- Worldwide Net Sales Up 9 Percent -
NEW YORK, Jan. 28 /PRNewswire/ -- On the strength of new product launches,
the global rollout of recent fragrance introductions, and the continued solid
performance of existing key products, The Estee Lauder Companies Inc.
(NYSE: EL) today announced a 9% increase in net sales for the second quarter
ended December 31, 1996, to $941.5 million, from $860.8 million in the prior-
year quarter. Excluding the impact of foreign currency translation, net sales
would have increased 12% during the quarter.
The Company reported net earnings of $69.9 million for the quarter, or
$.54 net earnings per common share, up 19% from $58.5 million for the
comparable period last year.
Leonard A. Lauder, Chairman and Chief Executive Officer, said, "We are
pleased to report another record quarter of sales and earnings for the
Company. Despite a generally weak retail environment this holiday season, the
Company achieved solid global sales growth which reflects the strong appeal of
our products around the world."
Mr. Lauder continued, "We are also very pleased with our second quarter
operating performance, which continues to benefit from global sourcing and
manufacturing initiatives. The operational efficiencies we have achieved have
enabled us to increase advertising expenditures to further enhance our brands,
while still meeting our profitability goals. In view of our solid results for
the first half of 1997, we believe we are well-positioned to meet our
objectives for the remainder of the fiscal year."
In the Americas region, the Company reported an 11% increase in net sales,
to $525.4 million, and an increase in operating profitability versus the
prior-year quarter. Gains were attributable to the sales from new product
launches and growth from existing products as well as stronger operating
results in Canada.
In Europe, the Middle East & Africa, the Company achieved net sales of
$266.7 million, a 13% increase over the prior-year period. Excluding the
impact of foreign currency rate changes, net sales in the region would have
increased 16% during the quarter. Net sales growth was driven by strong
performances in the United Kingdom, Italy, France, and Benelux, and in the
distributor and travel retail businesses. Second quarter operating
profitability in the region increased substantially over the prior-year
quarter primarily due to improved operating results in Germany, the United
Kingdom, France, Benelux, and in the distributor and travel retail businesses.
On a local currency basis, Asia/Pacific net sales grew 3% over the prior-
year quarter, driven by strong sales increases in every market in the region,
except Japan. However, due to the continued strength of the U.S. dollar
versus the yen, reported net sales in the region decreased 2% over the prior-
year quarter, to $149.4 million. In Japan, while units sold increased during
the quarter, sales in yen terms declined slightly due to selective price
reductions on certain products, competitive pricing on new product
introductions, and difficult market conditions. Operating profit in the
region decreased from the prior year due to the unfavorable foreign exchange
impact as well as to increased promotional support for new launches in Japan.
From a product category standpoint, the strongest sales increases were
generated in the makeup category, where second quarter net sales grew 17% over
the prior year quarter. Makeup sales were fueled by new products such as
Clinique's City Base Compact Foundation and Long Last Soft Shine Lipstick,
Estee Lauder's Futurist Age-Resisting Makeup and Indelible Lipstick and
Prescriptives' Virtual Skin, as well as increased sales of M.A.C. and Bobbi
Brown products. Skin care product sales grew 9% during the second fiscal
quarter, due to the successful new product launches of Estee Lauder's Fruition
Extra and Nutritious Bio-Moisture Complex, and Clinique's Moisture On Line as
well as growth from existing products. In the fragrance category, despite
difficult comparisons with the prior year quarter which included the highly
successful domestic launch of Estee Lauder pleasures, net sales for the second
quarter increased 3% primarily due to the launch of "tommy girl" in the U.S.
and the continued success of Estee Lauder pleasures and "tommy" around the
world. In U.S. department stores, the Company also had the number one men's
fragrance as well as four of the top ten women's fragrances during the
important Christmas season.
For the six months ended December 31, 1996, the Company reported net sales
of $1.8 billion, up 7% from $1.7 billion in the comparable prior year period.
Excluding the impact of foreign currency translation, net sales would have
increased 9% during the period. Net earnings for the six month period
increased to $122.6 million, up 17% over the $104.9 million reported in the
same period last year. A portion of the net earnings increase for the three
and six month period ended December 31, 1996 relates to a lower effective tax
rate. The reduced tax rate is primarily due to a relative change in the mix
of earnings from higher tax countries such as Japan to lower tax countries.
The Estee Lauder Companies Inc. is one of the world's leading
manufacturers and marketers of prestige skin care, makeup and fragrance
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. and Bobbi Brown essentials.
The forward-looking statements in this press release involve risks and
uncertainties some of which are detailed in Exhibit 99.1 to the Company's
report on Form 10-Q for the quarter ended December 31, 1996 which was filed
with the SEC today.
THE ESTEE LAUDER COMPANIES INC.
Summary of Consolidated Results
(In millions, except per share data)
Three Months Ended Six Months Ended
December 31 December 31
1996 1995 1996 1995
Net Sales $941.5 $860.8 $1,814.3 $1,693.9
Cost of sales 217.6 210.4 417.4 403.7
Gross Profit 723.9 650.4 1,396.9 1,290.2
Selling general and administrative
expenses:
Selling, general and administrative 589.0 530.5 1,152.7 1,067.0
Related party royalties 9.0 10.9 17.0 21.3
Total 598.0 541.4 1,169.7 1,088.3
Operating Income 125.9 109.0 227.2 201.9
Interest income (expense), net:
Interest income (expense), net 0.1 -- (1.1) (1.4)
Interest income from
stockholders, net -- 1.1 -- 2.7
Total 0.1 1.1 (1.1) 1.3
Earnings before Income Taxes and
Minority Interest 126.0 110.1 226.1 203.2
Provision for income taxes 50.5 47.3 95.0 91.4
Minority interest (5.6) (4.3) (8.5) (6.9)
Net Earnings (A) 69.9 58.5 122.6 104.9
Preferred stock dividends 5.8 30.2 11.7 45.8
Net Earnings Attributable to
Common Stock (A) $64.1 $28.3 $110.9 $59.1
Net earnings per common share $0.54 -- $0.93 --
Weighted average common shares
outstanding 118.9 -- 118.7 --
Pro Forma Net Earnings Per Share (A):
Net Earnings n/a $58.5 n/a $104.9
Pro forma preferred stock dividends n/a 5.8 n/a 11.7
Pro Forma Net Earnings Attributable
to Common Stock n/a $52.7 n/a $93.2
Pro forma net earnings per
common share n/a $0.45 n/a $0.81
Pro forma weighted average
common shares outstanding n/a 116.2 n/a 115.4
(A) As a result of a recapitalization and the issuance of common stock in
the Company's initial public offering (the "Offering") in November
1995, net earnings per share for the three and six months ended
December 31, 1995, have been computed on a pro forma basis assuming
the recapitalization occurred at the beginning of fiscal 1996, and
includes the amount of shares issued by the Company in the Offering
from the date of issuance plus the effect of common shares
contingently issuable, primarily from stock options, from that same
date. Pro forma preferred stock dividends for the three and six
months ended December 31, 1995 reflect only recurring dividends on
the Company's $6.50 Cumulative Redeemable Preferred Stock.
SOURCE The Estee Lauder Companies Inc.
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CONTACT:
Investor Relations: Gina R. Boswell,
212-572-4384, or Media Relations: Karen O'Connor, 212-572-4439,
both of Estee Lauder
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