- Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone and welcome to the Estée Lauder Company’s Fiscal 2023 First 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 the 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 cause with statements. the Since forward-looking where these you press remarks forward-looking our factors SEC, to and refer that differ find let from could release filed many our results you reports today our will to actual of statements, contain materially business, and the expectations To charges commentary our our facilitate the in and restructuring discussion financial disclosed is adjustments underlying before release. other of and results press on our stated, Unless translation. the closures acquisitions, organic and otherwise impacts brand all excludes net sales divestitures, currency non-comparable growth the of impact of

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

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

Fabrizio Freda

notably pressure, this heightened management Asia the of for we world in retailers travel partially Rainey developed inventory in strong our hello the in China, spoke our most be we It growth you strategy we quarter. everyone. emerging fiscal headwinds the and with U.S. opportunities. some external To restrictions reducing and empower dollar to complexity, to China and and us to organic prolonged reflect domestic significantly. is the many seize our impact of the engines as expected. conditions, markets Amid are Since to for multiple higher growth realized retail XXXX, outlook intensified well outstanding increased mid-August, in Even outlook diluted than globally a COVID-XX inflation sales, second Indeed, good line restrictions today. high year performance as the down tighter EPS prevailing of in U.S. in delivered you, offset and adjusted X%, with and we in around these COVID-XX Thank by

While primary in three are discuss outlook Tracey our revised will there detail, drivers.

first of anticipated, Asia travel The return what restrictions restriction the retail, retailers tourism slower are COVID-XX particularly in The to versus ongoing leading tightening a of had of is Hainan. resulting inventories. in impact

is it near-term not destination significant, diminish among the deep as does is for this in our the While Hainan for pause temporary acquisition. new it brand-building best consumers’ conviction long-term

second robust headwinds, driver from sales U.S. the retailers The third first underlying and in the U.S. of is evidenced our is in growth. stronger is And in quarter consumer results which some far demand markets are by fundamentals these retail the beyond Encouragingly, of the tightening pandemic, emerging inventory the dollar. the

opportunities our optimism brands for the Our in long-term prestige intact. and is beauty growth for

brands, into plan investing prestige share. innovation, entry including strategic countries our fiscal advertising, reach continue and year in new XXXX, During we grow profitable beauty consumer expanded to for to

expect year We to low the organic of XXXX. in improvement on adjusted reported high-teens half second basis and growth double-digit EPS sales growth a fiscal a gradual sequential

and builds the these other areas drive As momentum to business our ongoing our begin in abate, pressures investments of growth.

quarter. from now me our share some first insights Let

many strongly, while in Japan organic second world. the and alongside the in organic delivered sequentially in the just we brick-and-mortar. better with that Brick-and-mortar down markets As improving online, a name markets to consumers prospered we bright many activations around and beyond. of by and we newness. UK trends also We these Domestic growth had realized spots give few. Thailand, us single-digits and Brazil, a growth welcome half China services, East sales sales driven headwinds, engaging Middle high-touch had as performance India, in excellent the emerging confidence grew developed double-digit and large

Brown, Bobbi to brand, online Tom Aveda and among others. Our Mer contributed Beauty, Ford as La luxury and growth did

grew In high-touch led capabilities it encouraged of We Beauty Malone the or and a Sephora share. greater the artistry at enhanced the are freestanding enhanced as retail China to M·A·C accelerated, and well, demand U.S., expanded Bobbi Jo channel, Labo. for our services, terrific also Clinique, M·A·C by perspective beauty omnichannel London sales traditional Douyin. gain store both benefiting we in at as stores and on performed twice in and of from especially Kohl’s. online and Target at growth. our From by personalization results Ulta the reach and be very nearly consumer at Brown Le by Specialty-multi JD partnership fast our prestige powered

Beauty Ulta and in M·A·C presence. results are excellent further last the Brown Bobbi year, over Given expanding their

the to despite granular the see investing market growth freestanding and beauty brands the strong the evidenced its prestige We in delivered continue promise sales recession remain and consumer U.S., in in stores in opportunities. best to our retail advertising to capture in We and we specialty-multi. growth strategies performance aim committed as innovation, risk overall acquisition

organically luxury collectively Mer luxury Paris hair and brands sought-after transparency. Labo, to half Malle every sales. all organically, represent our Frédéric high Editions ingredient with globally. increasing Malone while Jo The brand, portfolio Jo in brands KILIAN London in from Malone rose organic authenticity as XX, our La at rose over makeup, in care, driven Tom consumers Aveda the newest strength and sales and Fragrance and innovative care, to our Ordinary, strength. excelled innovation Beauty, expanded artisanal Parfums to de Looking XX an its in region. M·A·C XX% evolves heroes and and appeal skin approach of Among single-digit Ford fragrance contributed, Le London, to outstanding by in

the fueled entry Diamond Southeast abate. was momentum Slim campaign its across a the Lauder, of Jart luxury brands high cream, Asia, as for Ulta XXX-degree a Collection. the future mascara. developed travel Brown standout in supply and in the skin Clinical still the Bobbi unparalleled Estée growth by issues makeup and M·A·C as XXX Collection coveted glass contributed growth. of and Smart most the Night brands The Ordinary higher Japan gains creatively of launched along overall La pressures several fragrance U.S. Brand We in as India newness English America, the growth. The further results the through & for with benefit new Powder complemented evidence despite power Korea. the strongly Innovation Southeast well creative the in by transformative to and last Day, componentry challenges headwinds, demand Malone Re-Nutriv year. and In diverse serum credentials double-digit also from Asia Latin catalyst pivot as as most a realized remarkable Latin marketing gains Demand be growth Mer, growing U.S., the end Clinique and increasingly Freesia did engines. constraints as emerging grew for packaging the in brand’s M·A·CStack while in to contributed of In lipstick expansions For resonated improved had showcase momentum strong as were evident campaign. the strategic reopened results, highly Repair Bumble a resonated China, the launch our In its well skin to finish to driving boosted Mainland its quarter, franchise. care campaign scientific example, were into Blur further In currency Stick and Kiss at for over Origins grew hair innovation Lazada’s the M·A·C’s makeup powerful recovery. entry featuring Pear this its and pressured to a hero striking Makeup reimagining transitory proved still served both across was Re-Nutriv realized in balanced world, thrilled growth brands in Macy’s. our Lauder category. franchise the brilliant edition limited stronger strong the new Super Dr. leveraged America significant care, Europe, beautifully passion new popular acquisition Innovation regimens captivating, from the Velvet Profitability significant Estée the Clinique Target prospered. traffic bumble ongoing oriented reduced single-digits in marking fueling America elevated gained new from China, in renaissance and brand of Beauty to category and marketing organic Brit claims. sales Hair organically. while TikTok was activations and the on retail and continued volume launch in also the sought-after double-digit around Middle driven regions. artistry sales serum from especially in luxury. The care In by had broad-based with Aveda content prestige China, consumers. as and China East, consumer especially for organically for strategy, and even brilliantly Jo growth to Latin Smart markets these Ultimate care, benefits to derived was for Consumer when of moisturizer three embraced products, recruit also creators and the growth. markets Western which London’s the these fragrance prestige from eye which and market gains was evolved China, heroes and in the bodes market. excellent Globally,

across to pleased also that reduction responsible goals by vehicles, report previously we year employees our progress, XXXX stated share electric features and possible of efforts made for will am fiscal the focus exciting our world sustainability I today close, areas I water and sourcing. extraordinary details goals. and It social The report. of Before release also impact around new ESG our the

taking women in I which report. racial external progress current many. last well are equity also and pressures more are we as the commitment In discussed advancement conclusion, to Finally, to reflected actions earnings on the few as were the make in gender our calls, equality,

distribution advancing look success year be to long-term Balmain leveraging alone, aim of progress strategy another the fashion on we deal long-term and to China. We our Aveda house. we confident match extended remain announced diversifying consumer on into productive the fully strategy, across launch new high-growth continue regions luxury ahead, and engines set our XXXX brands reach focus quarter in channels the in stage to couture prestige to our strategically In multiple balancing growth first with further as Beauty of in portfolio, expand year fiscal countries and we the create beauty. despite the with expand our promise having for our in domestic headwinds. We However, our a to

with welcome our skin for my production deepest near create care innovation labs amplifying close Chinese Tokyo. for colleagues commitment into environment. facility their also would amid We our the our ability began to new the in Shanghai, to for exceptional manufacturing limited the employees complexity thanks we best like consumer. in our China I And to new of

the I wisdom creativity, passion Thank turn Tracey. you. beyond and are will And call to over Your compare. now

Tracey Travis

hello everyone. Thank you, Fabrizio and

Our incremental them even quarter. sales organic in sales quarter our earnings X% first were share expectations share, per and exceeded net Net was earnings with in line $X.XX. declined per and the with headwinds

sales as be COVID negatively impacted met anticipated the August, different sales the the of and lifted. of outlook improvement gradual our expected. quarter China half mix While fiscal that by was first we year continued in In would our expectations, first restrictions Hainan, overall restrictions with throughout than sales

they first of impact modest, as were pace a reopen, closed in shipments However, quite quarter. lower quarter anticipation recovery. due the slower anticipated on greater most resulted of the our to as in of stores which we remained traffic sales for Hainan And was than the

reflected also tightening and concerns to year to outlook inventory retailers in the concerns of due our certain shipments by Our year this the supply retailers U.S. to due stark slower the traffic. contrast prior in the secured comparison earlier chains to about for holiday when of

retail with East year to Middle even EMEA year. region’s the management currency and of net faster impact reflect locations sales the the Asia-Pacific continued due travel markets of organic the prior declined in somewhat of Americas APAC, well as double-digits, Our actions These timing grew X%. in From by the to America, the U.S. prior pace fueled the the of geographic retailers including makeup. our all in and pricing in offset certain Latin primarily in results this recovery year headwinds contributed quarter the by other Europe, in well Africa organic July primarily of a challenges retail travel recovery in X%, In additional In net and reflecting of X sales the strong as points transactions shipments inventory the strategic actual international for region, The were tighter-than-expected overall nearly of percentage and growth. the shipments inventory in timing declined tightening we from X%, key negative of foreign in standpoint, August. as U.S. parts as benefit took a

demand travel growth brick-and-mortar. offset Greater by Korea, was East retail Americas markets fell double-digit rose The due most and of support resulted and Our Dr. travel of shipments Asia-Pacific the with of from to Organic rest and as XX%. led to markets Japan. to in double-digits and returned in brands perspective, United growth EMEA, the Korea. from net growth ongoing inventory the organic travel sales decline COVID in our personal From has and and certain the Kingdom consumer delivered global curtailed and India, for in net triple and the X% than fragrance business. brands retailers. drove of by restrictions the the were Strong stores. the and we a Malaysia increasing with by in in China in brick-and-mortar region slow European increased markets Middle many Turkey by restrictions net stricter from tourism Elsewhere in all to retail growth lifting in double-digit respectively in sales rising and category region Thailand, travel Net return, restrictions double-digit Conversely, the travel in growth. and for traffic resumption Many led with in the impacting sales in continued boosted recover Jart’s more return resulting our nearly sales ongoing growth, sales In closed lifted the The COVID Hainan. as region innovation region been drove retail restrictions professional Stores to COVID the declined led as traffic growth management travel. Ordinary. of retail business China sales in lower there strong quarter

and to winning with strong product rose Clinique led Clinique Labo. Malone thrive Ford franchise. luxury Tom Our Jo Net Beauty, artisanal by from the regions Le brands London and continue all sales Happy double-digits, across

an net led year as to the hair COVID hero rose by for comparison the China Middle in Europe, of top the Color by of M·A·C from organically. M·A·C, declined hero performance due and the to restrictions Brown shipments Bobbi be Control and rose products of as XX%. lips the growth strong Asia by a sales EMEA Net net majority and the most Southeast in sales period double-digit strong and Estée has from foundation, timing net growth for by to across driven innovation, line. X% where XX% eye Lauder. of business. strong Our our the to due emerging care This driven sales skin launch products skin overall driven the impacted care holiday in the care category East and success of restrictions continues been the including subcategories. in makeup Aveda Organic Africa, and Organic the difficult innovation strong declined in both in U.S. Hainan, in well performer a the prior sales COVID double-digits in accounts category markets product

and more gross declined last licenses than strategic as to margin million, due $X.XX The to XX% XXX declined foreign as key in impacts diluted EPS inflationary our a exit effective transactions XXX quarter. cost prior income X% respectively. and the first margin of to result of the the slightly were increased our sales. of promotional supply driven basis Our compared expenses items the points contracted impacted X%, higher retail compared operating expected and year, currency in XXX by points decreased XX% of from reduction by designer year. a offset by from The $XXX EPS and management. Operating to XX% better Operating Diluted the points costs positive in locations percent to in chain. travel basis negatively impacts sales than certain pricing basis quarter pressures

due cash timing expansion. morning, reflecting in both lower online million the quarter, inventory to invested $XXX payments During $XXX capital, additionally, well announced activities, We $XXX increased levels as to stockholders and distribution capabilities quarterly primarily net utilized of capital in we XX% the working a and income. operating and expenditures flows as And million net million for improvements, dividends We we from cash in our share repurchases. chain through supply in returned higher this increase dividend.

results we delivered one we quarter anticipated. again, So as our overall

our to the for of remainder turn fiscal let’s Now XXXX. outlook

speed largely and of recovery pandemic While uncertain. we from that apparent stabilization currency the challenges the first inflation the are also believe that it and the is quarter headwinds both timing of are our results impacted both and temporary,

continue in this to to as expect happens, we have Until As China. retail Hainan, the these potentially Hainan with ease restrictions further of recovery were quarter, believe half inventory consumers our the expected our our shipments prepared to will of retailers faster adjustment more safety result particularly restrictions second second to we COVID of the environment. modified retailers in areas. line the corresponding to travel island lower by ongoing with inventory and for a be sales begin certain slower levels although products, And in in to in with into we traffic, traffic lower their that in net with in restrictions less are subside adjustment the

the inventory retail. U.S. management demand at We the also the strong given to products tighter abate our still in anticipate in the half for second

and areas expect we pressured sales, consumer through as confident our the as net business capacity, of to reach to first the investments Despite new of strategy remain sustain some for to entry we these We our half strategic long-term expect our advertising, remainder of into drive consumer profitable the and headwinds plan in well innovation, uncertainties. to of be We invest new to navigate continue our continued performance production as the growth. brands. in to strength countries engagement

half, travel lifted, second retail anticipate and including progressively we travel of trends resumes Asia Hainan, in the For in inventory the tightening restrictions and sequentially are to throughout the Greater as improve China, U.S. subsides

We to Asia/Pacific reported the continued the in drag be also the Currency for and as in expect strengthen and is quarter of dollar recovery currencies. against has markets U.S. year. significant on continued projected balance our second various to results for the the rapidly a EMEA year full in key

we Both speed of higher-than-normal strategic inflation, pricing experienced we the with movements year. and currency entered far, suppressed inflation. the took balance further XXXX, to the expectations of magnitude have As mitigate for fiscal thus combined our

Specifically, Chinese based to on growth mid-October spot year. for continue won, the currency the rates sales reported for and for of quarter negatively full the yuan for for EPS diluted second the for pound, is the X.XXX and anticipated XX.XX impact X.XXX euro, to X.XX the Korean translation and

fall We X with by travel in dilute reported from an foreign sales XX% continued reflecting translation expect growth tightening X and for in our the X dilutive net primarily of retailers certain certain points approximately tightening of X%, locations. Hainan, expected to leading by is additional organic be to impact to to in exits impact disruption international U.S. quarter by inventory license continued sales further key to to to the transactions point. are reported second certain inventory points Currency expected designer risk of The of of currency sales due the

is locations XX%. XX%. certain $X.XX EPS XX% points. We travel $X.XX the translation of from Currency dilutive that expected international impact EPS to forward, and of to XX% between constant to in X second negative This expected be foreign transactions adjusted adjusted is expect percentage EPS includes decline to by key to $X.XX approximately between such decline retail currency quarter currency a

dilute X%. we translation from X foreign activities impacts to up other dilute additional full The is currency approximately retail growth in certain each and year, by the key transactions from to X Currency organic sales percentage full by are expect with travel we For locations. designer license restructuring the points sales flat expected growth growth range impact expected fiscal to from the of year international reported of and certain and an associated point. sales exits points, X returns dilution reported of expect to for

to we priority Despite invest our growth brands We point effective plan engines remain remarks. to XX.X%, to in approximately expect We travel foreign impacts the XXX our to $X.XX in approximately translation. of expected approximately about continue the the a full points. mix currency, period, full and XX% our of the EPS impact from global negative constant excess between currency XX to our selectively of expect gain XX%, locations basis geographical areas profitable expect the and In our sales, between This and share-based previously dilution prestige and of Diluted year concludes benefit currency foreign year EPS includes strategic in now temporary challenges, and year from XX%, rate to prepared other contraction confident international be related In the be $X.XX change approximately the closing, key and currency prior geographical the to now primarily into mix mentioned. investments to globally. transactions fall retail earnings less strategic for up amazing estimated reflecting and to charges. from growth of tax from to due multiple we That operating restructuring future percentage beauty prospects share strategy. ongoing of which tax external long-term and I includes before we $X.XX range support margin compensation. benefits is to

We questions time. will Question-and-Answer take at be happy your Session to this

Operator

Instructions] ahead. you. will Morgan And Dara come [Operator go question from today Thank Please our Stanley. Mohsenian with first

Dara Mohsenian

good morning. Hey,

Fabrizio Freda

Dara. morning, Good

Dara Mohsenian

year fiscal demand So underlying organic sounded but obviously, How your growth about terms for pretty large are expectations cut a enthusiastic for retail top to of still in in you today, sales line the you? comments.

from greater inventory on more terms in to macro temporary top guidance line ‘XX issues a of more also how to much what more might extend the versus etcetera? line your fiscal of degradation how you related regard revision. talked give highlighted much just the the the those revision just to be us much you top of know pressure, helpful can So the reasons COVID in versus each is of a in or driving detail second It’d issues primary demand is underlying related buckets as bucket terms ‘XX of Is ask view ‘XX How question longer-term? to temporary? earnings? greater And then it’s more And your similar of prior market can in sort about I just that respond is you’ve flexibility conditions. to ad which that recently, asked I relation agility in to to spend earnings

Just understand trying how what plays into and beyond year seeing to year? that of this we’re earnings sort this outlook the longer-term Thanks.

Fabrizio Freda

complex is there part start, second a lot in I me – It’s a Yes. say. so join question, Tracey particularly question. the of then in will to and your will

we our in difficult of very our this growth even are confident business trend complex times. retail So and globally very in the external

later as of direction. give America North – to really which an things, a for know, explain great of And big where growth. M·A·C America, growth growth, the in demonstrated digits. example example, could M·A·C coming is North all in business, to of just our can strongly So retail this with is are North you many you a our are news And and back back M·A·C business. potential it XX% our I Clinique particularly growing so our to brand see America the in a part because But this, going quarter, quarter retail mid-single I for was well the it’s

remarks Then market look you portfolio. what brands to and growing brands look So, when the we release. inventories explained top that was in combined, the consumers into in in issues retail in business, the growing share in Mainland, our M·A·C despite in have retail press news you the great travel at we retail Chinese mid-single and back have retail, domestic prepared at tightening the the and digits, grew China and

now China an market, when brick-and-mortar the recovering, example, is and the you a decline, traffic, have been quarter. in difficult gradually gradually – the the has underlying couldn’t are we the we issue the general we in of ship to progress there we growing – market Then to trend. the from this fact spoke where some was no remained Then about will closure improve And business. decline we’re the quarter less the the strength. the be look, than moment domestic recovery very double for the growing last restrictions, time, again the spoken with in that extraordinary share And for than still there less So Shanghai fact but fragrance we previous China. in market, we but online online, of in encouraged much in where above less that by the

fulfill maximum demand. chain globally, numbers, this to luxury complex to taken potential heard presence supply moment decision than we for profitable. more Now strategic for the in And growing fragrances, – they seasonal a the even fully focus they the particularly the of have the on double to you growing. glass, and which are of reduced are ability from They are in get digit, to

to supply over also more time gradually. the because come So will abate constraints

across other balance effort growth, the engines now have we activating also double-digit is we business – are in growth our the So which hair the our in to care is that engines. West, the been also the care very big but this, in a in growth business. strongly Aveda in of of has step is And different China our the hair launch there

other Makeup reopening, in recovery. But described. the interesting situations doing travel wherever is China there continued we it’s well, is except the have issues that The lowdown’s globally, is retail indication makeup the very the and and makeup. market

look And in and are in skin will that’s innovation care. continue quarter expanded happy, we And of care have come but important very extraordinary which make good said, I the very, forward. it four, our innovation quarter many center, performance in three news there with strong the step because distribution distribution. will at skin very majority when at us productive then we globally, of on As a then you M·A·C pipeline. Admittedly,

the technically very, China And the So part of quarter obviously, are is year, the distribution next not in more concept more start will this promising and brands And countries, new and specialty-multi our quarter we North expansion. with is In is quarter the expanding very is continue of the of three consumers. also in which in becoming one. but XX/XX. is and reflects also productive, a important we the four, our in of there productive and promising, in it’s this the new China Aveda Douyin big, it. expansions. And will sorry, continue two, start America we new these distribution expanding to we in – The brands only

are in strong that in to in fragrances, you reopen strong country care, in large So in And we makeup to is strong strong, few innovation skin sense strong market in so that the lockdown linked just to the the issue hair future category, the we growth care, the and wherever give of reopening in examples a there by in there. the plan that and are restart future. the majority very will strong is

the then very gradually the semester, more back growth. to our point, obviously, on stronger total of semester quarter that, in in you the last in as look we Tracey? go double-digit in So if quarter to four. remain in confident growth, explained three assuming is Proof second that but long-term we we to are outlook, and

Tracey Travis

Yes.

the and year are business it of significant what’s last the and starting quarter to parts of relates into first business. some the fourth disruptions obviously, of in third Dara, at impacting so this continuing lockdowns of key to as our the unanticipated And beginning quarter year impacts us and the with

the for the easing. as expecting in fourth Fabrizio half of we year. outlook and said, expecting further that in the are quarter, we are As we provided we’ve easing, the second some forward think today, And

the terms we stabilization that heading in the matters, business we As can growth about can leverage some we more get of that expansion these the business think forward as well. margin the is assuming intact of get, we get the of of and construct our and can that

As is consumer Fabrizio demand has said, strong. disrupted. It been

our that are flexibility key We be else are also taking everyone that and future some continued and continued as is there structure last the expansion in in line pressures is created strong over top the – of EPS could remains recessionary in intact years once environment for mindful, But positions we’ve markets, well account. and the that we into in certainly more strong margin us of, cost and the there growth macro stabilization growth. few our

Operator

Thank you. Fargo. Wells with will Please next ahead. Chris go come from the question And Carey

Chris Carey

good morning. Hi,

Tracey Travis

morning. Good

Chris Carey

China get sure call So today. plenty I’m will focus the of recovery on

becoming of angle where bit interactions I a It China those take might wonder the organization certainly, you channels sort kinds this can is in a if on in expanded just working just the to here. earnings with you whether expansion is you be big power additional expanded you’ve with of is this just types willingness you specialty-multi opportunities beyond this And of is opportunities wonder, to new some medium, different a certainly organization, the more of I’ll Clearly, historical channels. more just comment China, perhaps can feels context and the and comfortable going in or on the be. comment longer-term and true, on of like Fabrizio, So out of the your actually ahead what Estée see comfort Lauder whether brands of and with U.S. concept broader TikTok. I there true retailers? the recovery, of called of JD with I organization debate a think take

Fabrizio Freda

been very is think and are where I right XX focused years. ago. the the we’ve No, over one-channels last years consumer the channels level on in having distribution much operate basically versus now We focus XX – of preferences Yes. evolving

continues have And in to that to to in that be more can so more obviously this see services better brands, brand.com to first is – our continue sites, of you sites. this, comfort to expansion expanded we the there, all, and online be our

expanding expanding You example we XPP, model, them Alibaba with collaborating different world. are expansion. different the Also and most the this present is our at point around in countries Lazada which in the to the is being meaning have evident probably Tmall this in model countries,

in and of to terms more, are And specialty-multi, And then believe our comfort particularly we is continued with playing Europe our We retail.com with new. and many pure-play I not examples, have of this be this. more in expanded. obviously,

– and with specialty-multi, We comfortable, are well. very doing is are there we

We are growing.

our North increased is very, in the this well. market the channel but America, very progressing many well, other parts world not in have North of America, and in We as only shares in

this is in sense news important other direct-to-consumers. The

freestanding to our the the in consumers more many of wherever So, our a quarter. coming had years. the the effective freestanding for stores really model in go freestanding back brought the see wherever we and management reopening there cost are tremendous back really stores today, to and is And a store the enthusiastic last And strongly brick-and-mortar. and efficient more retail the are efforts of expertise in company we

to return promising. the of is stores So, very freestanding traffic

our in the for XX% Just U.S. we stores example, give are to quarter. fragrance freestanding an in brands, plus the

sign strong very remaking. very, So, of

comfortable – we expansion, with about when in interesting I happened spoke channels, when really, the only JD, this at in And entered where but enter, And these you a the more we not Look great the playing more we channels. are you are partnership, is about TikTok. expansion. we we really a – we is winning in – Chinese the said these will so well thing with recent results. And JD we win, play what but exactly great spoke

So, our definitely the with evolution manage where are preference continue to consumer distribution go. consumers serve we the line in with we of

unique building the And they building be the mind serve It care keep building be of to has a will And and we However, in on of consumer luxury. equity, high-touch education, services. our product brand that availability customization, pricing, with has with distribution, distribution not focusing consumer serve are services. with our focused the to are which on only that they experiences. elements

a pure are in We play luxury.

quality, It’s it’s So, of branding about not services. with distributing about there distributing only mass and is consumers. wherever

has there that where become traffic. we you environments where want places so anything? focus in add in and in is have but better more changed, creating Tracey, to not – more consumer And do these

Operator

question be will ahead. The next you. Bank. Thank Please go from with Powers Steve Deutsche

Steve Powers

Maybe Great. Dara’s Thank up question. good following on you and morning.

of also, were context have focal not then that in kind particularly you more that retailer broadly, destocking And I around in don’t bit across we assumed would have you something a think your I if and your portfolio that so anticipate I question it’s hasn’t – the outlook? categories. Fabrizio is for overall possible, like guess helpful, the point beauty I growth but been a follow-up. heard there But dynamic you that that positive year, – That’s that. have to in as called a the or But just seen flat both growth far, comments a little Tracey. consumption from we for the across retail X% organic sales the your certainly think we have other rate Your out U.S. of can to peers, but compare

into half? much seen, specific a just So, maybe is bit through and you the outlook to what again, more second you. you your holidays how think what detail portfolio on the have Thank the

Tracey Travis

it’s So, let might average hard to It’s you would our start do in we of you all markets, markets, positive. on markets, the but market. but me slowness every as our varies for in of the across an positive. the that retail. and of some tell It well imagine. at as retail some digit all obviously, projection year, look I retail is market, it’s markets, double In disruptions actually positive given certain by in

markets certainly and a and retail in have of between at of of in disconnect or that’s between markets, In not big our slowdown, some where many have markets, our the more more we net. the gap we the we disruption again, all. seeing very where retail is recovery anticipation net so And had are

Operator

question ahead. from Telsey Advisory from Group. will Thank Telsey you. go And be Dana the Please next

Dana Telsey

like afternoon. feels already. afternoon morning morning. Good everyone. Good It Good

any specialty-multi there think in And categories in prior any going the or stores, it’s about are pricing you thinking that forward? guidance how embedded change about then that of you you. what of of difference is in making any you you whether in looking are pricing, in was the your terms your a difference, is you And seeing department performance? As there are U.S., inventory Thank are freestanding, whether at? it’s

Tracey Travis

So, the pricing. I will start with

looking beginning there about We terms X.X% and was the at taken at timeframe. year. so across pricing in the average the our markets, talked about in pricing that July-August of on are – the that at took we is We no change of

at that and We also prior guidance in looking taking in light all price certain inflation of be the looking January-February at the are we the more not across and would anticipated slightly And markets. some in increase, a that timeframe. pricing markets, of in secondary pressures

channels, channels. had down channels focused up obviously, of are relates our we don’t it our they terms are traffic end to most some we those can bring that lower those so on the in channels, stock to so over the have As that in levels slowing of, ones stock, shipments

quarter. we think that called So, channels in performed quarter, we you out about just talked first us the if first the for the about strongly

in our performed So, our strongly quarter. Online in in our first specialty-multi channel quarter. first performed China strongly

cautious. for will markets strongly to So, well. those And are freestanding stores channels, in continue continue quarter. recovery perform in we us stores to for strongly are the channels Other that more us. performed a perform that bit we Freestanding expect first the

our So, being those we that to in retailers. retailers how being well more as of the obviously, cautious are trends ourselves terms traffic both we bit are are we supply freestanding anticipated, more continue, a on store a Where as of will some network. supply cautious our little bit

Operator

ahead. will go Bank Bryan Please And with you. of from be Spillane the Thank next America. question

Bryan Spillane

a go of fiscal ‘XX? about bit to morning. since Thank of of start going and balance a question. be you on Hi. I a should Tracey, pricing And just sources a the see the the see some to continued an fiscal thinking expectation of of how inflation be is, maybe detail Good through what’s you, give follow-up Can to the guess and on today just inflation we we incremental, us more little little of Is we been as bit factor operator. you year? that maybe inflation the a into the trying as it sense go get rising. as Just year? continue you that

Tracey Travis

Yes.

our I particularly as think in seen transport. in see chain. supply our moderating. We to quite actually see parts, other In we inflation have we chain, that parts certainly it it supply of relates continuing bit of a do

incorporated seen anticipated pricing that have year. wage We in has some we that inflation this have been again, of well. as the And

bit. a stabilize rates advertising seen have We

seeing much not were media are previously. as seeing as we so we inflation And

one chain those a about the say, us that great we particular so our is forward. are, pricing inflationary But is of inflation the area see we that – do exercised have are And of and focus areas have the power, would watching. I supply things we that we we So, biggest where certainly one going again, category, the for impacts.

Fabrizio Freda

position I offset expressed we we And is doing to we quarter, and in add we remain that are that. point want with what in most view we inflations are the just continue pricing, a same – to last of to the the which of

in is the thing, other The quarter this last which currency. emerge stronger is however,

become has dollar even the stronger. So,

things possible adjustments And only with is cost like, And increases most pricing. we make in in next if January-February selective there the But can and the in pressure areas. contributing activity some of impact savings. innovation the And price example, see so the inflation, also selective price rest, – our mainly of well goal of average most cost has currency, on the are are then inflation our covering price of gross we of are inflations. not to we focused are a been overall where to our offset consideration of to margin, higher looking protecting now also doing also remain these our and markets we to for big on

we will sense. we shape be believe and So, are in that good in we

Operator

Rupesh question go next the be from And Oppenheimer. ahead. Please you. will Parikh Thank from

Rupesh Parikh

taking morning. question. Thanks for my Good

you normal you if you are what conditions essentially China color just So, more think And in Is on curious it? return you to the about a the both Mainland additional was way assume the QX? think in today corridor. and that of ground about do China, I Hainan can seeing as recovery, to give by some the the terms in

Fabrizio Freda

the will domestic see will increased with And as assumption, traffic the our is gradual we gradual in said there brick-and-mortar from and the be before, China, a In Yes. Hainan recovery restriction, I that China. the recovery in in with restrictions.

retail So, are those it’s stronger being is the communicated. the interesting to the and evolve, positive, that economy, growth key overall the than overall is retail that way growth things because needs is two economy

that than beauty proven is is that that continue and more economy, on the average future. will the happen we we then beauty And phenomenon speak. the as is historically grows average than to more it’s trend on believe industry the in we what So, prestige happening industry – grow

there traffic. minus normal then well. first Then down after the – was continue in the and last very XX%. in traffic went the to was January, full movements to detail, are time is now still should – what, last And to January, the in time, over have lockdown, And again, would recovered Hainan contrary, the was different. clarify if assumption I then October, go the February, it take again. was, And went Hainan traffic XX%. Hainan but where think on want, that traffic February, July, the remarks clarified prepared However, But minus situation. this you was roughly regular, XX

is and that future XX be the make And high inventories the traffic traffic the There factor But less people of basically, is consumption what readjusted. side, in growth expectation There consumption. originally second So, through that at is much the more online. are is going more on was obviously of is minus than that and online. there that presence need traffic also to for terms of level expected channels. it’s too other

levels. before, I situation have So, in as digit growth said with we traffic mid-single a traffic this seen total, even in reduced

in travel and and phenomenon visible further brick-and-mortar, four. in further happen, recover will our And in more will we the positive. that domestic, will pretty should traffic quarter retail do the increase when be this assume be when So, improve, both in this

seeing. improvement of when as start And the the be also That’s period but now of of then, that don’t see see in a is we three. – lot we will traffic. two, a we dynamic then we there and quarter improvements quarter be in between a we will rebuild assume are April-June So, gradual explained, in

Operator

will from go The Goldman English Sachs. question from you. Thank Please ahead. Jason next be

Jason English

a am morning rapid fire folks. questions. couple you. going Good to of Hey. Thank I

like assuming the is you about can down all fiscal sequential I I plans. to shoe you Thank multiyear bright what you dynamics but of multiyear the the point fine in destocking? rate is light you like have XX, back still are Second question, for earnings you. think power what exit you for to clarify that are a has in the that fiscal the at improvement, guess you lastly, But as XX, that, how running not drop to that your ‘XX, normal today? year, ‘XX discussing to And First, guidance. Europe question, put uncertain? asking last changed be and in like level down traffic, then answer thought am of if may on terms is that to Hainan next

Tracey Travis

Jason. So, start, let me

be anticipate Much but In terms to in to of improved, QX. back that Hainan, no, we back Hainan normal. fully will normal don’t fully not

at fiscal looking traffic again, point guesstimate it’s this recover. in time. ‘XX And so we now for at are And a to

So, the just know obviously, I They certainly opened the a been do all new have get to than in general has the of is area mall. in to that think slower recovery, a we but us and growth. there anticipated, back commitment by retailers fantastic Hainan

QX forward now, in So, to it our is look is fully fiscal the recovered not still an ‘XX. and travel recovery. But thoughts right more destination, it exciting we

is our In said recovering. remarks, as of in Europe, terms prepared Europe, we

have we in so And in strong Europe, seen markets particularly in emerging growth Europe.

We are seeing makeup recover.

but everyone to we been European fiscal in the we many we second have reasons seeing talking care, growth. been one been believe of about the ‘XX it there in really that would skin talked say as believe I strong and slower think concerned will bit we Europe. now, markets about about, the fragrance yet. our year and care seeing that be a innovation a skin are strong our are half right But And has same, do we has the any that certainly not accelerate of growth. category into not But have We has are all Obviously, got recession.

So, that’s Europe.

biggest the relates retail of ‘XX, has biggest disruptions about of you had travel – this year, think one have in outside fiscal when impacts to As of it really currency. been the the we terms

be will that with in we constant dependent as of our what adjusted well currency. is talked we terms remarks, ‘XX out fiscal things in impacted And in happens what before of currency some the and results our about one so our prepared of by impact guidance. thought the on currency And is

And retail a in And it travel not big is amount. of particular. some relates to it that’s as

you the significant is currency margins. are looking our as an our and So, impact margins, on our at on impact margins

with of still health this years, for the Jason, feel So, But we our how rates, influences to business, throughout fundamental we executed most ‘XX. growth. happens temporary last are for relates us, it fiscal business about, disruptions and the future our depending currency have once the of on that – outlook strong the importantly, what that prepared are as very behind we strategies obviously, impact, these couple

way, some are in will transport Asia the facility new or will currency of We by opening that the issues reduce production some the and R&D well. of issues, it reduce as

and emerge that from the once been Q&A indicated, teams what done years that managing of with to resiliency. doing extended are disruption of we of they that last And so proud strengthened we have there we are incredibly our all few been many year, support really the are, as have Fabrizio And things has unfortunately our business through and End business. over them have the this fantastic

Operator

gentlemen. and ladies much, very question-and-answer you concludes Thank our This session.

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

The Estée Lauder Companies Inc. (EL) 2 Nov 222023 Q1 Earnings call transcript