Estee Lauder 2004 Annual Report Download - page 46

THE EST{E LAUDER COMPANIES INC.
FISCAL 2004 AS COMPARED WITH FISCAL 2003
NET SALES
Net sales increased 14% or $694.4 million to $5,790.4
million, reflecting growth in all product categories and all
geographic regions led by double-digit growth in Europe,
the Middle East & Africa and Asia/Pacific and the inclu-
sion of a full year of net sales of the Darphin line of prod-
ucts, which was acquired during the fourth quarter of
fiscal 2003. Net sales results in Europe, the Middle East &
Africa and Asia/Pacific benefited from the weakening of
the U.S. dollar. Excluding the impact of foreign currency
translation, net sales increased 9%.
Product Categories
Skin Care Net sales of skin care products increased 13%
or $246.4 million to $2,140.1 million. This increase was
primarily attributable to the recent launches of Hydra
Complete Multi-Level Moisture Cream and Idealist
Micro-D Deep Thermal Refinisher by Estée Lauder and
Pore Minimizer by Clinique. Additionally, the increase was
supported by strong sales of Clinique’s 3-Step Skin Care
System and the Repairwear line of products from Clinique
as well as Re-Nutriv Intensive Lift Serum and Re-Nutriv
Intensive Eye Crème by Estée Lauder. Also contributing to
this increase was the inclusion of a full year of net sales
of the Darphin line of products, which are primarily skin
care, and growth in developing brands. Partially offsetting
these increases were lower net sales of certain existing
products such as Advanced Stop Signs by Clinique and
White Light and Lightsource product lines by Estée
Lauder. Excluding the impact of foreign currency transla-
tion, skin care net sales increased 8%.
Makeup Makeup net sales increased 14% or $260.5 mil-
lion to $2,148.3 million, in part, due to strong sales of our
M.A.C and Bobbi Brown makeup artist lines. The increase
in net sales also reflected the current year launches of
Ideal Matte Refinishing Makeup SPF 8 and Electric Intense
LipCreme by Estée Lauder and Perfectly Real Makeup and
Colour Surge Bare Brilliance by Clinique. Also contribut-
ing to net sales growth were strong sales of High Impact
Mascara, High Impact Eye Shadow and Skin Clarifying
Makeup by Clinique, as well as Pure Color Lip Vinyl and
Artist’s Lip and Eye Pencils from Estée Lauder. Partially off-
setting these increases were lower net sales of certain
existing products such as So Ingenious Multi-Dimension
Liquid Makeup and Pure Color Lipstick from Estée Lauder
and Moisture Surge Lipstick from Clinique. Excluding the
impact of foreign currency translation, makeup net sales
increased 10%.
Fragrance Net sales of fragrance products increased 15%
or $161.5 million to $1,221.1 million, primarily attributable
to the current year launches of Estée Lauder Beyond
Paradise, Aramis Life, Clinique Simply and the Tommy
Jeans collection. These product launches primarily con-
tributed to increased fragrance net sales outside the
United States. Additionally, the increase in net sales bene-
fited from improved results from our travel retail business.
These net sales increases were partially offset by lower
net sales of Estée Lauder pleasures, Intuition and Beautiful,
certain Tommy Hilfiger products and Clinique Happy.
Excluding the impact of foreign currency translation,
fragrance net sales increased 10%.
Hair Care Hair care net sales increased 9% or $20.5 mil-
lion to $249.4 million. This increase was primarily the
result of sales growth from Aveda and Bumble and bumble
products due to an increase in sales at existing salons and
spas, new salon and spa openings and the success of new
and existing products. Aveda net sales also increased as a
result of the opening of new Company-owned Aveda
Experience Centers. Partially offsetting the increase were
lower net sales of Clinique’s Simple Hair Care System.
Excluding the impact of foreign currency translation, hair
care net sales increased 7%.
The introduction of new products may have some can-
nibalizing effect on sales of existing products, which we
take into account in our business planning.
Geographic Regions
Net sales in the Americas increased 7% or $217.0 million
to $3,148.8 million, primarily reflecting growth from our
newer brands, the success of new and recently launched
products and increases from most of the Company’s
freestanding retail stores, all of which reflected the
strengthening retail environment. Nevertheless, the pres-
tige fragrance business in the United States continues to
be challenging.
In Europe, the Middle East & Africa, net sales increased
24% or $363.8 million to $1,870.2 million, primarily
reflecting higher net sales from our travel retail business,
the United Kingdom, Spain, Greece and South Africa, as
well as the inclusion of a full year of net sales of the
Darphin line of products. We also benefited from
the effect of favorable foreign currency exchange rates
to the U.S. dollar. Excluding the impact of foreign cur-
rency translation, net sales in Europe, the Middle East &
Africa increased 14%.
Net sales in Asia/Pacific increased 17% or $113.6
million to $771.4 million, primarily due to higher net sales
in Japan, Australia, Taiwan, China and Thailand. Excluding
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