Highlights:
Full Year Net Sales Decreased 4%, or 3% in Constant Currency
Full Year Diluted EPS was
COVID-19 Recovery Begins Across All Regions, Led by
Announces Two-Year
The Company reported net earnings of
In this challenging year, our multiple engines of growth strategy proved highly effective. The Estee Lauder brand grew double-digits for the third consecutive year.
Freda emphasized, 'In this new fiscal year, we remain focused on the safety and well-being of our employees and consumers. Our sense of urgency to act on our recently announced racial equity commitments is strong. We enter fiscal 2021 with cautious optimism, given the vibrancy of our skin care portfolio, acceleration in
Our strategic priorities for fiscal 2021 rightly balance investment in these engines with cost discipline amid the ongoing pandemic. Through the Post-COVID Business Acceleration Program announced today, we are better aligning our brick-and-mortar footprint to improve productivity and invest for growth. We are well-positioned to drive growth as the market dynamics support it, yet remain equally mindful of the effects of COVID-19 on consumers, the retail sector and economics, in general, as well as geopolitical uncertainty.'
COVID-19 Business Update
The outbreak and global spread of COVID-19 has caused a significant disruption in the Company's operating environment. Accordingly, the Company modified a number of its business practices during the second half of fiscal 2020, in part due to legislation, executive orders and guidance from government entities and healthcare authorities (collectively, 'COVID-19 Directives'). These include the temporary closing of businesses deemed 'non-essential,' travel bans and restrictions, social distancing and quarantines.
Retail Impact
Primarily due to COVID-19 Directives, many retail stores across most countries, whether operated by the Company or its customers, closed for some period of time and have experienced severely reduced consumer traffic as they re-open.
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In addition, air travel has been largely curtailed globally due to both government restrictions and the sentiment around health concerns, which adversely impacted, and continues to impact, consumer traffic in most travel retail locations.
During the second half of fiscal 2020, online sales1 growth accelerated in every region as the Company and its retailers activated numerous digital capabilities and strategies to capture consumer demand online. Net sales in mainland
COVID-19 and its wide-ranging impacts have also influenced consumer preferences and practices due to the closures of offices, retail stores and other businesses and the significant decline in social gatherings. The demand for skin care and hair care products has been more resilient than the demand for makeup and fragrance. Within skin care, the demand for products in hero franchises has remained strong, driving double-digit growth at the Estee Lauder brand during the fourth quarter of fiscal 2020.
During the second half of fiscal 2020, a majority of the Company's facilities continued to manufacture and distribute products globally, albeit in a much-reduced capacity in light of safety measures designed to help protect the Company's employees. As a result of (i) certain of our manufacturing facilities operating at a reduced capacity and (ii) an increase in excess and obsolete inventory caused by the reduced activity in brick-and-mortar retail, the Company's cost of goods was adversely impacted in the fiscal fourth quarter.
The Company has been able to obtain raw materials and components as needed during the pandemic. By the end of
Cash Conservation
As the impacts from COVID-19 evolved, the Company faced various uncertainties and implemented strict cost control actions to preserve cash and the flexibility to manage the business. These actions included:
Expense reductions, including advertising and promotion activities, travel, meetings, consulting, and certain employee costs, including implementing a hiring freeze, furloughs and similar unpaid temporary leaves of absence for many point of sale employees, temporary salary reductions for senior executives and other management employees, and a temporary elimination of cash retainers for the Board of Directors. Combined, these resulted in approximately
Reduced capital investments (e.g., facilities and consumer-facing counters) by approximately
Temporary suspension of repurchases of the Company's Class A Common Stock.
Not declaring the quarterly cash dividend that would have been paid in
Raising an additional
Online sales discussed throughout includes sales of our products from our websites and third-party platforms, as well as estimated sales of our products sold through our retailers websites
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The Company continues to monitor the effects of the pandemic, which have negatively impacted many areas of its business in the second half of fiscal 2020. It will continue to invest behind the most attractive growth opportunities while, first and foremost, taking measures designed to protect the safety of its employees, beauty advisors and consumers.
Fiscal 2020 Results
Adjusted diluted earnings per common share excludes restructuring and other charges, changes in contingent consideration, goodwill, other intangible and long-lived asset impairments, and other income, net as detailed in the following table.
See full results at: https://www.elcompanies.com/en/news-and-media/newsroom/press-releases/2020/08-20-2020-114523255
Investors:Rainey Mancini
(212) 284-3049
Media:Jill Marvin
(212) 572-4438
Source:
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