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The Estee Lauder Companies Inc Class A EL

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Morningstar’s Analysis

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Estee Lauder Returns to Sales Growth Despite Ongoing Pandemic Headwinds, but Valuation Not Pretty

Analyst Note

| Rebecca Scheuneman, CFA |

Estee Lauder posted an impressive fiscal 2021 second quarter, with sales growing 5% compared with our expectation of a 6% decline. The Asia-Pacific region drove the upside, with 35% growth versus our 6% estimate, given a strong 11.11 Singles’ Day in China. Estee’s strong brands, which underpins its wide-moat rating, performed very well during the shopping holiday, with Estee Lauder ranking as the top overall beauty brand, while La Mer, MAC, and Jo Malone capture the top spots of the luxury beauty, prestige makeup, and fragrance categories, respectively.

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Company Profile

Business Description

Estee Lauder is the world leader in the global prestige beauty market, participating across skincare (52% of 2020 sales), makeup (33%), fragrance (11%), and haircare (4%) categories, with popular brands such as Estee Lauder, Clinique, MAC, La Mer, Jo Malone, Aveda, Bobbi Brown, Too Faced, and Origins. The firm operates in 150 countries, with 27% of revenue stemming from the Americas, 44% from Europe, the Middle East and Africa, and 30% from Asia-Pacific. The company sells its products through department stores, travel retail, multi-brand specialty beauty stores, brand-dedicated freestanding stores, e-commerce, salons/spas, and perfumeries.

767 Fifth Avenue
New York, NY, 10153
T +1 212 572-4200
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2020
Fiscal Year End Jun 30, 2021
Stock Type Slow Growth
Employees 48,000