EL - Earnings call transcript Q3 2022 | The Estée Lauder Companies Inc.

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Operator

Good day, everyone, and welcome to the Estée Lauder Company's Fiscal 2022 Third Quarter Conference Call. Today's call is being recorded and webcast.

For opening remarks and introductions, I would like to turn the call over to Senior Vice President of Investor Relations, Ms. Rainey Mancini.

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 divestitures, Unless excludes net all all the the net otherwise currency growth closures brand stated, numbers sales are sales of acquisitions, in constant impact and noncomparable and of impacts translation. organic

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

through a includes to references to platforms. consumers call through we sales through I'll turn sales brand.com sales estimated over It Instructions] of retailers' our the to include third-party reminder, As Fabrizio. and products websites. sites [Operator our our And also now make directly online our

Fabrizio Freda

everyone. are Rainey, humanitarian and want impacted hello the people all to Ukraine, our the I where devastating you, Thank expressing the to begin colleagues of envision by experiencing great sadness a and who by for crisis.

focus our line for XXXX, to growth diluted guidance restriction adjusted we in share organic our increased, peace continue delivered and expanded, our stronger-than-expected leading per third X%, of on margin We XX%. despite our China of volatility earnings the as is of and with year discipline exercised acceleration fiscal temporary COVID-XX We adjusted cost March. in growth operating in to employee the dearest to hope safety, quarter prevail. In sales of

demonstrated rising of organic by brands robust us grew across demand Consumer growth further to led organically our organically, category growth remains environment, of the environment. both fragrances' sales this with strategy sales engines XX even contributed outstanding engines multiple amid double-digit and diversified brick-and-mortar Every intensified drivers. in Our online. macro moment and the inflationary amplify enabled performance.

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our investments in ahead, and are opportunity confident Looking in consumers market. resilience the the untapped of we the Chinese the driving

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merchandising strategy we services. brands brick-and-mortar been omni in the new for meticulous and renaissance, their While in in ways online create looks innovative has meeting the M-A-C artist and educate in across the to superb consumers the regard. innovation high-touch inspire offer executing best to been and personalized with this invested have

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success upon consumer acquisitions, us well greater even high-touch we repeat. services, the with to fundamentals the improved also realize trial and During positioning of and quarter, engagement

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fiscal We while COVID-driven deliver ahead, are the for fourth year quarter, the remain our optimistic in the record restrictions we given in XXXX. we of expect another about incredibly our Looking temporary future lowering of China, the expectation impact to business. year

turn in as brands the of This call innovations markets the the trusted resiliency recover over beauty, will difficult and I to quarter of a proved prolonged Tracey. sequentially the pandemic. vibrancy macro its strength our prestige now from product and even environment

Tracey Travis

you, hello, Thank Fabrizio, and everyone.

different and sales realized freestanding store the in most investment Organic brick-and-mortar the growth growth added brands. and the led rose Western The late online points product and well X% our a stores complexity mid-single-digits. Mer, India. freestanding Sales quarter online and most grow, markets caused increased to markets, growth markets largest online Turkey Malone reduced like organically world to traffic. led region channels stores. markets to growth, was by department the grew, stores the across sales and in third point. prior region, in the at All both East in year M-A-C. and as where pandemic and from compared approximately closures as La DECIEM recover May categories the organic double-digit the grew rose grew XX%. the volatility and benefited store sales declined invasion inclusion channels despite emerging Growth of by of key specialty-multi currency headwind Jo when categories albeit the continue and and was both from by sales X Growth Market quarter recovery Middle the Africa was most led as retail across in by sales All stores, and of London brands sales pandemic-driven net and led From XXXX Ukraine. and was a regions sales standpoint, net specialty-multi in Europe, approximately geographic X reported across net Our rates. and broad-based

retail during challenges Our grew double the that quarter. despite the again global digits business travel arose

largest the sales and and quarter. for of of travel at is Korea robust our the most retail the for Asia key retail China very in region business, were markets

COVID in precipitous to there travel March restrictions in contain China. decline in increased Chinese were However, a was as

to as organically, in sales the social gain overall all share. and Brown We sales categories more the and the gained increase continued see Net Americas XX% two retail with drive largest a increased in share and contributing grew product The rose helping Ford Europe return and makeup Asia sharp to Bobbi to category throughout of resumed outpaced the strength workplace in U.S., particular care. prestige growth makeup travel more to continue hair outside consumers in also markets makeup All occasions. Tom with to further Beauty renaissance M-A-C Clinique, growth. Americas. the as their brands and traffic

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mid-single-digits. Mainland declined net quarter, in the For sales China

strong restriction affecting facilities, in to distribution. country at into where a Year additional notably in Following declined product curtailed Lunar most distribution the to the country productivity fulfill all restrictions entire New receive are as sales and located. shipped Shanghai, serving March cities, many our February, both The sharply impacted demand ability COVID being these across centers of our channels

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price inflationary offset of of increases well XX of in in chain, manufacturing as logistics impact start-up Operating mainly plant Japan. last and basis currency obsolescence reduced improved margin Strategic sales. costs the favorable than under increase overhead. materials for as anniversary pressures contributed year. and and year's points of our gross to of impact percent decreased our expenses in This last in gross new a increasing combined to with favorable Our approximately basis as absorption more increased the XX compared margin the points X% supply

sales shipments increased to of costs air leverage freight on Our and higher expense was related administrative offset partially and general rates by volume. increased more shipping

with million, slowed, our began and to as XX% to XX.X% certain $X.XX Hainan tightening XXX reduced operating in expanded quarter. the correspond compared the income to and EPS we traffic. points basis $XXX rose traffic year. retail Diluted slower Additionally, to XX% Operating margin expenses China restrictions throughout cities increased to of prior

retail. $XXX recorded and goodwill Jart+, forecast we and slower-than-expected primarily quarter, to China growth impairment the of related travel Dr. other in to During reflecting million for intangibles

as growth growth impacted the recovering the brand, to disruptions its temporary the COVID potential has growth given to in We which strong as prior seen of continue Asia the well in of the markets. believe pandemic in by start the been

For support returned working in disruptions significantly the near reflects and cash investments billion months, billion online and Investments the well new taxes. ongoing through activities we partially of as our X mitigate increased billion We which income. operating higher to the facility technology compared in of was $X.XX some risk million to both investments capital higher manufacturing to we of to $X.XX as stockholders in last capital from share of investment as dividends. as flows $XXX cash repurchases a supply growth support combination in net $X.XX and generated year, for cash our in innovation enhancements. paid Tokyo. by in chain offset This And our Shanghai center well to construction net

our now outlook. to Turning

As invasion you headwinds have have in that have emerged since last gave of COVID-related impacting Ukraine. the been and restrictions heard also there China Hainan February, early we and increased in are guidance aware, two significant

this reflects Americas retail guidance in balance current constraints fourth China least corresponding travel as the distribution and Our quarter. half for year well momentum in excluding first continuation of of the through our of lockdowns the the EMEA as continued at and

result the we for these constraints severity the in experiencing meaningful China of and distribution While in both a at Hainan, we in continued decline the areas are growth net retail Mainland quarter. are expected expect for to sales

The in expected greater that months of fourth the XXX majority time, same growth Ukraine the drivers. of growth results points. our the cautiously be fiscal for quarter of orders our We reduced X able X.XX and are basis delivered we by the for with year, At diversification approximately first sales planned has we time fulfill elimination sales activities. Russia will our optimistic in to of outstanding

tremendous of including Our engines expect multiple to geographic and of the recovery is asset, markets our Western most growth we and the Asia. a Americas, in diversity ongoing continue, Europe

We year. X.XX of margin inflation quarter, helping continue of to We and key support abate, our initial effects in the offset strategic China expect along agility fiscal the pricing throughout disruptions actions current and to plan to shopping cost fuel upcoming Mother's assuming our year, deliver the year. strong with for Day. are like benefit this to management increasing The invest also the improvement moments in and recovery, in innovation this

forecasted to complexities a to basis our now is EPS includes approximately well year, are by closing, the divestitures organic deliver third currency $X.XX solid In the accretion year. range to and we as assumptions between closures, growth. expansion before of approximately these strong very other basis fiscal of this acquisitions, imply $X.XX X%. expectations in quarter. points from including expect currency, expected rise points, DECIEM excellent to from are continue to X forecasted charges. XX%. margin we to our XX excludes managed of our above-average impact be and In we through quarter, expansion environment Diluted These this, and full these fourth $X.XX complex dilution increasingly and brand line organic to top range dilution X% expect With an approximately is XX expected This sales to of Despite meaningfully neutral. year X% points backdrop with currency margin to and translation growth, from EPS extremely net grow DECIEM, inclusion for and EPS DECIEM. constant This from restructuring $X.XX in primarily

to through And your concludes this happy be when can accelerated well prepared manage the prepared take ease. remarks. at to that temporary and We'll headwinds we time. questions that our pandemic present momentum effects continue confident are We the for be

Operator

Lauren [Operator from from Instructions] Lieberman comes Our Barclays. first question today

is line open. now Your

Lauren Lieberman

if get in of half like retail, inventory guess, you're a the to quarter. I the for about currently dynamic Tracey, on-the-ground thinking to hoping bit visibility, will, that, China how more little and for you just the first

trying stock? sites able order Because So fourth Or store, be the and of comment, is trying to if a way Shanghai I Am to or store, you saw go I'm to piece an does that's I'm Tracey, of the of of and knowing e-commerce is quarter? for but see the If there you'd what pieces caught online? I a that I assuming place half to were first up, by on to together you're together the say inventory? any the put in I quarter outlook. do now? that for those it out that go just out, kind X.XX constrained to

Tracey Travis

weeks We some SKU, it to chain. had right? difficulties to for So we we've have we as certainly relates disruptions consumers. your the several on had depends product do -- had And really inventory point, now shipping But have the to have trade. in certainly it last supply

at So the that we on than what things in some in in -- haven't cases, would. believe And hearing that it's right it's it's up the cases, the able uncertain to taking ship other mid-May, ground normally open based might longer we're been that market but We some it all. of on very now.

mid-May. So the we obviously catch-up. fourth put be relates together our in open will then our And had And quarter. that will up as a start assumptions it there to assumptions to to things assume

we So matter China it out around have product to a the getting customers and It's of distribution obviously, center it then to getting in X.XX. time. and in our for do

Operator

Steve from of Bank. Your comes from Deutsche next question the Powers line

now open. is line Your

Steve Powers

on but talk as on which is the but X-year deceleration little China, we and a about Americas. you is be believe, the to a from I'm X% X% came sure in it with reversal of levels, -- fiscal negative CAGR the in That's I that questions obviously half is averaging a year. And called strong, a first negative expectations. addition below versus local DECIEM. what I pre-pandemic our wanted actually there more currency bit there'll out, was Growth basis, the of growth, saw

in the year. to caused just perspective about calendar recovery more the saw balance over may multiyear half what growth fluctuation think progression you're we bit versus little the in on what just I a how that viewing and of how Americas, want first the in So have third the the quarter

Fabrizio Freda

quarter is quarter North brands, vary business plus actually, months sales in of last of a our is presence or and XX% plus in the holidays presence three. a we XX in sure. cetera. and XX% may accelerating actually the America by good trend. et for But No, had thing, very general, innovations, Yes, serious believe Obviously, including we specific in

number If number in overall Bobbi Ordinary, see ranking M-A-C, quarter M-A-C that brand, is one one Tom makeup, they're you in share. Brown, three, growing Clinique Ford, The all

executing doing -- are the U.S. groups. of covering multi-ethnic are We better strategy we well all consumer

have in online We improved now. mix, more high-growth, focused during particularly areas penetration on general, is now high-profit distribution it our COVID, which are we our maintaining have improved we and

hit reestablished have brick-and-mortar XX doors. number We heavily COVID, store productivity, department strong closing was stores exiting freestanding which by and closing also of a

successfully are doors, rolling the new the Target, to Ulta are We by the reach Sephora consumers. way called new proving out which

We performance brands which that overall America frankly, size in are North of have Clinique M-A-C two are, key business, and growth. driving a the stronger the the

We in three. have some strong quarter innovation successes

faster is mass pace I so far also which Clinique, particularly mass, And like which which proving where is For remarks, with consumers, in the mentioned prestige like our pricing extraordinary had that are recovery prestige Ordinary. market into underline, back exactly like we from an in The been success. Macstack, new prepared example, would a has sourcing M-A-C, we than much brands we are entry

ever speaking first -- top sold. which units in direct-to-consumer U.S. care, past. on distribution, the the consumer the the skin our an number store media The We partners one-third of Ordinary more many also is activities, understanding certain data, model fourth America fourth is where and on in really, we give activity, a online of And brands and consumer about of brand.com North extraordinary added now in DECIEM lot already with prestige direct and acquisitions social in ranking data in which including they're of which freestanding retail business that position had in Brand, us with is

in reshaping and our North a it's of So future business much is believe we strong most today of as development that and platform continued condition continued the our market America stronger growth more in is for well. brands share of years been

very forward. are strong team, very and in which today motivated the is our action we North America So positive business of trend proud a also driving and having of and is which

Operator

RBC Your next Nik question from comes Modi from Capital. of line the

now Your open. line is

Nik Modi

For I pressure. the an was retail, because, the I wanted like improved to pandemic, a prior but the a now, M-A-C It if assessment in things if brand the guess, and seems to in lift of U.S. better under a there's lot get on maybe are know of overall I mobility looking underlying didn't or an brand. makeup just category that's function improvement of that fundamentals

frame If you help the be just kind situation would us, for that helpful. could of

Fabrizio Freda

Yes.

interpreting to M-A-C makeup is is, and a COVID the back renaissance, category the important coming education as we personalities, user back, the think flourishing general, joy yourself. up recovery mentioned, extent. trend prepared mood, they vacations, of first with back parties, in all, it's also of strong really category interpreting is is And makeup back entire retreating coming at gradually a in to is to user I the meaning I the educations remarks, of I seen what coming is certain least in back, working. This back the have during all meaning to we as restaurants, with office, explained makeup call linked basically again. to Plus, back what the that to

So a has developed benefited and from most has positive in sense several category. months, of recovery the COVID last the been this

the in in is three. So the prestige market quarter M-A-C leader

overall obviously, And it's so benefiting category recovery. of the

a has made choices. now mix in distribution the Second, distribution, important brand has better

artist in have the but builds on Macstack, your an that's artistry, been core new back, on always looks at the ultimate different which innovation and lashes and build to innovation is core much, the performance deal. different this been multi-ethnic new makeup consumers to innovation market in allowing the meaning refocusing answering idea, which the a and not ways. extraordinary The of makeup been leading long in well, also mascara. where taste, values which is ideas is interpretation as has already And consumer product and stacks, North how is mascara R&D, is, reaching well which the other to consumers which or customization how brand locations, innovation so far fresh in and is of frankly, new so it has only ability the style, any power in a so consumers mascara close big in creative core M-A-C, which on technical is America and brand, of fast to a like better, it's is so That's speak the So a ability always in the M-A-C launched.

strong work team a our recovery M-A-C the in of there. So of is and very trend, proud we are

Operator

Your comes next Dara from Stanley. of from question Morgan Mohsenian the line

Your line is now open.

Dara Mohsenian

board. more restrictions the returning plans a top short-term your risk or sounds Tracey just issues can mid-May. contingency longer a, but you then based you do set, chain demand just not holidays peer the if if the just the meet detail-wise, So hopefully, it more assuming on of like term, detail so it there? in some can you get up But the on? that's commentary in if restrictions far, could reconfigure you that's chain line issue be for And of versus a maybe comfortable the open supply sounds June continue? question it Fabrizio, some it's chain of end supply that product like, an Shanghai to supply profitability up outsized to to just across obviously, the being have the competitor touched case, discuss Are bit Is more case China,

China longer-term retailer how or think share to and about implications Just in any you relationships that? your

Tracey Travis

start. the Dara, going things that are so There on quarter fourth are two in I'll impacting us. Yes,

to right China there in management also pandemic a now, in slowdown Hainan. the is Given traffic

specifically well travel Hainan along in so being quarter, the retail And as is impacted China. with fourth

online, the saw distribution fourth the in we do when quarter expenses, As traffic our change. in quarter our back and would we assumptions and be same pulled to if prepared in third slowed on you the

The other a do hopefully, is pressure Shanghai we our distribution most thing looking that on to of are mitigate outside is the area center that of the and affected have some campus. temporary we'll

that up some things our of -- encouraged a it's if this that the the estimate of and planning we've the of terms could terms the market deliver so of QX. if seen not quite B, we volatile, situation May. cases are of as open in signs down. this heard in in are we by those the at So the is will, do that But plan coming But we have what we're does Dara, you best in or middle of time some recent couple to

Fabrizio Freda

Yes. your asked And question you on relationships. -- on about retailer

China the are market develop and in We for to to long term partners completely serve continue dedicated there. our the and

relevant to and R&D event a the We very needs us this determination are to is market. COVID our going which to will a of specific in we proceed. very to are long-term be big open obviously, And the of serving going restrictions as manifestation continue allow to soon China, locally and center soon as do

days So want more moment underlining double COVID restrictions comes a -- this And thing of the consumer other from XX% really grew sales. that of China where I the is ship it's We hands, demand strong. retailers we and and XX last consumers that existing clarify than to Tracey multichannel the That's explained both it mainland what online now in our orders. the the three quarter We in we orders not point. digit from could online. couldn't already in had March, ship that key of despite

so in that's the and past, to during in And happens pandemic in this Europe temporary the lockdowns. the us States, United obviously,

quarter know when about despite that share of market happens, March strong And had was very, strong XX% we the three It's to a but this to a until it's how this very Hainan March. mid-March, So know to that, and changed access dramatically online finishes not But because February. XX% how serve Hainan very we online, we we consumers. in in short rebounds second of second had a consumer very in has store how half period time. very April, inability in is And then the saw despite of the this consumers Hainan. and traffic reduction decline about demand. works of traffic. XX% in strong, was the which part estimate strong also grew in We to

that what very can and seen domestically quarter very very back also, because in also is the finish, our that's happily. restrictions be bounce people fast four. So have we historically strong when reflected But travel these

which because confidence areas having in also expanding was April are are And There of impacted everywhere, marketing of place activations. unchanged, increased and lot, many future there mid-March are really not incredible is so actually was and was together where the in and development -- now a so the the center. is restrictions. given with month the It with very as making. the the in Hainan continuous strong as Brick-and-mortar digital good discussed And of entire confidence expansion was we in -- online was but Tmall, that's JD, where distribution the also with Shanghai, the have the TikTok were things, we during most we impacted the into online within with success restrictions. definitely other the so

a we activity. will making also, expectation temporary. period, competition, in temporary speak which growth skin distribution be assuming I getting But centers expanded but for supply in moment, to, we and market The logistics also mega planned seen this as a never we little So retail, more -- said, there the is market fiscal more for example, to in up for it's any high-end needs more also productive will beyond with expansion The but that investment has permit, are as tailor bigger restrictions category. of discount the deploy, X.XX, as 'XX And that to Tmall in we additional economic cities to the of the of Obviously, will for expansion very we to plans be And about percentage restriction will the as XXXX in in the and obviously, permissions in as the invest level in but coverage the we to China prestige because that of the been of businesses of allow. and more invest global beauty in profitable clarified. in be country. to resolved, further in look I should much strongly. fragrances rebound brick-and-mortar us, that are be personally there already in China XX new in story. want Tracey fundamental access year alluded consumptions we remains care, diversified clarify the underline for When in because for opportunity. as regional fragrance the had are There development already soon Actually, I opportunities, very, the will makeup, spoke There want that is in but expanded. it's have July-September strong. the world the will -- we traffic. a there coming the online, other we'll we more long-term the partner that the Hainan enthusiastic The that diversification for certain of growth very fragrances in also develop good. further stimulus further be counters the is retail our and the that Tracey pretty U.S. coming total in about hear category I can extraordinarily China in -- region coverage much consumers we China, will are more more is the have Also, more strongest likely have meantime, because than ahead has to rebounds new chain center. continue productive to in will brands the the also will travel travel months. the be will in next XX Hainan the not to innovation country only

want in our businesses. TR just restrictions. really I as China remain and to absolutely determined underline, be clear I possible that we hope was we But objective to trying to continue So as it COVID are prudent the to reflecting and China build

Operator

J.P. Morgan. Your next question comes from the line of Andrea Teixeira from

now open. Your line is

Andrea Teixeira

you're when able when to. to fulfill mentioned you that Fabrizio, you're comfortable

the of orders was was front I for point were XXX in to that volumes think, a in pricing a of see growth. pricing Tracey's And your online quarter. clarification organic the the hoping just impact on on also made impact basis So what with, China comments I in

impact. a relative on growing I all assuming impact hoping the negative those. hear a less -- carryover So into the rollover you in the selling on the given is the was quarter basis, mix you're of that fourth you're to I'm skincare. what mix share less was Hope and

Tracey Travis

So We let a Andrea, with really beginning year. X.X% of pricing taking And My for in take started typically, we second of was increase. our our of January. second did points start, XXX half the at increases year pricing the most year. the We the me of price basis the fiscal pricing. take increase

of to, year additional second -- impact pricing pricing. half our our expect beginning our year-over-year take upcoming And So X% for in fiscal relative prior the year. to we is the upcoming in July,

is that strategic and -- within pricing categories. tiers the of So our levels between

take inflation market, or lower brands. price skincare much It's what yes, a higher very there's that increases. lower-priced would So take skincare pricing, our pricing the care model for higher-priced various determine might the to dependent our price we sophisticated use the skin currency, on very

will will skincare on we've we the are the do that experiencing quarter. still increases pricing that yes, the at the lower expect they that fourth So in and cover have would taken sales we But be we average, around inflation moment. X%,

Fabrizio Freda

you of tell XX question, we days the in quarter. the first X.X much when March But the for can had I growth part the had, brick-and-mortar. we Frankly, we online we of couldn't your that ship. versus hands how where did cannot which ship distinguish XX, And the the is ship of our not answering quarter I could moment for in that of the points orders not order we entire as the

was of And you in traffic importantly, the March. in May Mainland TR then mainly amount we shipments. that substantial also the a despite there the had pandemic beginning quarter the had of capacity strong shipments. see, while of limited April China also reflected also, second three a was So less the impact part the quarter of And in very and impact, numbers

ended of traffic than up four expectation, is of our assumptions. is, quarter the in the there in is Hainan somehow higher proportion stocks bigger reduced the China. in with So a impact in impact there frankly, an And then

high very given And the to very detailed assumptions level this so a bit you situation, frankly, interpret in also a in volatility. that's give maybe light difficult our more on

Operator

next from America. comes Bryan the question of of Bank from Your Spillane line

is line Your now open.

Bryan Spillane

the an we've expectation of in stimulus you or the not the Q&A, the whether in any China. some to was maybe feeling that the And guess all softness Fabrizio, in one you've that recession slowing impact or the or the seen consumer got of this mentioned prepared of there questions remarks could China I risk. in economy be is morning maybe just connected

in or you touch any or in on can of you've So impact consumer economy just a terms any demand slowing just sort China? not on behavior little of bit that on based whether seen patterns the

Fabrizio Freda

No.

we started look at I you only because because, are since when area, robust, remained the moment can -- you this since traveling also when in not to in and the not seeing need Chinese global the at started this said, any as demand far, -- demand COVID less. in So impact internationally look demand mainly, China

moments growing you solid if has but the the China need market before, see been in very growing But quarter and China like all very, brick-and-mortar online, industry, in it the in for to Hainan. look China, the and online our growth. very, in results You it see very three with you consumption put Hainan only I by us, China soft said three we total and been the combination certain put Chinese at competition has share were moment. in at without may as channel, for you demand -- patterns when you Mainland very brick-and-mortar in together of these together strong, the The even together, or When and results the you digit different look general. you double Mainland for only look

not important thing is this composition. also the that changing other to clarify in The

this the the brands. in is luxury demand moment segment example, high-end most For China in important

our brands high-end the within brand. the portfolio in competitive like Renotriv, a Mer our which portfolio brand our the is performance or part within of Ford La Tom So both portfolio, Lauder, like or in or of

the doesn't stimulus in in luxury suggests than other So and economic is that moment. and are for consumers Said of high doing more obviously lot than This lower and worried trust also, of of in more in are restarting is this, high a looking This economic strong this experiences by possibilities there part. economy. everywhere, is a the the any consumers stronger better this suggest expectation possibility part the actually development. performance in growth there the the economic moment, but

solid. that believe overall still sentiment is consumer the I So

Operator

Your line next comes Sandler. question of Korinne from Piper from the Wolfmeyer

line now Your open. is

Korinne Wolfmeyer

expanding here the Kind affect that of consumer question beauty both developments a broadly We've APAC? changed start weeks. as little your in resiliency have to more few viewpoint macro-wise geographically get numbers the a on consumer-centric the bit depressed category impacted more and prestige these U.S. EMEA on on in recent of last kind viewpoint over in sentiment or of broadly. seen How and or past your the

viewing you're how resiliency wondering beauty just So the prestige of these in market dynamics.

Fabrizio Freda

different the obviously, -- No. region. have by say see of the to consumer sentiment, development Yes. level that a we I

U.S. in the So all, very first consumer the the solid. And is sentiment U.S., interesting. is of

prestige more. the in economic interest coming is of yourself consumer actually in the is You can overall is positive pleasure, what is which center But to joy the sign feel and mass. positive accelerate the consumer also standpoint. than And continues in at and pampering are The from post-COVID by a consumers yourself, quality, the in more prestige this to move for necessarily mean to also sense accelerate what confidence prestige back sentiment. interest economy. Again, you in than environment, periods a much that growing, positive self-pampering and this sentiment are for they growing that a to for is only better the the sentiment a by the explained much more. a go And in least the -- difficult read the dedicating And feel that beauty to for but sign. to to very out see trust the necessarily connected rather faster grow They is consumer Positive performance, of and a consumer feelings, consumer long-term trends. both doesn't channel. to by to results the go sorry, experience the

in world. sentiment pampering one so pushed And of consumer stress is needs. in this prestige is because the general even stronger more is there sometimes sentiment And that the around consumer movement high beauty that

in So other China, recovering U.S., only believe in like better can -- many U.K., Japan, I pleasure sentiment. of it's where Europe, strong Singapore, markets there in around a and tough obviously pressure second, mention war in is a Asia, a going like sorry, not because pandemic feeling in the still which getting Europe But the very also like the COVID markets solid creating Korea, like The you period. in markets bad sentiment, all Japan, from economical like you other the is is know, Ukraine out because a is as results the are area as consumer people. down in of

very there The this. the difficult a environment. and sentiment the consumer that's way, this that also this was element the business very, only create much mixed sad And consumer economic, need of it is the but solid, themselves, this suggest so moment By But in in take very is in of remains people beauty in at sentiment Europe. a of care suggesting themselves to how the area they sentiment, I numbers mix feel where is the terms external prestige are how they to the like the pamper number what which is not explaining, world, pressure business.

than many of is markets. these more situations So in to other beauty prestige kind that sense, resilient

Tracey Travis

picked to so tampering Fabrizio's And the prestige that even point of care. the self during up, add we've terms only and category this to time as I thing hair is would in commented, has fragrance

in of seeing are during recovery. in categories we're the some acceleration an in markets that this So prestige actually time, particularly

is really we're the this quarter. into that experiencing So a and temporary now situation fourth

we meet our sure them the them so. to And to working looking they as obviously, consumers our they that of as really are get them the the can to under best them been demand who in team incredibly products, are that all can we in diligently are and to make to we'll they're ground doing staying these as get get soon circumstances that can place for China in and has healthy. the thankful restrictions product respecting things on of China to consumers, Our for try

Operator

one We question. last have for time

comes question from Dana Telsey Telsey from line Your last the Advisory of Group.

is line Your now open.

Dana Telsey

you then releases? any at product skincare of new you're makeup what relationships product about going you recovering strongly is at And and As skincare, are the your new terms think the forward in Target and and looking for what categories expansion as makeup of expansion seeing of there? so Ulta

Fabrizio Freda

with will including very of Skincare develop. skincare the growth one of important, the very basically makeup instant consumers that on skinification many key benefit. in happening and category anti-aging what's care. hair in key the category, is is And anti-aging, the a numbers skincare benefits top of also Actually, is in are continue skincare broad past sure. sense of particularly entering is to remain happening mature Yes, categories, of in the instant Today, is more thing interest what's growth where only about the area. about is than increasing. happening in The that trends

know, don't I brightness different many I tone, luminosity, benefit, mean, to skin even the how and benefits in so day. looks instant linked For are are that today skin the there

it time. You use over rather than just

there industry category area. groups the And is On among the penetration benefits. this and instant the skin so penetration to linked target are of also increasing target around occasions top of better are basically user the providing of benefits amazing is groups care and technology more reason, younger usage different that, great that bigger, world. is more And more and some the some progress is there in

in in we strong very Asia a in term. long frankly, skincare in have So and particularly the view very positive Obviously, is skincare China.

situation. this, And growth now, the long-term will is the like moment explained of trend strong of remains in less strong. in skincare, China But restrictions a so have temporary as but we skincare in you see again, entire

America. In Target, it's consumers. But but of pretty North most bringing Sephora are results the the terms only and of situation we points These of for Kohl of Kohl’s important moment for is the happy Target -- yes, the quarter growth the Ulta total, in initial there. news and -- new of Target and that call’s accounted stores, X

the new So those of is give doing and in very consumers. extra this are spaces well a these consumers, and to us our brands lot access with possibility

So journey. in beginning direction, good this the also but the trend of only right is it's a the

Operator

That concludes today's and question-and-answer session. today's conference

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

The Estée Lauder Companies Inc. (EL) 3 May 222022 Q3 Earnings call transcript