The company's Estée and Bobbi are counted among some of the closest friends to women worldwide. Estée Lauder sells cosmetics, fragrances, and skin care products, with brands including upscale Estée Lauder and Clinique, as well as professional Bobbi Brown and luxurious Tom Ford beauty and fragrance lines. Its products are sold in upscale department stores, specialty retailers, online, and 670 company-operated single-brand stores and 130 multi-brand stores. Estée Lauder operates a chain of freestanding retail stores (primarily for its M.A.C, Origins, and Aveda brands). Fabrizio Freda, a veteran of Procter & Gamble, heads Estée Lauder as CEO.
It boasts wholly-owned operations in some 40 countries and a controlling interest in a joint venture that operates in three countries. In recent years, revenue generated by its two international segments -- Europe, the Middle East, and Africa, as well as Asia/Pacific -- have risen while sales in the Americas dropped. The company has seen stronger sales in Asia/Pacific. Estée Lauder branched out into Turkey and operates a unit in Istanbul named ELCA Kozmetik Ltd. Sti. Estée Lauder sees Turkey as a springboard into the young and growing market. Estée Lauder purchased privately held Ojon Corporation, based in Canada. Ojon sells high-end hair care products through fast-growing QVC, specialty retailers (such as Sephora, Ulta, and Nordstrom), as well as hundreds of upscale salons. Ojon also boasts a limited distribution of its products overseas. The deal has not only extended Estée Lauder's reach into other parts of the world, but it added Ojon's natural brands -- such as its Rare Harvest Tawaka Collection -- to its products portfolio.
Through a worldwide economic downturn, Estée Lauder has worked to remain a relevant company to consumers and maintain what it calls its high-touch service model. With its products available in more than 150 countries, Estée Lauder is a world leader in upscale personal care products and captures nearly half of all US prestige cosmetics sales. Estée Lauder is also jockeying for position in the doctor-based skin care arena. The beauty company operates the Clinique Skin Wellness Center through a partnership with Weill Cornell Medical College. The company runs The Estée Lauder Companies Innovation Institute located in Shanghai, China. The purpose of the institute is to study topical botanicals and synthetic materials for safety and efficacy, as well as study human skin in relation to the environment.
Sales and Marketing
Despite its ranking and market share, Estée Lauder and the Lauder family have been working to breathe new life into its flagship brand as competition has heated up. While Coty, Elizabeth Arden, and L'Oréal are enlisting the help of celebrities to elevate and give credibility to their brands, Estée Lauder sewed up its brand rejuvenation with a boost from fashion. The company is banking on a multi-year partnership with former Gucci Group creative director and fashion talent Tom Ford to continue its successful Tom Ford-inspired Estée Lauder line. The company has expanded its customer base to include younger shoppers through its M.A.C and Clinique cosmetics lines. Its 2010 purchase of Los Angeles-based Smashbox Beauty Cosmetics supports this strategy. Estée Lauder has also expanded its distribution channels to include mass merchandisers and salons. Longtime retailer Macy's is its largest customer with 11% of sales since 2010. The company has been gradually shifting business from department stores to its own stores and other outlets. Its online Origins presence has expanded, too. Clinique, M.A.C, Origins, and Bobbi Brown sell products online.
Estée Lauder kicked off a turnaround plan in 2009 to save as much as $550 million by 2013, but the plan has morphed into a long-term strategy to guide the company through 2015. The downturn in consumer spending spurred the beauty company to eliminate some 2,000 jobs. The plan has aimed to boost non-US sales to more than 60% of revenue, with the Asia-Pacific region leading the way. As part of its strategy, Estée Lauder is shifting its category mix to more high-margin products that have global growth potential. To this end, the company is focused on skin care products -- its most profitable category. Also, Estée Lauder has been penning licensing agreements to boost its brand and reach. Estée Lauder and Sean John, the private company formed by Sean "Diddy" Combs, co-developed a line of fragrances under the Sean John name. In recent years Estée Lauder has expanded its European fragrance offerings through a deal with the Milan-based Missoni fashion business. The two companies market scents and related products through Lauder's Aramis and Designer Fragrances division.
While it makes plans for the future, the company's surely holding its own for now. It logged 10% sales increases in 2012 across all major product categories and geographic region. Through the economic downturn, Estée Lauder was able to maintain its sales revenue. Even its product-category sales have remained the same during turmoil in retail markets, with its skin care and makeup businesses together generating around 80% of its overall revenue since 2008. Fragrances (with 13%), hair care (another 5%), and other (1%) comprise the balance of its segment sales.
The founding Lauder family controls about 52% of Estée Lauder's voting shares. – less
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