Estee Lauder 2008 Annual Report Download - page 64

62 THE EST{E LAUDER COMPANIES INC.
Makeup Makeup net sales increased 11%, or $287.7 mil-
lion, to $3,000.4 million reflecting growth from our
makeup artist brands of approximately $194 million. Also
contributing to the growth were incremental sales from
the recent launches of Estée Lauder Signature Hydra
Lustre Lipstick, Double Wear Zero Smudge Mascara and
Eyeliner from Estée Lauder, Supermoisture Makeup and
Superbalm Moisturizing Gloss from Clinique, as well as
higher sales of Double Wear Stay-In-Place Makeup from
Estée Lauder of approximately $97 million, combined.
Partially offsetting these increases were lower sales of
approximately $30 million of Pure Color Eyeshadow and
High Gloss from Estée Lauder and Colour Surge Lipstick
from Clinique. Excluding the impact of foreign currency
translation, makeup net sales increased 7%.
Fragrance Net sales of fragrance products increased 9%,
or $123.4 million, to $1,432.0 million. The recent launches
of Sean John Unforgivable Woman, Dreaming Tommy
Hilfi ger, Estée Lauder Pure White Linen Light Breeze, Estée
Lauder pleasures delight and DKNY Delicious Night col-
lectively contributed approximately $95 million to the
growth in the category. Higher sales of approximately $62
million of DKNY Be Delicious, Jo Malone and Tom Ford
fragrances also contributed to the increase. Lower sales of
approximately $53 million of Tommy Girl by Tommy
Hilfi ger, DKNY Red Delicious Women and DKNY Be
Delicious Men partially offset the growth in this product
category. While current year sales levels compared favor-
ably to the prior year, we anticipate continued challenges
in this product category in the United States. Excluding
the impact of foreign currency translation, fragrance net
sales increased 5%.
Hair Care Hair care net sales increased 13%, or $50.0
million, to $427.1 million, primarily due to the inclusion of
the Ojon brand which was acquired at the end of July
2007, as well as growth from Aveda and Bumble and
bumble. Aveda net sales increases benefi ted from the
recent launches of Smooth Infusion and Aveda Men
Pure-Formance products, as well as the recent acquisition
of an independent distributor. Bumble and bumble net
sales benefited from new points of distribution and
increases from its hotel amenities program, which
concluded in the third quarter. Excluding the impact
of foreign currency translation, hair care net sales
increased 11%.
Geographic Regions
Net sales in the Americas increased 4%, or $150.6 million,
to $3,711.5 million, primarily refl ecting net sales growth in
Canada and Latin America, as well as the addition of the
Ojon brand, of approximately $98 million, combined.
In order to meet the demands of consumers, we continu-
ally introduce new products, support new and established
products through advertising, sampling and merchandis-
ing and phase out existing products that no longer meet
the needs of our consumers. The economics of develop-
ing, producing, launching and supporting products
infl uence our sales and operating performance each
period. The introduction of new products may have some
cannibalizing effect on sales of existing products, which
we take into account in our business planning.
The recent challenges and uncertainties in the econo-
mies of certain key countries, including the United States,
may continue to have an adverse impact on consumer
demand, which could affect our net sales and operating
results in the short and long term.
FISCAL 2008 AS COMPARED WITH FISCAL 2007
NET SALES
Net sales increased 12%, or $873.3 million, to $7,910.8
million, refl ecting net sales growth in all of our product
categories within each geographic region. Skin care,
makeup and fragrance net sales increases were led by
Europe, the Middle East and Africa while most of the net
sales increase in hair care was achieved in the Americas.
The increase in net sales refl ected our efforts to capitalize on
growth opportunities internationally. Excluding the impact
of foreign currency translation, net sales increased 8%.
Product Categories
Skin Care Net sales of skin care products increased 15%,
or $395.8 million, to $2,996.8 million. This growth
refl ected the recent launches of Idealist Pore Minimizing
Skin Refi nisher, Cyber White EX and Hydra Bright Skin
Tone Perfecting Moisturizers from Estée Lauder. Also
contributing to the growth were the recent launches of
products in the Acne Solutions Clear Skin System, Redness
Solutions and Even Better Skin Tone Corrector from
Clinique as well as The Eye Concentrate and The
Moisturizing Gel Cream from La Mer. Collectively, these
new products resulted in incremental sales of approxi-
mately $215 million. Net sales increases from Re-Nutriv
and Resilience Lift Extreme Ultra Firming products from
Estée Lauder, products in Clinique’s 3-Step Skin Care
System and Repairwear line, and Tri-Aktiline™ Instant
Deep Wrinkle Filler from Good Skin™totaled approxi-
mately $80 million. These improvements were partially
offset by approximately $55 million of lower sales from
certain other existing Idealist products and Perfectionist
products from Estée Lauder. Net sales of other new and
existing products also signifi cantly contributed to the
growth. Excluding the impact of foreign currency transla-
tion, skin care net sales increased 10%.