Sales have plunged! Net profit **92%, used to be a "lady harvester", but now I am not used to it.
It is said that the elderly, children and women are the three groups that make the best money, and in terms of making women's money, Estee Lauder, which has a history of 78 years, can be said to be the best among them.
In the 50s of the last century, a platinum cream from Estee Lauder cost $115, which was 10 times more expensive than the most expensive skin care products on the market in the United States at the time, but it was still hard to find.
In 2019, Estee Lauder's total revenue exceeded 105 billion, and the profit was as high as 12.6 billion, which shows how strong Estee Lauder's strength is.
However, after Estee Lauder released its Q1 financial report for fiscal year 2024 in November last year, the stock price of Estee Lauder Inc. fell off a cliff of **189%。
And in the whole year of 2023, Estee Lauder's stock price has fallen by about 50%, and its market value has evaporated by $45 billion, which is almost a direct halve.
How "ugly" is Estee Lauder's earnings report that will lead to this result?
In the 2024Q1 financial report announced by Estee Lauder, the cost of sales increased slightly compared with last year, but the net sales did not rise with it, but from 39$300 million was reduced to $35$1.8 billion, a decrease of 1048%。
One of the most miserable data in the financial report is net profit, Estee Lauder's net profit in the same period of 2022 is 4900 million US dollars, but now it is only 36 million US dollars, a decrease of 92%, not in half, but in ankle.
After 78 years of ups and downs, it is not easy for Estee Lauder to get to where it is today, and now it is suffering from this catastrophe, how to deal with it?
The Estee Lauder brand is named after its founder, Mrs. Estee Lauder.
Mrs. Estée was born in 1908 in a Jewish family in Queens, New York, USA, and she would eventually become a generation of "beautiful godmothers", inseparable from the influence and help of two people.
Her mother taught her the importance of beauty to women, and her uncle Schutz, a chemist, taught Mrs. Estée how to create "the power of beauty."
For the pursuit of beauty, Mrs. Estee spared no effort, her original dream was to become an actress and leave her beauty to the world like Audrey Hepburn, but unfortunately she had no talent and had no choice but to give up.
Since you can't be an actor, you can do your favorite skin care products, which can also retain your beauty and youth, and not only your own beauty.
In 1946, Mrs. Estée and her husband founded The Estée Lauder Company, which initially produced only three products: lotions, cleansing oils and creams.
She is a genius in skin care research and development, and even more so in commercial sales, and she is the only woman on the list of "20 most influential business geniuses of the 20th century" selected by Time magazine in 1998.
Nowadays, the most commonly used sales promotion method in the beauty industry is "buy ** and get new samples free", which was pioneered by Mrs. Estée.
At least 50 faces a day", this was the daily goal that Mrs. Estée set for herself, and through her consistent sales in various beauty salons in New York, Estée Lauder quickly made a name for herself.
In the second year of the brand's existence, Estée Lauder moved into the Saks department store on Fifth Avenue and began to slowly expand outward from New York.
In 1958, Estee Lauder's annual turnover reached $800,000, and Estee Lauder entered the fast lane of rapid development.
Also that year, Mrs. Estée's eldest son, Leonard Lauder, retired from the Navy and became an employee of the company, and he later became the second generation of Estée Lauder.
Estee Lauder is also one of the first companies among all the top international beauty brands to discover the potential of the Chinese market.
In 1993, Estee Lauder opened China's first store in the Isetan department store on Huaihai Road in Shanghai, and since then, big brands such as L'Oreal, Helena, Procter & Gamble, and Shiseido have also entered Shanghai.
In "Flowers", which was popular at the beginning of this year, it also cited the incident of Estee Lauder's entry into the Chinese market as the plot, but it should be more about placing advertisements for the financiers.
After entering the new century, Estee Lauder has shifted the sales focus of the Asia-Pacific region from Japan and South Korea to the Chinese market.
In May 2005, Estée Lauder moved its Asia Pacific headquarters from Singapore to Shanghai, and in November of the same year, Estée Lauder not only introduced its six major brands to China, but also established an R&D center in Shanghai.
The three big moves in one year all prove Estee Lauder's confidence and ambition in the Chinese market.
Since its inception in 1946, Estee Lauder has gone through 78 years, from the beginning of a small counter to the present day all over the world, Estee Lauder has become one of the world's largest skincare companies.
And the Estee Lauder family has always firmly held the control of the company, and now William Lauder, the third-generation head of Estee Lauder, is the grandson of Estee Lauder, and the company's market value once exceeded 100 billion US dollars under his leadership.
However, who would have thought that such a huge business empire would halve its market value in just one year, what happened?
In fact, not only last year, but also in recent years, Estee Lauder's life has not been good, as early as 2020, Estee Lauder's annual net sales began to decline.
After the announcement of Estee Lauder's 2020 financial report, the stock price also plunged by 7%, and the market value evaporated by about 5.2 billion US dollars, which is converted to about 35.9 billion yuan, as if it was a rehearsal of this event.
Faced with such a crisis, Estee Lauder had to take emergency measures, so it issued a "post-epidemic plan", but in terms of content, it was a contraction plan.
Two of the main ones are layoffs and store closures, with plans to lay off 3% of the group's workforce nationwide, or about 1,500 to 2,000 people, while closing 10% to 15% of its independent stores in Europe and the United States.
Such a move to expose the "fatigue" of the group's operation is very rare throughout the 78-year history of Estee Lauder.
Another is that Estee Lauder also explained the reason why the decline in sales was so serious in its 2024Q1 financial report.
Sales of Estée Lauder and La Mer decreased significantly, while makeup and fragrance products increased slightly.
In other words, the cheap ones are easy to sell, but the expensive ones are no longer easy to buy.
This is also a problem that many big luxury brands have encountered in recent years, and they wonder why consumers used to save money to buy a copy of their products, but now they are disdainful.
This is not only because of the intensification of competition in the industry, and many emerging beauty brands have begun to exert their strength, but also because of the awakening of consumer consciousness, which tends to be rational in consumer behavior, and even downgrades.
For example, the "ingredient party" and "big-name party" that women have come out of because of their different concepts of skin care products and cosmetics.
The latter is only pursuing big brands, while the former is a more affordable replacement brand when the ingredients are almost the same, and it is the "ingredient party" that has gained the upper hand in recent years.
As consumers blindly pursue big brands and exaggerated consumption decreases, the "good days" of luxury brands can reap the wallets of the middle class by pushing a product are also gone.
However, despite this, the Asia-Pacific market, especially the Chinese market, is crucial for Estée Lauder.
In fiscal year 2023, while Estee Lauder's overall sales shrank, sales in the Asia-Pacific region increased by 4%, and in the fourth quarter, it increased by 36% year-on-year.
China's mainland market and Hong Kong market have also achieved double-digit growth, which is no less than a red for Lauder shareholders to see a touch of red in a green **.
But if you want to get out of today's crisis, the key lies in Estee Lauder itself, and the choice of the market is a process that constantly drives the change of the enterprise.
In terms of popularity, L'Oreal, Procter & Gamble, Shiseido and other beauty brands are not much weaker than Estee Lauder, and some are even better than them in the Chinese market.
On the top, Estee Lauder is not close to the people, and there are many emerging brands behind them who are catching up, and the situation can be said to be not optimistic.
Today, Estee Lauder's old rival L'Oreal is making great progress, and the net profit has been pressing Estee Lauder under him for many years.
If you only know that you are lying on the credit book and do not seek new development, then no matter how beautiful it has been and how long the history of the enterprise is, it will not be "alive" for a long time.
Women's beauty is an eternal law, and now that all beauty brands have achieved performance growth, Estee Lauder has become the one who "fell behind", which is a very dangerous signal.
Estee Lauder still needs to take the initiative to change as soon as possible, find new development opportunities and methods, and keep up with the "big army" as soon as possible.