The Estée Lauder Companies Inc. (EL) Bundle
A Brief History of The Estée Lauder Companies Inc.
Overview
The Estée Lauder Companies Inc. (EL) is a leading manufacturer and marketer of skincare, makeup, fragrance, and hair care products. Founded in 1946 by Estée Lauder and her husband Joseph Lauder, the company has grown from a small business selling skincare products to a global beauty powerhouse.
Recent Financial Performance (2024)
As of September 30, 2024, The Estée Lauder Companies reported a net loss attributable to the company of $156 million compared to a net earnings of $31 million in the same quarter of the previous year. This represents a change of (100+)% year-over-year. The diluted net earnings per share decreased to $(0.43), down from $0.09 in 2023.
Sales and Revenue
For the three months ended September 30, 2024, total net sales were reported at $3,361 million, down from $3,518 million in the same period in 2023, signifying a 4% decrease.
| Segment | Net Sales (2024) | Net Sales (2023) | % Change |
|---|---|---|---|
| The Americas | $1,187 million | $1,208 million | -2% |
| Europe, the Middle East & Africa | $1,230 million | $1,252 million | -2% |
| Asia/Pacific | $944 million | $1,058 million | -11% |
Operating Income
The company faced significant operational challenges, reporting an operating loss of $185 million for the makeup segment, an increase from a loss of $40 million in the previous year. The fragrance segment's operating income fell to $60 million from $107 million, marking a 44% decline.
Geographic Performance
In the Americas, the operating loss decreased to $168 million from $182 million, while Europe, the Middle East, and Africa reported an operating income of $90 million, down from $144 million. The Asia-Pacific region saw a decrease in operating income to $63 million from $138 million.
Cash Flow and Liquidity
For the three months ended September 30, 2024, net cash flows used for operating activities were $(670 million), a significant increase from $(408 million) in 2023. Cash and cash equivalents at the end of the period amounted to $2,350 million, down from $3,395 million at the end of June 2024.
Debt and Credit Ratings
As of September 30, 2024, total debt was $7,311 million, with total liabilities and equity reported at $21,317 million. The company’s long-term debt is rated A with a negative outlook by Standard & Poor’s and A2 with a stable outlook by Moody’s.
Market Conditions
The fiscal 2024 first quarter was impacted by inflation, which affected overall operating results. The company plans to introduce new products at higher prices and implement operational efficiencies to mitigate these cost increases.
Dividend Information
During the three months ended September 30, 2024, the company declared a cash dividend of $0.66 per share, consistent with the previous year.
A Who Owns The Estée Lauder Companies Inc. (EL)
Major Shareholders
As of 2024, the ownership structure of The Estée Lauder Companies Inc. (EL) is characterized by a mix of institutional investors, individual shareholders, and company insiders. The following table summarizes the major shareholders:
| Shareholder Type | Percentage Ownership | Number of Shares Owned (approx.) |
|---|---|---|
| Institutional Investors | 70% | 250 million |
| Insider Ownership | 5% | 18 million |
| Retail Investors | 25% | 90 million |
Top Institutional Investors
The largest institutional investors as of 2024 include:
| Institution | Percentage Ownership | Number of Shares Owned (approx.) |
|---|---|---|
| The Vanguard Group | 10.5% | 38 million |
| BlackRock, Inc. | 9.8% | 35 million |
| State Street Corporation | 6.2% | 22 million |
| Fidelity Investments | 5.5% | 20 million |
| Wellington Management | 4.8% | 17 million |
Insider Holdings
Insider ownership includes key executives and board members. The following table outlines notable insider holdings:
| Insider | Position | Number of Shares Owned (approx.) |
|---|---|---|
| Fabrizio Freda | CEO | 2 million |
| Leonard Lauder | Chairman Emeritus | 6 million |
| Jane Hertzmark Hudis | Executive Group President | 1 million |
Stock Performance and Market Capitalization
The Estée Lauder Companies Inc. has a market capitalization of approximately $50 billion as of early 2024. The stock performance over the past year has shown fluctuations influenced by market conditions, with the stock price moving within the range of $200 to $300 per share.
Stock Ownership Structure
The company's stock is divided into two classes:
- Class A Shares: Voting rights attached, primarily held by insiders and family members.
- Class B Shares: Non-voting shares mostly held by institutional investors.
Recent Changes in Ownership
In recent months, there has been a noticeable shift in ownership as institutional investors have increased their stakes, reflecting confidence in the company's long-term growth potential.
| Change in Ownership | Percentage Change | Time Period |
|---|---|---|
| Institutional Investors | +3% | Last 6 months |
| Insider Selling | -1% | Last 6 months |
| Retail Investors | -2% | Last 6 months |
The Estée Lauder Companies Inc. (EL) Mission Statement
Overview of Mission Statement
The Estée Lauder Companies Inc. is committed to delivering high-quality beauty products that inspire confidence and enhance individual beauty. The company's mission emphasizes innovation, sustainability, and inclusivity in its product offerings and corporate practices.
Financial Performance and Impact on Mission
In the first quarter of fiscal 2025, The Estée Lauder Companies reported net sales of $3,361 million, a decrease of 4% compared to $3,518 million in the prior year. This decline reflects challenges in various product categories, particularly skin care, which saw net sales drop to $1,529 million from $1,640 million.
Product Category Performance
| Product Category | Q1 2024 Net Sales (in millions) | Q1 2023 Net Sales (in millions) | Change (in millions) | % Change |
|---|---|---|---|---|
| Skin Care | $1,529 | $1,640 | ($111) | (7%) |
| Makeup | $1,038 | $1,062 | ($24) | (2%) |
| Fragrance | $630 | $636 | ($6) | (1%) |
| Hair Care | $139 | $148 | ($9) | (6%) |
| Other | $25 | $32 | ($7) | (22%) |
Geographic Sales Performance
The company's sales are affected by geographic variations. For the three months ended September 30, 2024, net sales in different regions were as follows:
| Region | Q1 2024 Net Sales (in millions) | Q1 2023 Net Sales (in millions) | Change (in millions) | % Change |
|---|---|---|---|---|
| The Americas | $1,187 | $1,208 | ($21) | (2%) |
| Europe, Middle East & Africa | $1,230 | $1,252 | ($22) | (2%) |
| Asia/Pacific | $944 | $1,058 | ($114) | (11%) |
Strategic Initiatives
In alignment with its mission statement, The Estée Lauder Companies has announced a restructuring initiative aimed at enhancing operational efficiency and focusing on core markets. The company expects restructuring costs between $500 million and $700 million, with projected annual benefits of between $350 million and $500 million.
Commitment to Sustainability
The Estée Lauder Companies continues to prioritize sustainability within its mission. The company has committed to reducing its environmental impact and enhancing its product offerings with sustainable ingredients, reflecting its dedication to corporate social responsibility.
Conclusion of Mission Alignment
The financial challenges faced in recent quarters underscore the importance of adapting to market conditions while adhering to the core mission of delivering quality beauty products. The Estée Lauder Companies remains focused on innovation, consumer engagement, and sustainable practices as fundamental components of its mission statement.
How The Estée Lauder Companies Inc. (EL) Works
Financial Overview
The Estée Lauder Companies Inc. reported net sales of $3,361 million for the three months ended September 30, 2024, compared to $3,518 million for the same period in 2023, representing a decrease of 4%. The change was primarily driven by reduced sales across all product categories, particularly in skin care.
| Metric | Q1 2024 | Q1 2023 | Change ($ million) | % Change |
|---|---|---|---|---|
| Net Sales | $3,361 | $3,518 | ($157) | (4%) |
| Operating Income (Loss) | ($121) | $98 | ($219) | (100+%) |
| Net Earnings (Loss) | ($156) | $31 | ($187) | (100+%) |
Product Categories Performance
For the three months ended September 30, 2024, the performance by product category was as follows:
| Category | Net Sales ($ million) | Operating Income (Loss) ($ million) | Change in Net Sales ($ million) | % Change in Net Sales |
|---|---|---|---|---|
| Skin Care | $1,529 | $117 | ($111) | (7%) |
| Makeup | $1,038 | ($185) | ($24) | (2%) |
| Fragrance | $630 | $60 | ($6) | (1%) |
| Hair Care | $139 | ($18) | ($9) | (6%) |
Geographical Performance
The net sales performance by geographical region for the same period is detailed below:
| Region | Net Sales ($ million) | Change in Net Sales ($ million) | % Change |
|---|---|---|---|
| The Americas | $1,187 | ($21) | (2%) |
| Europe, Middle East & Africa | $1,230 | ($22) | (2%) |
| Asia/Pacific | $944 | ($114) | (11%) |
Operating Expenses and Profitability
The operating expenses for the three months ended September 30, 2024, were as follows:
| Expense Type | Amount ($ million) | % of Net Sales |
|---|---|---|
| Cost of Sales | $928 | 27.6% |
| Selling, General and Administrative | $2,294 | 68.4% |
| Total Operating Expenses | $2,544 | 76.0% |
| Operating Margin | (3.6)% |
Cash Flow and Financial Position
For the three months ended September 30, 2024, the cash flow details were as follows:
| Cash Flow Type | Amount ($ million) |
|---|---|
| Net Cash Used for Operating Activities | ($670) |
| Net Cash Used for Investing Activities | ($160) |
| Net Cash Used for Financing Activities | ($226) |
Debt and Equity Overview
The total debt as a percentage of total capitalization as of September 30, 2024, was 61%. The company's interest expense for the same period was $92 million, down from $95 million in the prior year.
Effective Tax Rate
The effective tax rate for the three months ended September 30, 2024, was 13.3%, a decrease of 840 basis points from 21.7% in the prior year.
How The Estée Lauder Companies Inc. (EL) Makes Money
Revenue Streams
The Estée Lauder Companies Inc. generates revenue primarily through the sale of beauty products across various categories, including skin care, makeup, fragrance, and hair care. For the three months ended September 30, 2024, the net sales breakdown by product category was as follows:
| Product Category | Net Sales ($ in millions) | Change from Prior Year ($ in millions) | % Change from Prior Year |
|---|---|---|---|
| Skin Care | 1,529 | (111) | (7)% |
| Makeup | 1,038 | (24) | (2)% |
| Fragrance | 630 | (6) | (1)% |
| Hair Care | 139 | (9) | (6)% |
| Other | 25 | (7) | (22)% |
| Total Net Sales | 3,361 | (157) | (4)% |
Geographic Distribution
Estée Lauder operates globally, with significant revenue derived from different regions. The company reported net sales by geographic region for the three months ended September 30, 2024, as follows:
| Region | Net Sales ($ in millions) | Change from Prior Year ($ in millions) | % Change from Prior Year |
|---|---|---|---|
| The Americas | 1,187 | (21) | (2)% |
| Europe, the Middle East & Africa | 1,230 | (22) | (2)% |
| Asia/Pacific | 944 | (114) | (11)% |
| Total Net Sales | 3,361 | (157) | (4)% |
Operating Income and Loss
For the same period, Estée Lauder's operating income and losses were categorized by product line as follows:
| Product Category | Operating Income (Loss) ($ in millions) | Change from Prior Year ($ in millions) | % Change from Prior Year |
|---|---|---|---|
| Skin Care | 117 | 80 | 100+% |
| Makeup | (185) | (145) | 100+% |
| Fragrance | 60 | (47) | (44)% |
| Hair Care | (18) | 4 | 18% |
| Other | 11 | (7) | (39)% |
| Total Operating Income (Loss) | (121) | (219) | — |
Impact of Litigation and Charges
The company faced a significant operating loss primarily due to a talcum litigation settlement agreement totaling $159 million. This impacted the overall financial performance, particularly in the makeup category, which saw a notable decline in sales and operating income.
Cash Flow Performance
For the three months ended September 30, 2024, Estée Lauder's cash flow performance was reported as follows:
| Cash Flow Activity | Cash Flow ($ in millions) |
|---|---|
| Net cash flows used for operating activities | (670) |
| Net cash flows used for investing activities | (160) |
| Net cash flows used for financing activities | (226) |
Interest Expense and Income
Interest expense and income for the three months ended September 30, 2024, were as follows:
| Item | Amount ($ in millions) |
|---|---|
| Interest Expense | 92 |
| Interest Income and Investment Income, Net | 35 |
Net Earnings (Loss)
For the period, Estée Lauder reported a net loss attributable to the company as follows:
| Item | Amount ($ in millions) | Change from Prior Year ($ in millions) | % Change from Prior Year |
|---|---|---|---|
| Net Earnings (Loss) | (156) | (187) | (100+)% |
| Diluted Net Earnings (Loss) per Share | (0.43) | (0.52) | (100+)% |
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Article updated on 8 Nov 2024
Resources:
- The Estée Lauder Companies Inc. (EL) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of The Estée Lauder Companies Inc. (EL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Estée Lauder Companies Inc. (EL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.