Estee Lauder Companies Reports Sharply Higher Fourth Quarter and Fiscal Year Results; Net Sales For Quarter Up 13% on Constant Currency Basis, Full Year Up 11%; Diluted Earnings Per Share For Quarter Increases 23%, Full Year Rises 21%

NEW YORK, Aug. 18 /PRNewswire/ -- The Estee Lauder Companies Inc. (NYSE: EL) today reported net sales for the fiscal year ended June 30, 1998 of $3.6 billion, a 7% increase from $3.4 billion in the prior year. Excluding the impact of foreign currency translation, net sales increased 11% during the year. The Company reported net earnings of $236.8 million for the 1998 fiscal year, up 20% from $197.6 million in the same period last year. Basic earnings per common share for fiscal 1998 rose 22% to $1.80 from $1.48 in the prior year, and diluted earnings per common share increased 21% to $1.78 from $1.47 in the same period a year ago. For the fourth quarter ended June 30, 1998, the Company reported net sales of $845.0 million, up 9% from $775.9 million in the comparable prior year period. Excluding the impact of foreign currency translation, net sales increased 13% in the quarter. On a regional basis, net sales were paced by strong growth in both the Americas and Europe, the Middle East & Africa. Net sales increased on a local currency basis in all product categories, led by a strong performance in fragrance. Net earnings for the current quarter rose 20% to $44.0 million from $36.7 million in the corresponding prior year period. Both basic and diluted earnings per common share for the fiscal 1998 fourth quarter, increased 23% to $.32 from $.26 in the same period last year. Leonard A. Lauder, Chairman and Chief Executive Officer, said, "We are committed to increasing stockholder value through solid and consistent growth. The strong results we delivered this fiscal year demonstrate our ability to follow through on our commitment. I'm thrilled with the performance we have achieved this year and how well we are positioned for the future." Mr. Lauder continued, "In the coming year we will look to move ahead to new levels of success strategically, operationally and financially. We will continue to focus our attention on developing our newest acquisitions, building our core businesses and executing our corporate initiatives." In the Americas region, the Company reported a 14% increase in net sales, to $2.2 billion, versus the prior year. Higher sales were achieved from the strength of new products across all categories particularly fragrances, growth from existing products, and the inclusion of sales from jane and Aveda, both of which were acquired in the second quarter of fiscal 1998. Operating income in the region increased significantly as a result of the higher sales and the positive impact of operational efficiencies. In Europe, the Middle East & Africa, net sales increased 13% over the prior year, excluding the impact of foreign currency rate changes. On a local currency basis, virtually all markets turned in solid performances, with particularly strong net sales growth in the United Kingdom, Spain, Germany and Italy. Reflecting the impact of the strong U.S. dollar against European currencies, the Company posted a 6% increase in reported net sales over the prior year to $960.8 million. Operating profitability increased over the prior year, principally due to improved results in the United Kingdom, France and Spain. On a local currency basis, Asia/Pacific net sales decreased 3% versus the prior fiscal year. Double-digit sales increases in Thailand and Malaysia were more than offset by lower sales in Japan and Hong Kong because of the ongoing difficult economic and retail environments in those countries. Reported net sales in the region decreased 15% over the prior year to $452.5 million as the continued strength of the U.S. dollar versus Asian currencies tempered reported sales. Operating profit declined primarily due to the net sales decrease and incremental expenditures in Japan associated with the launches of Bobbi Brown essentials and M.A.C, as well as the continued expansion of Origins. On a product category basis, the strongest sales growth was generated in the fragrance category, where net sales for the year increased sharply, up 25% excluding the impact of foreign currency translation. Reported fragrance sales grew 21% over the prior year to $988.4 million, driven by the highly successful current year launches of Clinique Happy and Lauder Pleasures For Men, the ongoing successful rollout of "tommy girl" and continued worldwide sales growth of "tommy." Makeup product sales grew 8% before foreign currency translation. Reported makeup sales increased 5% during the year to $1.32 billion, as a result of new product introductions such as Clinique's Superbalanced Makeup and Superlast Cream Lipstick, and Estee Lauder's Two-In-One Eyeshadow and Blush All Day. Sales increases of new and existing products from other brands also fueled makeup growth. Net sales of skin care products for the current year increased 2% excluding the impact of foreign currency translation. Skin care sales benefited from the continued success of Estee Lauder's Uncircle and the highly successful introductions of Estee Lauder's Diminish and Clinique's All About Eyes and Moisture-In-Control. Reported skin care product sales decreased 3% to $1.25 billion, reflecting the adverse impact of currency translation given the relative concentration of skin care sales in Asia and Europe, as well as difficult comparisons with certain prior year launches. Sales of hair care products increased to $56.5 million, reflecting the inclusion of the Aveda hair care product line. The Estee Lauder Companies Inc. is one of the world's leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. The Company's products are sold in over 100 countries and territories under well-recognized brand names, including Estee Lauder, Clinique, Aramis, Prescriptives, Origins, M.A.C, Bobbi Brown essentials, Tommy Hilfiger, jane, Donna Karan and Aveda. The forward-looking statements in this press release, such as those in quotations, involve risks and uncertainties some of which are detailed in the "forward-looking statements" section of the Company's report on Form 10-Q for the quarter ended March 31, 1998, previously filed with the SEC. THE ESTEE LAUDER COMPANIES INC. SUMMARY OF CONSOLIDATED RESULTS (In millions, except per share data) Three Months Ended Year Ended June 30 June 30 1998 1997 1998 1997 Net Sales $845.0 $775.9 $3,618.0 $3,381.6 Cost of sales 190.7 180.4 819.5 765.1 Gross Profit 654.3 595.5 2,798.5 2,616.5 Selling, general and administrative expenses: Selling, general and administrative 569.2 524.4 2,357.6 2,224.6 Related party royalties 7.7 8.1 31.8 32.8 576.9 532.5 2,389.4 2,257.4 Operating Income 77.4 63.0 409.1 359.1 Interest (expense) income, net (4.1) 2.6 (6.3) 3.8 Earnings before Income Taxes and Minority Interest 73.3 65.6 402.8 362.9 Provision for income taxes 29.3 27.5 161.1 152.4 Minority interest -- (1.4) (4.9) (12.9) Net Earnings 44.0 36.7 236.8 197.6 Preferred stock dividends 5.8 5.8 23.4 23.4 Net Earnings Attributable to Common Stock $38.2 $30.9 $213.4 $174.2 Net earnings per common share (a): Basic $.32 $.26 $1.80 $1.48 Diluted .32 .26 1.78 1.47 Weighted average common shares outstanding (a): Basic 118.4 118.3 118.4 117.7 Diluted 120.2 119.2 119.7 118.6 (a) In December 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." Consistent with the requirements of SFAS No. 128, net earnings per common share and weighted average common shares outstanding for the three months and fiscal year ended June 30, 1997, have been restated for purposes of comparability. Estee Lauder press releases are available at no charge through Estee Lauder Companies News On-Call fax service. For a menu of Estee Lauder press releases or to retrieve a specific release, call 800-758-5804, extension 251850, or use the Internet via http://www.prnewswire.com/cnoc/exec/menu?251850/