THE WHAT? The Estee Lauder Companies has reported its results for the third quarter of fiscal 2023. The US prestige beauty giant reported net sales of US$3.75 billion, down 12 percent on the prior-year period.

THE DETAILS The company reported net earnings of US$156 million, substantially down on last year’s US$558 million in Q3.

In terms of sales by sector, both make-up and skin care lost ground, the latter seeing 20 percent shaved off 2022’s Q3 total. Fragrance and Hair Care managed to inch up 1 percent.

By region, The Americas recorded a 3 percent uptick in sales, Europe, the Middle East and Africa saw sales dive 26 percent and sales in the Asia/Pacific region stayed largely flat, down 1 percent yoy.

THE WHY? Lauder attributed its drop in earnings to a considerably higher effective tax rate due to the expected change in the company’s geographical mix of earnings for fiscal 2023. The drop in net sales was put down to the continuing struggles in ELC’s travel retail Asia business.

Fabrizio Freda, President and Chief Executive Officer explains, “In the context of a quarter which we anticipated to be challenging, we are pleased to have delivered the high-end of our outlook for the third quarter of fiscal 2023. Our developed and emerging markets grew strongly and exceeded our expectations to offset an even slower-than-expected recovery in Asia travel retail. Each of The Americas and Asia/Pacific returned to organic sales growth, bolstered by increases in the United States and China, while the markets of EMEA continued to prosper. Moreover, we continued to grow our prestige beauty share in many markets, including a sequential acceleration in gains in China and Western Europe.

“As the shape of recovery from the pandemic for Asia travel retail comes into better focus, it is proving to be both far more volatile than we expected and more gradual relative to what we experienced in other regions. We are, therefore, lowering our organic sales and EPS outlook for fiscal 2023 to reflect significantly greater headwinds in our fourth quarter than we expected in February.

“While we work through the serious but we believe temporary headwinds facing Asia travel retail, we are encouraged by the strong momentum in the rest of our business. Indeed, consumer demand is robust for our diverse portfolio of brands in developed and emerging markets around the world, evidenced in both organic sales growth and retail sales trends, which drives our confidence in the long-term. What is more, we are thrilled to have acquired the Tom Ford brand last week and are optimistic about its promising growth opportunities.”