August 20, 2013, 11:24 AM

Estée Lauder’s web sales top $500 million in fiscal 2013

E-commerce grew by 6% in the United States.

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Beauty products manufacturer and retailer The Estée Lauder Companies Inc. had a strong sales year in 2013, aided by e-commerce and global sales growth, according to the fiscal year earnings it reported last week.

“One of our big wins was e-commerce, where we again had significant growth and crossed a milestone,” president and CEO Fabrizio Freda told Wall Street analysts in a conference call. Estée Lauder’s annual online sales surpassed $500 million for the first time in 2013, Freda said. “Sales rose in both our own brand sites and retailer sites.”

The company did not report specific e-commerce sales on the call or in its filing with the U.S. Securities and Exchange Commission. But Freda said on the call that online sales account for an increasing percentage of overall annual sales. “E-commerce is growing 20%-plus and we believe this will continue,” he said. “We grew about 6% in the U.S. in fiscal year '13.”

For the fiscal year ended June 30, Estée Lauder, No. 59 in Internet Retailer’s 2013 Top 500 Guide, reports:

  • Total sales were $10.18 billion, an increase of 4.8% from $9.71 billion in fiscal 2012.
  • Net income was $1.02 billion, a 19.0% increase from $856.9 million last year.
  • Total sales in the Americas, including North America and 17 countries in Latin America, grew by 4.9%, from $4.10 billion in 2012 to $4.30 billion in 2013.
  • Total sales in Europe, the Middle East and Africa grew by 4.4%, from $3.60 billion in 2012 to $3.76 billion in 2013.
  • Total sales in Asia-Pacific grew by 5.5%, from $2.01 billion in 2012 to $2.12 billion in 2013.

Estée Lauder did not break out dollar amounts for Latin American e-commerce sales, but noted the addition of online sales sites in the region. “We launched our first brand e-commerce site two years ago for Clinique in Brazil, and sales have steadily grown,” Daniel Rachmanis, president of the company’s Latin America segment, told analysts in the earnings call. Later this year, the company will launch another e-commerce site in Brazil for its cosmetics brand MAC, and it plans to begin with e-commerce in Mexico and Chile in fiscal 2015, he said. Estée Lauder already has 10 non-sales sites for its brands in Latin America and is active on social media in the region, he added.

MAC, short for Make-up Art Cosmetics, is sold in 79 countries.

Estée Lauder targets Brazil for great growth potential, but competition from strong local suppliers of mass market and luxury products, which the company refers to as prestige, and logistics have been formidable obstacles, Rachmanis said. “Although we've had strong growth, distribution in Brazil remains challenging,” he said. “Department stores are nonexistent, perfumeries are fragmented and losing share and the new prestige distribution is still emerging.” Going forward, Estée Lauder’s distribution strategy in Brazil will focus on freestanding Estée Lauder stores, multi-brand specialty stores and e-commerce, he said.

For the fourth quarter, the company reports:

  • Total sales were $2.41 billion, an increase of7.1% from $2.25 billion in the fourth quarter of 2012.
  • Net income was $95.9 million, up 83.7% from net income of $52.2 million in Q4 last year.

Estée Lauder has earmarked $525 million for its 2014 capital investments to “largely support consumer-facing investments in store counters, retail stores and e-commerce, as well as back-office support for systems and supply chain,” Tracey Thomas Travis, chief financial officer and executive vice president, told analysts.

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