Down 32% in March-June, Estee Lauder's fiscal 2020 net profit plunges 60% yoy

On August 20, Estee Lauder, one of the world's three cosmetic giants, released its financial results for the fourth quarter of fiscal 2020 (ending June 30). Among other things, fourth-quarter sales were $2.43 billion, down 32% year-over-year, with a net loss of $459 million.

For the full fiscal 2020 as a whole, the group's sales were $14.29 billion, down 4% year-on-year (down 3% at constant exchange rates), while net profit was $680 million, down a severe 62% year-on-year decline.
 

According to the results, the group's losses continued to widen in the fourth quarter, following a loss of $41 million in the third quarter of fiscal 2020, due to the global epidemic. The continued weakness in the third and fourth quarters led to a marked decline in the group's overall performance.

In terms of categories, the skin care category performed significantly better than the color cosmetics category. The group's skin care segment recorded 13% growth in net sales to $7.38 billion, accounting for 51.6% of overall sales, thanks to the excellent performance of brands such as Estee Lauder and La mer. The color cosmetics segment's net sales fell 18 percent to $4.79 billion. Perfumes as well as other businesses such as hair care were also down, with both declining by 13% and 12%, respectively.

Regionally, Estee Lauder saw strong double-digit growth in net sales in mainland China in FY2020, thanks to the impact of the outbreak. In addition, almost all of the Group's brands achieved double-digit growth in China, especially the online channel, which was very strong and contributed 40% of sales.
 
The group's sales in Europe, the Middle East, Africa and North America remained stagnant, with nearly 20% of retail stores in these regions still not open as of the end of June this year.
 
Alongside the results, the group also unveiled a two-year restructuring plan aimed at resizing the company's business in response to the dramatic changes in its distribution landscape and consumer behavior following the global outbreak of the neo-crown epidemic, which is expected to be completed by fiscal 2023.
 
Among other things, the group plans to reduce its global workforce by a net of approximately 1,500-2,000 jobs, or about 3% of its current workforce, and will eliminate some of the group's positions, retrain and redeploy some employees, and invest in new positions in key areas.
 
Secondly, the Group will also make changes to its global distribution network, particularly in North America, Europe, the Middle East and Africa. Estée Lauder expects to close approximately 10% to 15% of its standalone stores worldwide.