Fiscal 2Q16 revenue for the fragrance segment
Estée Lauder’s (EL) fragrance segment’s reported revenue increased 7% in reported terms and 12% on a constant currency basis to $0.5 billion in fiscal 2Q16. The increase was primarily due to strong double-digit gains from luxury brands Jo Malone London and Tom Ford and incremental sales from recent acquisitions.
The increase in sales was also from newer brands Le Labo and Frédéric Malle, and the launch of designer fragrances such as Michael Kors (KORS) Gold Collection. In addition, the holiday gifting season fueled growth with the help of Tory Burch and Estée Lauder’s Modern Muse Le Rouge, which boosted the Modern Muse franchise. Estée Lauder is a global licensee for fragrances sold under brand names such as Coach (COH), Tory Burch, and Tommy Hilfiger (PVH).
Operating income for the fragrance segment increased 12%. The increase was due to strong results from luxury brand Aramis and the launch of the Mimosa & Cardamom and Tom Ford Noir fragrance lines. This increase was partially offset by lower Estée Lauder brand sales.
On February 25, 2016, EL acquired Paris-based luxury fragrance brand By Kilian for an undisclosed amount. By Kilian is sold in more than 40 countries and its current product offerings include fragrances, candles, and other accessories, as well as exclusive collections available in certain regions.
Through this acquisition, Estée Lauder will hold a stronger portfolio of fragrances than peers Coty (COTY) and L’Oréal (LRLCY). Also, this acquisition will give EL the opportunity to gain market share in the ultra-luxury fragrance category.
The company continues to expand its distribution and roll out exciting new scents. For example, its Jo Malone Herb Garden collection will offer five different colognes. EL makes up 0.7% exposure of the iShares MSCI USA Quality Factor ETF (QUAL).[1. As of March 15, 2016]