The Estée Lauder Companies (ELC) has seen a disappointing start to its 2024 financial year, after reporting a double digit sales decline for Q1.  

Net sales amounted to US$3.52bn for the three month period ended 30 September 2023, a 10 percent decrease from the $3.93bn it recorded one year prior.

The company, which owns Estée Lauder, Clinique, MAC, La Mer, Tom Ford, Bobbi Brown, and Jo Malone London, among other brands, also saw earnings sink to $31m during the quarter. By comparison, ELC reported $489m in Q1 2023.

According to a press release published by ELC, the financial results were largely impacted by increased pressures on the company’s Asia travel retail business. This was exacerbated by a slower-than-expected recovery of prestige beauty sales across mainland China in the wake of the Covid-19 pandemic.

“While we had a better-than-expected first quarter, we are lowering our fiscal 2024 outlook given incremental external headwinds, namely from the slower growth in overall prestige beauty in Asia travel retail and in mainland China, which is currently confirmed in the pre-sale phase of the 11.11 Shopping Festival, and the risks of business disruption in Israel and other parts of the Middle East,” said Fabrizio Freda, ELC President and Chief Executive Officer.

The company intends to strategically invest in consumer-facing activities, including innovation, advertising, and regional supply chain development in the Asia/Pacific region by completing a manufacturing facility in Japan.

Sales for the beauty brand owner’s skincare arm also experienced a significant decline during the quarter, with sales down 21 percent.

ELC has now lowered its financial outlook for 2024, as it works to re-establish its balance sheet and profitability.

The above challenges were partially offset by organic net sales growth in the United States, many markets in Asia/Pacific, led by Hong Kong SAR and Japan, as well as in nearly all markets in Europe, the Middle East and Africa (EMEA), led by the United Kingdom and Germany. Organic net sales in fragrance and makeup also grew, partially offsetting the decline in Skincare.

Main image: @esteelaudercompanies