Estee Lauder 2007 Annual Report Download - page 12

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11
Not only do we focus on what our consumers want, but also on where they shop for prestige beauty.
We operate more than 450 free-standing stores for brands including Origins, M.A.C, Jo Malone and Aveda.
Sales from our online division grew by more than 25% in Fiscal 2007. In addition to our own sites, our brands
are also sold on select retailer sites. Many of our brands are expanding their e-commerce to global markets as
consumers around the world use the Internet for shopping.
This year, Bobbi Brown’s appearance on QVC became the direct-TV shopping channel’s most successful beauty
launch in 20 years— selling more product in one hour than any other guest. Sales benefits overflowed from TV
to retail counters and on bobbibrowncosmetics.com, as shoppers looked for more from this great brand.
We continue to support our North American department store business through the current wave of
consolidations. In Fiscal 2007, Origins entered the dynamic European pharmacy channel, and Darphin has
pursued the international spa channel. We are rapidly expanding in the potentially lucrative Chinese market and
now have eight brands in China, with the Estée Lauder brand the most widely available in 32 cities.
we need the sharp, keen
instincts of a small merchant to
stay close to our consumers.
Travel retail has proven to be a vital shopping venue. In spite of the potential challenges at the beginning of the
year, travel for business and pleasure grew, as did the retail opportunity within airports and duty-free shops.
Our travel retail business responded to the demand with exclusive product offerings that met the unique needs
of travelers. We now have 11 brands available in airports and duty-free shops around the world. In Fiscal 2007,
sales from our travel retail business grew 16%. Our retail strategies in this arena are setting a new standard for
how some of our brands touch consumers. The beautiful Jo Malone store at Heathrow airport in London is
a model for the brand’s global expansion.
Finally, global growth would not be feasible without the infrastructure to support our concept-to-market product
cycles. We are gaining momentum with our Strategic Modernization Initiative. We successfully launched SAP at
Aveda in May 2007. We anticipate that the majority of the SAP transformation will take place through Fiscal
2010, at which point we expect to benefit from the full impact of more than $80 million in savings annually.
I would like to take this moment to thank our Board of Directors for their guidance and support; our Chairman,
Leonard Lauder, for providing us with his ongoing wisdom and experience; our management for their dedication
and leadership; and all of the employees of The Estée Lauder Companies for their continued passion, drive and
commitment to growth.
Sincerely,
William P. Lauder
President and
Chief Executive Officer