Beauty giant Estee Lauder says its Asian sales rose in every country except Hong Kong in the last quarter.
Estee Lauder Asia achieved double-digit growth in Korea, Japan, Australia and Taiwan and achieved “solid” constant currency sales gains in China and Thailand.
“The higher sales in China reflected sales gains in most brands due to continued distribution expansion and increased online activity,” the company said in an earnings statement.
“In Hong Kong, the reduction in tourism from China continues to negatively impact business, particularly for the Estee Lauder, Clinique and La Mer brands. The company remains cautious of the near-term slower growth there.”
Foreign currency translation unfavorably impacted reported sales by 5 per cent with the largest impact affecting China, Korea and Australia.
In Asia-Pacific, operating income decreased, with lower results reported primarily in Hong Kong and China.
“The lower results in Hong Kong were primarily due to the lower sales, and in China were attributable to increased marketing, selling and store operations costs. These lower results were partially offset by higher operating income in Japan and Singapore,” the company said.
In its outlook for the full 2016 year, now nine months complete, Estee Lauder said it expects the global prestige beauty market to continue to generate solid growth.
“However, volatility and economic challenges are expected to continue to negatively impact Hong Kong and some emerging markets challenged by weak currencies. The company’s growth has outpaced global prestige beauty and is expected to continue growing faster than the industry, demonstrating the company’s ability to successfully navigate volatility. The company expects to increase targeted investment spending in the fiscal 2016 fourth quarter compared with the prior year, behind areas with good momentum or with opportunities for share gains, as well as in capabilities to sustain future growth.”
Globally, net sales for the company’s third quarter to March 31 totalled US$2.66 billion, a 3 per cent increase compared over the $2.58 billion in the prior-year quarter. Net earnings were $265.6 million, down on the $272.1 million of last year.
Meanwhile, Estee Lauder has revealed plans to save between $200 million and $300 million a year through a series of job cuts, retraining and restructuring initiatives.