Estee Lauder 2002 Annual Report Download - page 13

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TAKING ACTION
To improve our performance, our Company continually examines all areas of our businesses. In particular, during
economic slowdowns, we look to identify those areas where prospects are not apparent. This process leads to
action. This year, we took a one-time, $117.4 million pre-tax charge relating to four areas — the Internet, supply
chain, distribution and globalization of our organization — to position us for a return to our goal of double-digit
earnings growth. These actions free resources to stimulate sales through focused investment. Our commitment
to building and maintaining the equity of our brands dictates that we spend on innovation, as well as advertising
and promotion. This continues to be the best recipe for growth.
This year, inventory management became more stringent as a result of slower retail sell-through and the desire of
our retail customers to carry lower inventory levels. We responded quickly, adjusting procurement and manu-
facturing production levels. The outcome was a dramatic improvement in inventory levels that favorably affected
cash flow. This accomplishment was the result of a great team effort.
Our freestanding retail stores, while not immune to overall market conditions, continue to present great
opportunities for enhancing the consumer’s experience with brands like Origins, M.A.C and Aveda. We now
have over 375 single brand, company-owned stores around the world.
REACHING OUT TO THOSE WE CARE ABOUT
At a time when many corporations are re-examining their images, positions and codes of conduct, I believe
our corporate reputation has never been stronger. We received several prestigious awards for our integrity.
On June 5, 2002, the Company was honored by the Foreign Policy Association and received its award for Social
Responsibility in recognition of our outstanding corporate citizenship. We at The Estée Lauder Companies strive
to find new ways to be of service to our consumers, stockholders and employees, as well as to our communities.
This passion has given birth to countless initiatives in many different areas such as The Estée Lauder Breast Cancer
Awareness Campaign, which supports the work done by The Breast Cancer Research Foundation; the M.A.C
AIDS Fund, which has raised more than $24 million through the sales of its Viva Glam lipsticks; Aveda’s support
of the environment with the Earth Month Program; our contributions and our employees’ contributions to the
Twin Towers Fund and the American Red Cross which raised more than $1.4 million for the families who suffered
the effects of September 11th, and the many other activities organized by our corporate volunteer programs.
AT A TIME WHEN MANY CORPORATIONS ARE RE-EXAMINING
THEIR IMAGES, POSITIONS AND CODES OF CONDUCT, I BELIEVE
OUR CORPORATE REPUTATION HAS NEVER BEEN
STRONGER.
BUILDING AND BONDING FOR FUTURE GROWTH
As I continue to reflect on our growth model, two words come to mind: building and bonding.We must continue
to build an even greater future based on the strengths and heritage of our past. And we must relentlessly
forge even stronger emotional bonds with our customers. They are the ultimate decision-makers in buying our
products.We must be relentless in meeting and exceeding their expectations and enabling them to bond with
our brands, not only by selling products, but also by recognizing their needs and sharing in their concerns. In other
words, bonding requires that we go beyond the products themselves and create emotional ties with consumers
through the experiences we provide at every point of contact. We strive to listen carefully and translate what we