Estee Lauder 2013 Annual Report Download - page 127

Fragrance Net sales of fragrance products increased
3%, or $39.8 million, to $1,310.8 million. Incremental
sales from the recent launches of Zegna Uomo, DKNY
Be Delicious So Intense, Tommy Hilfiger Freedom Men
and Coach Love contributed approximately $30 million,
combined, to the increase. Higher sales of Jo Malone and
Tom Ford fragrances contributed approximately $60
million, combined, to the increase. These increases were
partially offset by lower sales of Estée Lauder Sensuous
Nude and DKNY Golden Delicious, both of which were
new launches in the prior year, as well as pureDKNY, of
approximately $52 million, combined. Excluding the
impact of foreign currency translation, fragrance net sales
increased 4%.
Hair Care Hair care net sales increased 6%, or $26.5
million, to $488.9 million, primarily reflecting the contin-
ued success of the Invati line of products and recent
launches of Pure Abundance Style Prep and Be Curly Curl
Controller from Aveda. The category also benefited from
sales generated from expanded global distribution,
in particular, to salons for Aveda and multi-brand
specialty retailers for Bumble and bumble. Partially offset-
ting these increases were lower sales of Bumble and
bumble brand products to salons and lower net sales of
Ojon brand products due, in part, to a reduction in our
business in the DRTV channel. The impact of foreign
currency translation on hair care net sales was de minimis.
Geographic Regions
Net sales in the Americas increased 5%, or $201.8 million,
to $4,302.9 million. The increase during the current year
was primarily attributable to growth in the United States
of approximately $172 million, due in large part to prod-
uct offerings from our heritage and makeup artist brands.
Net sales in Canada increased approximately $13 million,
primarily reflecting increased sales from certain of our
heritage brands as a result of expanded distribution.
These increases also reflect the efforts of our expanded
pull/push activities, which include innovative advertising
that continues to draw new consumers to our brands and
our ongoing efforts to work with retailers in the United
States and Canada on strengthening the “High-Touch”
concepts used to help market our products. We are cau-
tious of a slowing retail environment in the United States
in the short term. Net sales in Latin America increased
approximately $19 million, led by Venezuela and Mexico.
The impact of foreign currency translation on net sales in
the Americas was de minimis.
In Europe, the Middle East & Africa, net sales increased
4%, or $155.5 million, to $3,758.7 million, primarily
reflecting higher sales from our travel retail business and
in the United Kingdom and the Middle East of approxi-
mately $185 million, combined. The net sales increase in
our travel retail business primarily reflected a strong retail
environment for our products, new product launches and,
to a lesser extent, an increase in global airline passenger
traffic. Higher sales in the United Kingdom were primarily
driven by our makeup artist brands and new product
launches from certain of our heritage brands. In addition,
the United Kingdom benefited from increased sales of
certain of our luxury fragrance and skin care products.
Higher sales in the Middle East were primarily driven by
our makeup artist brands and sales of luxury fragrances.
These increases in the region were partially offset by
lower net sales in Spain, Russia, Switzerland and the Bal-
kans of approximately $45 million, combined. With the
exception of Russia, these lower net sales reflected the
challenging economic environments in certain countries
in Europe. Accordingly, we remain cautious in the near
term. The lower net sales in Russia primarily reflected
destocking associated with ongoing challenges with
a certain customer. The overall change in Europe, the
Middle East & Africa net sales was inclusive of unfavorable
exchange rates due to the strengthening of the U.S. dollar
against most currencies in this region of approximately
$75 million. Excluding the impact of foreign currency
translation, net sales in Europe, the Middle East & Africa
increased 6%.
Net sales in Asia/Pacific increased 5%, or $110.2 mil-
lion, to $2,121.6 million, primarily reflecting growth in our
sales of skin care products, in line with our strategy. We
increased sales by approximately $160 million in China
and Hong Kong. Net sales in China benefited from
expanded distribution. While we gained share in the pres-
tige business in China, we are cautious that a slowing of
the future growth trend of the Chinese economy may
temper our retail sales growth, including that of our travel
retail business. Higher sales in Hong Kong were primarily
driven by launches from our heritage brands and higher-
end prestige skin care products. These increases were
partially offset by lower net sales in Korea and Japan of
approximately $66 million, combined. The lower net sales
in Korea primarily reflected a challenging economic envi-
ronment and continued competitive pressures facing
prestige beauty in Korea. The decline in Japan was driven
by the weakening of the Japanese yen. Excluding the
impact of foreign currency translation, net sales in Asia/
Pacific increased 6%.
We strategically stagger our new product launches by
geographic market, which may account for differences in
regional sales growth.
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