Sales for Estee Lauder in Australia boom through lockdowns and home isolation

Female consumers didn’t let lockdowns and home isolation get in the way of buying their favourite cosmetics and skincare products.

Shoppers didn't let lockdowns or home isolation stop them from buying cosmetics and skincare to help Estee Launder book booming sales in Australia and take market share from rival brands.

Female consumers didn’t let lockdowns and home isolation get in the way of buying their favourite cosmetics and skincare products, with trusted brand names especially popular through the pandemic to help leading US conglomerate Estee Lauder lift sales in Australia.

Estee Lauder, the Manhattan-based cosmetics giant that has a market capitalisation of just over $US130bn ($180bn), has experienced boomtime conditions in Australia and claims to have attracted shoppers from rival brands over the past year by growing its market share of the prestige cosmetics market by 4.1 per cent.

Fuelling this growth was a better-than-expected bounce as lockdowns ended and the recovery in retail picked up pace, while shoppers flocked to Estee Lauder’s “hero” brands and products that had high recognition and trust among consumers.

Accounts show for the 12 months to June 2021, Estee Lauder’s Australian arm posted revenue of $282m, up 6.8 per cent on the revenue of $264m recorded for fiscal 2020.

Profits grew at a far stronger pace than sales, with net profit of $35.8m up 51 per cent to the profit of $23.6m posted in 2020.

The growing sales and profitability for Estee Lauder gives credence to the power of the “lipstick effect”, which describes the retail theory that through major economic upheavals such as recessions, high unemployment or, as is the case now, a global pandemic, shoppers still spend money on small indulgences that make them feel good.

In the operational review accompanying the latest Estee Lauder Australia results, the company notes the strong performance of the business despite a number of economic and operational headwinds.

“The group has maintained a strong performance in a difficult trading environment and fluctuating consumer sentiment notwithstanding the impacts of Covid-19 and prolonged lockdowns across Victoria … and shorter lockdowns in other states throughout the year,” the report said.

Estee Lauder’s latest financial accounts lodged with the corporate regulator have revealed a business in Australia that wasn’t dented by Covid-19 and the closure of non-essential retail, but rather an operation that thrived, especially as lockdowns were eased.

“The expected impact and impending recovery from lockdowns was more positive than originally expected … overall the group maintained its leadership of the prestige cosmetics market growing market share by 4.1 per cent and focusing on the hero products across the brand portfolios with most achieving higher growth in hero product sales compared to overall brand sales increases.”

Estee Lauder internationally has focused more on its “hero” brands, including Estee Lauder’s Advanced Night Repair, Creme de La Mer and Bumble and Bumble, which also have high rates of return purchases of as much as 60 per cent in some markets.