The Estée Lauder Companies is feeling the impact of a beauty slowdown. For the first quarter of fiscal year 2025, the company reported a 4% decrease in net sales, falling to $3.36 billion from $3.52 billion during the same period in the prior year.
“For the first quarter, we anticipated a challenging start to fiscal year 2025. Our results today are largely consistent with the outlook for the quarter we offered in August,” said outgoing CEO Fabrizio Freda during the earnings call.
Much of that decrease came from Asia. Net sales in the region decreased 11%, with growth in Japan failing to offset a sluggish performance in mainland China and Hong Kong, largely due to declining sales in Asia travel retail. “Our strategy reset at this point in time is focused on continuing to rebalance our regional growth, evolving our exposure to China market volatility, which has already come down by nearly 10 percentage points since fiscal year 2022,” said Freda.
That decline was consistent throughout the globe, despite individual areas of growth. While sales in the Americas overall declined by 1%, the company reported double-digit growth in online sales in the United States. In March, skin-care brand Clinique joined Amazon’s online beauty store, followed by the Amazon launch of Too Faced in June and the Estée Lauder brand in October. Outgoing chief financial officer Tracey T. Travis said the company will continue to look to channels like Amazon to drive growth.
“Our team remains focused on evolving our channel distribution mix toward fast-growing channels with the consumer, as evidenced by the launch of seven brands in the last eight months in Amazon’s U.S. premium beauty store,” Travis said during the earnings call.
Despite ongoing fragrance growth from the likes of LVMH, Estée Lauder reported an overall 1% decline in net fragrance sales for Q1 2025. Not all Estée Lauder brands experienced the same decline, however. Net sales for Tom Ford fragrance fell in the single digits, while Le Labo saw double-digit growth. According to Freda, the Jo Malone brand grew in Asia. The brand saw double-digit growth in China and has acquired a major market share in Japan since launching a flagship store in Tokyo in June.
Other categories saw steeper declines. The company reported a 2% drop in net sales in makeup, a 6% decrease in hair care and an 8% decrease in skin care for Q1 2025.
The negative outlook comes as the company is preparing for major leadership changes in the coming months. Stéphane de La Faverie will succeed Fabrizio Freda as CEO beginning in January, while Akhil Shrivastava will replace Tracey T. Travis as evp and CFO in November.
“I personally believe that the new leadership team will be able to bring the kind of improvement and acceleration that obviously all of you are expecting from us in the next years,” said Freda.
