The Beauty Giant Anticipates Decline in Prestige Beauty Sales in China for Next Year
Estée Lauder Cos. has predicted an ongoing slump in prestige beauty sector sales within China next year. The announcement comes simultaneously with the company’s message about the retirement of its longtime CEO, Fabrizio Freda, due next year.
The company disclosed it expects reported and organic net sales to fluctuate between a 1% decrease and a 2% increase in fiscal 2025 as compared to the previous year. Adjusted diluted net earnings per common share are also anticipated to rise from 7% to 15%, ranging from $2.78 to $2.98. These projected figures fall somehow short of Wall Street’s predictions of $3.97.
According to Freda, the less than optimistic projection reflects an ongoing weak purchasing sentiment among Chinese consumers. He commented, “While our sales and profit outlook for fiscal 2025 is disappointing, this year we will make important strides, as we implement our strategy reset to continue rebalancing regional growth, deliver improved annual profitability, and strengthen go-to-market and innovation capabilities to elevate our execution in response to a more competitive market.”
In the fourth quarter ending June 30, the beauty giant reported net sales of $3.87 billion, which marks a 7 percent growth compared to $3.61 billion in the same period last year. This slightly exceeded Wall Street’s estimations, with organic net sales seeing an 8 percent increase.
However, the company observed its net loss expanding to $284 million, with diluted net loss per common share hitting 79 cents. The whole of fiscal 2024 witnessed net sales of $15.61 billion, a decrease of 2 percent from $15.91 billion in the previous year. Organic net sales also dropped by 2 percent.
The details divulge a 3% drop in skin care net sales, primarily due to the existing softness in the overall prestige beauty market in mainland China. The sales from Estée Lauder, Clinique, and Dr.Jart+ experienced a decline. On the other hand, Lar Mer and The Ordinary had an impressive run with their growth.
In terms of category, makeup net sales decreased 1 percent, fragrance net sales increased 2 percent, while the hair care section faced a 4 percent decline.