使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主
Operator
Estee Lauder Company’s Fiscal 2003 first quarter conference call.
All participants have been placed on a listen-only mode, and the floor will be opened for comments and questions following the presentation.
Today's call is being recorded and webcast.
For opening remarks and introductions I would like to turn the call over to the Vice President of Investor Relations Mr. Dennis D'Andrea.
Please go ahead, sir.
Dennis D'Andrea - Vice President of Investor Relations
Good morning, and thank you for joining us to discuss our first quarter results.
On the call today are Fred Langhammer, President and Chief Executive Officer, and Rick Kunes, Senior Vice President and Chief Financial Officer.
Some of our remarks today contain forward-looking statements, and actual results could differ from those we expect.
In addition to risks described on this call you will find additional factors that could cause actual results to differ materially from these forward-looking statements in our press release and 10-Q which we expect to file today.
Now I'll turn the call over to Fred.
Fred Langhammer - President and Chief Executive Officer
Thank you Dennis.
Good morning, everyone.
It is my pleasure to share with you our first quarter results as well as giving you some indication as to the expectation for the rest of the year, as well as some guidance for the second quarter.
Let's zero in first on the first quarter.
Our results this quarter came in as we had expected.
July and August retail was softer than we would have liked, based on the traffic in the malls, but it was followed by a favorable comparison in September.
New launches in marketing activities helped us drive sales.
Net sales for the quarter rose 2% excluding the impact of foreign currency translation, which increased our reported sales growth by approximately two percentage points.
On a reported basis, net sales increased 4% to $1.24b from $1.19b in last year's quarter.
Net earnings for the quarter were $73.4m compared to $97.1m in the prior year's quarter, reflecting the calendarization of our programs and aggressive investment in advertising and promotion.
Diluted earnings per share came in at $0.28 at the high end of the range we forecasted compared to $0.38 in the prior year's quarter.
Solid performances from our strong new product pipeline across all brands as well as continued momentum from developing brands increased sales in the quarter.
In the U.S., while our major brands contributed, they were adversely impacted by the slow foot traffic.
We continue to produce solid results in most European and Asian markets with particular strength in the U.K., Spain, Korea, and Taiwan.
All product categories saw reported growth this quarter.
We were happy with skin care and make-up, but fragrance continued to be challenging.
That applies to the overall industry.
In this difficult climate, product Noonus coupled with effective marketing and advertising is the force drawing customers' attention.
Skin care sales increased 4% in constant dollars.
On a reported basis sales grew a healthy 6% to $421.7m.
Clinique introduced Advanced Stop Signs, which replaces its original serum with an upgraded formula and new packaging.
Advanced Stop Signs has had a terrific reception and became the number three skin care product in the U.S. department stores this quarter.
Estee Lauder introduced Resilience Lift overnight face and throat cream a supplement to its number one anti-aging line for mature skin.
An aggressive sampling campaign will feature both the new product and the existing Resilience Lift face and throat cream for the day.
Advertising started this month in both radio and national print forums.
Origins launched Make-up Make a Difference skin rejuvenating treatment which is being supported by national print ads in October fashion, beauty, and lifestyle magazines as well as sampling; a direct mailer in co-op radio and newspaper ads; a powerful program.
Origins is cross-sampling Make a Difference with its number one product, A Perfect World, which launched last September and continues to do very well.
In September, Bobbi Brown launched Skin Care, a 12-SKU collection including both new and existing products.
The line is supported with sampling of two key products -- a direct mail campaign and core ads with select retailers.
The brand saw a 52% increase in skin care sales and retail this quarter in the U.S.
Aveda launched Rosemary-Mint Body Care in July supported by 160,000 samples in print ads in August books.
You will have noticed that all of these products contained strong support to drive interest and traffic.
Make-up had a 3% sales increase in local currency, and reported make-up sales grew 4% to $468m this quarter.
The higher sales were driven largely by exceptional world-wide growth from M.A.C. and Bobbi Brown due to increases at the existing doors as well as expanded distribution.
Product Noonas was driving in make-up with Clinique launching new smooth anti-aging make-up, rich-texture blush and expanding its Gentle Light offering with a new pressed powder.
The Estee Lauder brand is building traction in the category with its Pure Color Make-Up line, which has been tremendously successful, particularly international.
Fragrance remains soft on an industry-wide basis.
In fact, for the quarter, U.S. women's fragrance sales declined 5% according to NPD beauty trends.
Despite the difficult market and the large number of new launches, six of the top 10 women's fragrances are Estee Lauder Company's products.
For the quarter, our fragrance business declined 1% excluding currency translation and rose 1% to $296.5m on a reported basis.
Tommy Girl from Tommy Hilfiger launched this quarter, complementing the prior year's launch of Tommy T For Him.
The introduction of Estee Lauder Pleasures Intense helped firm up the Pleasures franchise which remains one of the top three fragrances sold in the United States.
And Donna Karan Black Cashmere launched to further build on the successful Cashmere line and obviously will be an exciting element to our Christmas program.
In the U.S. men's category, Intuition For Men ranked number six its first full quarter on the counter.
This is quite an achievement given the fragrance climate.
These introductions position us well for the Christmas season.
Also, it is important to remember that a large portion of our travel retail business is fragrance.
Travel retail remained under pressure from lower air traffic through July and August until easier comparisons began in September.
Hair care also rose 1% this quarter to $50.4m.
Clinique's hair care business was lower primarily because of the anniversary of its international rollout last year.
Aveda had a good quarter launching Caress in shampoo and expanding its Sap-Moss collection with a new styling spray.
The brand also opened two new Lifestyles stores this quarter bringing the total number of company-owned Aveda stores to 116.
Bumble and bumble launched thickening conditioners this quarter and continues to selectively add to its salon network.
On a geographic basis, in the Americas region, the Americas region increased 2% from prior year to $787.7m, reflective of the weak store traffic.
We increased spending behind advertising, sampling, and store events to help build momentum leading into the important holiday season.
After all, an object in motion stays in motion.
Earlier results of this spending are reflected in the strong retail sales for new launches.
Most developing brands posted sales increases, with exceptional double-digit growth in M.A.C., and Bobbi Brown, Bumble and bumble and our online division, as well as saw increases in Aveda.
As I said before the established brands were impacted by the slower foot traffic, and our own retail stores experienced high single-digit growth led by M.A.C. and Aveda primarily due to new distribution.
Europe, and Middle East and Africa continued to show strength.
Net sales increased 5% over last year on a local currency basis.
Again, we saw a very strong performance at the affiliate level, particularly in the U.K., Spain, Italy and Switzerland.
Every brand grew in the region this quarter, with particular strong showing from Clinique and our develop big brands.