Net revenue in 4Q15 for The Estée Lauder Companies’ (EL) makeup segment came in at $1.02 billion. It was the highest among all product categories. Although net sales for the makeup segment were lower by 4% compared to 4Q14, sales increased 3% in reported terms. In constant-currency terms, sales increased 10%.
Makeup sales and operating income
Higher sales in the makeup segment were due primarily to excellent growth from makeup artist brands such as MAC and Bobbi Brown. In addition, continued expansion and growth of Smashbox and Tom Ford also contributed to increased sales in makeup. Apart from new product offerings, EL also expanded distribution through freestanding retail (XRT) stores, travel retail, and specialty multi-brand retailers.
Beyond Perfecting foundation and concealer from Clinique and the Pure Color Envy line of lip products from Estée Lauder also contributed to sales gains. However, both these brands posted lower makeup sales.
Operating income for the makeup segment fell 24.2% to $0.12 billion in 4Q15 due to lower results from heritage brands and the impact of accelerated orders. Full-year fiscal 2015 makeup revenue increased 2% in reported terms and 7% in constant-currency terms to $4.3 billion.
Estée Lauder, like L’Oréal (LRLCY) and Avon (AVP), aims to strengthen makeup in emerging markets, especially Asia. The company is experiencing strong growth in lipsticks and foundations as well as increased prestige makeup usage in Asia.
Clinique is launching a new global campaign called Face Forward to introduce Clinique’s iconic and best-selling 3-Steps product to Millennials. The 3-Steps include Beyond Perfecting, Chubby Sticks, and Clinique Pop Lip Colour and Primer. This will help the company position itself against peers Coty (Coty) and Beiersdorf (BDRFF). It will also help target consumers and fuel EL’s makeup and overall business.