Estee Lauder 2004 Annual Report Download - page 16

display some of the best packaging in the industry — we have it all. Our Chairman, Leonard Lauder, said it best:
“The wealth of a company is its people. By that standard, we are a very wealthy company.”
Our financial success may be measured by sales and profits, but our overall success is measured by the power
and promise of our IDEAS. Our Company has always been known for its vision: We were the first cosmetics
company to connect with consumers by providing samples and Gift-With-Purchase; we were the first to
introduce consistent brand imagery around the world, and we were the first major prestige cosmetics company
to offer shopping on the Internet.
At present, our innovative drive is best exemplified by the creation and launch of several new brands in Kohl’s
department stores. This summer, we announced the fall launch of three new brands for Kohl’s — American
Beauty, Flirt! and Good Skin.™ The investment in these brands will enable us to reach consumers who might
not otherwise shop in our traditional channels of distribution with unique offerings. The venture will also provide
us with a range of
products positioned to appeal to consumers in emerging markets around the world.
The effort is being directed by our new division, BeautyBank, an incubator for new brand concepts and global
business opportunities.
FINANCIAL HIGHLIGHTS
Our critical assets — our products, our people and our ideas — contributed to an outstanding performance in
fiscal 2004. We added an unprecedented $694.4 million to top-line sales, generating $5.79 billion in total net sales,
an increase of 14% over last year. Net earnings attributable to common stock were $342.1 million, compared
with $296.4 million in fiscal 2003 representing a 15% increase. And, diluted earnings per common share increased
17% to $1.48, compared with $1.26 in the prior year.
The results were driven by several outstanding accomplishments:
• Global sales growth • Resource management
• Growth in our four main product categories • Strong distribution dynamics
GLOBAL SALES GROWTH
Our performance around the world certainly benefited from increased travel and tourism, recovery in the prestige
distribution channel and the effects of a weaker U.S. dollar.
On a regional basis, in the Americas, annual net sales increased 7% to $3.15 billion. In Europe, the Middle East &
Africa, annual net sales increased 24% to $1.87 billion. On a constant currency basis, net sales in that region rose 14%.
And in Asia/Pacific, annual net sales rose 17% to $771.4 million,while net sales in constant currency grew by 9%.
Outside the developed markets,we solidified our presence in fast-growing emerging markets. We relocated our
Asian regional headquarters to Shanghai and also developed the blueprint for a new R&D Center in China.
Our business in Russia continued to show strong growth, and other Eastern European markets continue to
show promise for the future.
GROWTH IN OUR FOUR MAIN PRODUCT CATEGORIES
Strong growth was reported in our four main product categories, led by fragrance and makeup. Two of our
categories, skin care and makeup, reached milestones this year,with both exceeding $2 billion in sales for the first
time in our history. Net sales in fragrance were $1.22 billion, up 15% on a reported basis and 10% in constant
currency. The improvements were driven by the resurgence of the travel retail channel, where 60% of
the cosmetics sales in the channel are generated by fragrance, as well as several new launches — including
Estée Lauder Beyond Paradise, Aramis Life and Clinique Simply.
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INNOVATION REMAINS THE DRIVING FORCE
THAT PROPELS OUR COMPANY FORWARD.