Hey,

Fabrizio Freda

Hello.

Dara Mohsenian

expectations unique comes bit an travel COVID of also on Thanks. demand given give do Just love us How but your for of can volatility? the category you update do crisis, How quickly an there. back? nature the just the bit I recovery, a business of a retail update for think going you potential just forward? the manage you pace the of

Fabrizio Freda

Yes.

I anyway, is perspective. retail travel will up. Tracey, Our But any business add you -- let our again,

that already what extra I -- is be versus recovery the so is in And will say growth. would net

domestic in So the than is over in the offsetting you as travel particularly of particularly that China west. and know, field, travel lack has the the what's been general within more in world international all and this happened all

by so very like are in and this Hainan expect Shenzhen, other China moment, to and travel then we to definitely moment even will net to going new will And the travel when expect and part. Greater be we emerging Bay extra in mainly over west when where will this And travel travel But than that restated, time, continue many which we to retail the than very, travel remain this there strengths international used be certain opportunities international solid. today travel. in domestic to domestic more then in which in particularly expect the with is centers be be retail, at to envision obviously with and we populations stronger what back travel only opportunities, today happen, historically driven the bring stronger

travel So reality retail. today, strong a for strong future

the is which of also recovery what on something. travel. which conversion, I retail speaking travel percentage buy was about that it's now, travelers the about about But in traffic, future is true commenting Now international

have we up, So by the going pretail. recently driven seen conversion

to online ability buy the So when you travel.

very pretail is west. very is the of many already Now, one-third business of and significant very -- in is or in not accelerating the present in a about parts yet Asia Asia, it's

significant conversion. opportunity or pretail with the the a see future for we And to two continue to and retail. increased to be growth And of future traffic to those the sense, travel very -- will grow buyers conversion the coming continue of see plus So in part KPIs a pretail, -- on we travel progress, growth solid that travelers retail. these the into of in represent back

Tracey Travis

Dara, would to what the are traffic said, and Fabrizio watching I And patterns only thing closely. we obviously add, travel patterns pretty

travel half -- international fiscal our fiscal projected 'XX travel Our second in time the is retail point 'XX. this team is even to recover -- so not of until perhaps really at

the making Western terms it the watching I a And will that retail other traffic we're But we the combined correspondingly. until the fantastic consumption in sooner, than in internationally we travel that travel online has job -- are of more a meantime, business. of only is markets. and thing sure again, of obviously. see prudently in Western closely our would retail of and would markets terms investments If travel the are the say the travel little I recovery now thing total it the retail half recover consumption business So managing pick up of retail in done team

well recovery strength going travel And see and the -- retail it so future our when forward online in growth. bodes of recovery growth you we very think the that our for momentum about the and

Dara Mohsenian

Thanks. Great.

Operator

Your English next from Jason question with Sachs. Goldman is

Jason English

for you slotting Thank folks. in. morning, me good Hey,

Fabrizio Freda

Good morning.

Tracey Travis

Good morning, Jason.

Jason English

but I region revenue from down bit expected. thing I across was many back is of the I And the sequential bigger just that come terms is drop XQ every want question morning. guess that Pacific. XQ, of Asia XQ to was good typical, I than in to larger growth than pretty one to always I guess, much want where first to, the us know especially than slower -- but me surprised was XQ a drop.

we maybe I and not market Or consistent stepping inflated was some setback? bit last some look know is are fact where reloading again from looks you seeing in all tightening So one it retailers reopening back but down, globally, the more consistently. into talked with mean, or of slowly inventory? two a I world a once we quarter markets generally One, about like and sit obviously -- the questions.

sequential around my help why would So around head debt? contextualize the we me see

Tracey Travis

Yes. I start, Jason. will mean, I

in particularly the more I in is of think more that we're and business Pacific more business. what Asia the seeing seasonality

to second very So a in quarter a with was very our XX.XX as tremendous third QX, third some us. really We vaccine Japan. we're holiday things large And and were markets of In downs for think seeing the bit back ups bit. with growth quarter has as holiday. strong have sustainably and year-over-year, But softer, large did more pandemic, obviously see get the when rates Asia we sales a going of you very until mentioned, addition become always normal accelerate a quarter. quarter. large are a indicate a that this in through It quarter, large that had I Fabrizio China to number

markets performance the various well. long-term quarter So still EMEA in the I of terms terms into other obviously, in and in would anything travel not Similarly this than is in outside as but well, challenged retail, markets. as Western of down part it seeing of read of in up EMEA the also pandemic quite were

stabilization we So again, normalization see until, and that pandemic. see we from more expect the to

Fabrizio Freda

Yes.

some were part Tracey the where want And in were closures early, pretty a back allowed, were I Japan, so in immediately North They underline brick-and-mortar an XX.XX were that, by they of U.K. America, to then because more by and there was topped I this lot to also places shopping, were positive. People possible, QX, of were just where were particularly after moment XX.XX in some of what in of Italy, went West. some maybe said. Canada. these a brands open fact holidays then, open. that strong driven frankly, to a read And extraordinary will the the project holidays our

and got So amount closures in West the particularly, March obviously. of enormous an January, we've Japan, in period, the

brick-and-mortar. the The that's And impact combination. on so is the combination pandemic

mind in makeup the results, seen have and experience. question [indiscernible] and is fragrance, brick-and-mortar doing is skin is the in really and we you Now, care the that recovery, comeback the keep as strong. extraordinary brand of to makeup very linked the The have

have And many So impact seen Japan the all makeup. the holidays Western markets did we that. have closures on an after in that and happened in actually

So was kinds these sign QX. strong our would any Actually, have it because I guidance. closures. the guidance things had of say an that of this seen of not we that ahead the is our in By is QX. had would because long-term there it seen extraordinarily happened We in way,

was more holidays and quarter quarter. a said, there of XX.XX an it absolute activities strong a always peak will be and and QX was as of create that in of But of very so And commercial high will an be level the terms QX a in future we just Tracey strong like combination because sales. strong extraordinary a pretty

Tracey Travis

Operator, next question?

Operator

from Rupesh question Oppenheimer. is next with Parikh Your

Rupesh Parikh

question. for Thanks morning. taking my Good

I have Fabrizio, going comments fragrance your and 'XX care skin now to exceeded getting FY levels. of, guess back So,

going was perspective? to as business back curious, get pre-pandemic I you from a do So impediments look at forward, in sales any makeup where makeup to see your you structural was

Fabrizio Freda

No, would no, I not. definitely

think are the as on again, the it, counting I COVID we abates and opening.

to I've that, want I about user As repeat before, education. is said makeup

when there pandemic when exactly at active and or social the so not makeup on consumption education user is the and down. closures and -- very occasions So professional goes that there the are and

back to reason stabilization these first really makeup then social occasions back in we any comebacks. would So don't why we and occasion we not professional and come growth -- these see are when go

success accelerated COVID. middle before, already of even COVID their having trends accelerated, been have Chinese these consumer, There to will category our ready the the the see as are reality, the Just areas to COVID. discussion. drivers is continue on drive. care These the category and are want current skin are you does now opportunity make the to Today, we high-end and the no that by global But we take which so great pictures. in in we online, were have and fragrance and strong drivers, really

groups these hit today come U.K., Japan, the improves. consumer continental Now, drivers I COVID. and to new Europe, certain usage, will U.S., COVID as badly be there really markets in are as most Makeup we added productivity as markets COVID back come brick-and-mortar and like that abate. back, unfortunately by gradually emerging should drivers We are said, markets,

we TR back. said consumption, linked and makeup And come Hainan as [ph] pretail will the consumer to before of come especially Younger which back. will is outside acceleration

XX better Asia high question that Dr. months our was innovation with huge makeup I more the production resources There and be new skin we consumer touch we better during Tokyo; every is is and which drivers on which and for the our analytics; that in investment when there in strengths more services acceleration in And before especially advertising, what to combined these investment activity ESG understanding factory COVID. stronger portfolio, brand are a upcoming our a the call online; advertising, by and ability DECIEM is digital that driven anticipate there the online, I are that [indiscernible]. increasing; gradually. better bringing are that to trends is of have we as acquisition them. of all there in becoming Jart; is of explained in have COVID we all Then skinification from better repeat invested these of in we pace new need built in assuming is strengths care and to new Shanghai quality So will innovation high and capacity of quality with COVID the and creating in accelerate return more the during higher process center more the There capacity rates. production have next

way drivers for built a Estée is will this just the long-term in drive, Companies quarter we that So drivers the growth really we will creating why and sustainable have very see that's the come new confirmation new we it And pattern the is strengths back company. hit. will year this the during including believe solid the makeup are that current Lauder that we that

Rupesh Parikh

Okay, great.

Tracey Travis

add to try-on. underscore that investment is, some virtual made technology And would the in for just we've thing I to only of the

very So professional try makeup from it we've online back, see makeup features occasions come for bodes some and to coming they whether want you store we category wants the and that those the engagement that capabilities online those added the back come when to the when think occasions acceleration. certainly someone well of if or and to about and social try in online,

Rupesh Parikh

Okay, great. Thank you.

Operator

time for question. We one have more

Fargo. will question with final Wells Carey come Chris from Your

Chris Carey

everyone. morning, Good Hi.

you're you also which I that some if is correct I got but but about come on the they're guess, forward. saving temporary online, element how So was lower. that some for longer the level, through also brick-and-mortar back are reallocating but you going wonder obviously margin term underlying continue that to going you're cost in costs I also are me 'XX, come wrong. online, mean, at question the if channel in XX.X%, fiscal this mix to are out is provide a you quarter dynamic comments higher shift margins be said can that operating just thinking clearly that I noted the substantially for play, a costs to there And channel subsidies there but with is longer into store coming Operating but an to going for be that have base. costs some costs term permanently much mix is I think

into of expect noted, step you mix a the next so, 'XX coming up I getting this or there that have view And wonder initiatives Thanks think evolving guess of you they can how costs some to year? target? from the much. sort back it, back fiscal as some over you I weather back would with all base the Do channel so move you that and you these

Tracey Travis

Yes.

we fantastic and teams mentioned. temporary part done the year of we mean costs. job, have, also salary you've had been terms where I So, unusual we've had will Chris, August, in of has of forward all year this typically as that We the reductions, for you upcoming managing the we know a which things certainly our give guidance of in fiscal we've had year do. an furloughs because

of those and will come year some next back costs won't. Some of them

the closures of more should which traffic see recovery. doors brick-and-mortar, fleet where the done, we've to be the and remaining of permanently accelerate door bulk is that of the we costs Some productive to as continues those

are be taken, over from accretive specifically the to would given actions you next more back. as many growth expect think that about we've care for grow when about we all to and margin when we've certainly strength will retail, that timeframe. next progression. disproportionately, think about that those as we to So makeup continue skin said you continued years, August also areas our But the we in fragrance Fabrizio had be strongly in to expect growth think we what of able you travel margin online year expect grow as and terms skin cost say multiple given where care. occasions come But will come more when years will we've the year And said,

do to even we've ways areas. margin So multiple got as investments back come progress brick-and-mortar multiple and engines, for other in

we -- the invest strongly We as to my believe in it as we in remarks, year start acceleration. will, strong advertising in a will what I fourth fiscal that quarter do an of It's we and the prepared more in that will for happen markets think in. invest indicate, normally as selectively said a you and support we so will be

Chris Carey

Thanks perspective. for the so much

Operator

over That remarks. for turn concludes today's question-and-answer to session. closing to would I like management it

Tracey Travis

all we a provided. the want as difficult to And thank think again, Fabrizio guidance look mentioned with to for year, forward are our for teams everybody navigating that our we of in I thank interest Just strong I proud, obviously company. their through results. incredibly closing mentioned and we the performance what And been but the has we year of the fantastic certainly,

So you, thank everyone.

Operator

Thank you.

through Estée call. you X-XXX-XXX- and for today’s unable Lauder That May If available day. XXXX. a good thank this entire wish call, playback The you hear To of XX. XXXXXXX. will dial X concludes the you Time conference to a recording number call, please p.m. like I be Eastern all today would at passcode were join to your participation

The Estée Lauder Companies Inc. (EL) 3 May 212021 Q3 Earnings call transcript