August 29, 2012, 11:40 AM

Lauder lauds e-commerce and outlines growth plans


Web sales grew 24% in fiscal 2012.

Lead Photo

Estee Lauder loves the look of e-commerce.

The Estee Lauder Companies Inc. is higher than ever on e-commerce following a year of strong web sales growth. The global cosmetics and personal care products maker and retailer plans to continue expanding its online sales efforts, including mobile commerce, Dennis McEniry, president of Estee Lauder Companies Online, told analysts on the company’s recent year-end earnings call.

“Throughout our history, we have experienced excellent sales momentum, illustrated by 24% growth in fiscal 2012,” McEniry said. “We achieved strong double-digit gains in every region for our brand sites, retailer partner sites and practically every brand. We expect this case to continue over the next few years.”

Web sales in the U.S. increased by 20% in 2012, McEniry told analysts. Neither McEniry nor the company’s annual earnings report broke out online sales in dollars, but McEniry said he expects e-commerce to account for about 5% of all sales in fiscal 2013.

Estee Lauder expects to continue building on its global web sales success. In fiscal 2012, online sales grew 34% in the United Kingdom, 55% in Germany and 40% in China, McEniry said. “Online has grown tremendously in many ways. Sales have tripled in the last five years with compounded annual growth of over 27%.”

Since 2001, when McEniry joined Estee Lauder, its number of e-commerce sites has grown from four in the U.S. to about 340 marketing and e-commerce sites in more than 50 countries today, he said. The company also helps support its retailer customers’ 76 web sites around the world.

“We will continue investing in High-Touch services online, new technologies, marketing tools and retail partnerships to further enhance our prospects,” McEniry told analysts. High-Touch service includes skin and hair care advice for North America shoppers provided via live chat, e-mail or telephone from beauty advisors who work at store makeup counters. The services will be deployed to other markets in fiscal 2013, starting in the U.K.

Skin care is Estee Lauder’s top-selling product category online, followed closely by makeup, McEniry said.

The High-Touch concept also is being applied to mobile commerce, a growing channel for Estee Lauder. “We have seen double-digit, month-on-month increases in mobile traffic in every region,” McEniry said. “In the U.S., many of our brands are generating more than 15% of their online sales from mobile devices, and m-commerce sales are growing much faster than sales made on PCs. In Japan, an astounding two-thirds of MAC's online sales come from mobile phones.” MAC, short for Make-up Art Cosmetics, is an Estee Lauder cosmetics brand sold in 79 countries.

The growth of mobile device use in emerging markets such as China, India and South Africa is driving Estee Lauder’s development of m-commerce sites, along with mobile- and tablet-friendly versions of its brand web sites, McEniry said.

Further plans call for expanding the role e-commerce sites play in the company’s marketing strategy. “Our strategy is to make them digital flagships with unique services and engaging content,” McEniry told analysts. “To that end, in fiscal 2012, we redesigned sites for four of our brands and are redesigning five more this year, including Estee Lauder, Clinique and MAC.

In fiscal 2012, the company launched e-commerce and mobile commerce sites in six new markets for a total of 15, and in 2013 plans to add six more, so far unnamed, countries.

For the year ended June 30, Estee Lauder, No. 58 in Internet Retailer’s 2012 Top 500, reported:

• Total sales of $9.7 billion, up by about 10.2% from $8.8 billion.

• Net income of $901.0 million, up by 21.3% from net income of $742.5 million in fiscal 2011.

For the fourth quarter:

• Total sales were $2.25 billion, up by 9.2% from $2.06 billion.

• Net income was $69.2 million, a 39.2% increase from $49.7 million in the same period last year.

“The future of our online business looks bright,” McEniry said. “With our historical results and the strong momentum we foresee, we believe our online sales can double in five years.”

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