Highlights:

Full Year Net Sales Decreased 4%, or 3% in Constant Currency

Full Year Diluted EPS was $1.86, Adjusted Diluted EPS in Constant Currency was $4.16

COVID-19 Recovery Begins Across All Regions, Led by China

Announces Two-Year Initiative to Invest in Accelerating Growth Opportunities Post-COVID-19

NEW YORK-The Estee Lauder Companies Inc. (NYSE: EL) today reported net sales of $14.29 billion for its fiscal year ended June 30, 2020, a decrease of 4% from $14.86 billion in the prior-year period. Excluding the impact of currency translation, net sales decreased 3%. The net sales decline was driven by retail store closures as a result of the global spread of COVID-19 that was partially offset by the tremendous acceleration online. Net sales from the Company's acquisition of Have&Be Co. Ltd. ('Dr. Jart+') contributed approximately 1 percentage point of growth to reported net sales.

The Company reported net earnings of $0.68 billion, compared with net earnings of $1.79 billion last year. Diluted net earnings per common share was $1.86, compared with $4.82 reported in the prior-year period. Excluding the negative impact of currency translation, adjusted diluted earnings per common share, which excludes items detailed on page 4, decreased 22% to $4.16.

Fabrizio Freda, President and Chief Executive Officer said, 'Fiscal 2020 was a year without parallel, as we delivered record sales and exceptionally strong adjusted EPS growth in our first half and navigated with agility through an unprecedented pandemic in our second half. The second half also marked a period of profound pain as tragic events in the United States highlighted the systemic racial injustice that has plagued our society for far too long.

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. Asia/Pacific was strong with organic sales growth in mainland China and several other markets driving prestige beauty share gains, our skin care category grew and was further boosted by the acquisition of Dr. Jart+, and our online channel surged. We quickly pivoted to capture consumption online during COVID-19 as retail stores around the world temporarily closed.'

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 Asia/Pacific, momentum online globally, and robust innovation pipeline, which includes the exciting launch this month of Estee Lauder's new Advanced Night Repair. We expect sales trends to improve sequentially each quarter.

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 Estee Lauder Companies has stood with the global community to help limit the spread of the virus and ease the related economic hardships faced by the communities in which we live and work. Guided by its family values and a spirit of giving, the Company has made contributions to support the well-being of our communities, including monetary and in-kind donations, hand sanitizer produced at the Company's facilities and the establishment of the ELC Cares Employee Relief Fund.

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.

In Asia/Pacific, nearly all retail stores have re-opened after many stores closed for most of February through April 2020.

In Europe, the Middle East & Africa, retail stores began closing in early March 2020 and have been gradually re-opening through June 2020. At the end of June 2020, approximately 15% of the stores remained closed.

In The Americas, retail stores began closing in March 2020. By the end of June, approximately 20% of the stores remained closed.

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 China, where restrictions were lifted first, grew strong double digits year-over-year during the fourth quarter of fiscal 2020, and net sales in Korea, excluding the impact of Dr. Jart+, also returned to growth in the quarter.

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 June 2020, all manufacturing and distribution facilities were operating with rapidly-improving capacity while maintaining health and safety measures.

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 $800 million of savings from what the Company planned to spend prior to the pandemic in the last five months of fiscal 2020.

Reduced capital investments (e.g., facilities and consumer-facing counters) by approximately $275 million for fiscal 2020.

Temporary suspension of repurchases of the Company's Class A Common Stock.

Not declaring the quarterly cash dividend that would have been paid in June 2020.

Raising an additional $2.2 billion of cash, as of April 2020, by borrowing the full amount under its $1.5 billion revolving credit facility and issuing $700 million of Senior Notes.

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

In June 2020, the Company repaid $750 million borrowed under its revolving credit facility and, in August 2020, repaid the remaining $750 million. The Company also announced the declaration of a $.48 per share dividend on its Class A and Class B Common Stock payable on September 15, 2020 to stockholders of record as of August 31, 2020.

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: The Estee Lauder Companies Inc.

(C) 2020 Electronic News Publishing, source ENP Newswire