Year in Review

As the global leader in prestige beauty, The Estée Lauder Companies is strategically optimizing consumer reach in the brand-building Travel Retail channel. This year, we increased the presence of our brands, products and services in airports around the world, and converted more travelers into travel retail consumers. We saw strong growth in Travel Retail in fiscal 2017, and we are the global leader in prestige beauty in this channel.

Digital commerce is the fastest-growing channel for prestige beauty sales, and for consumers who prefer to shop online, we have seized on opportunities to help them while they travel. More and more, traveling consumers are buying their goods online and picking up their purchases prior departure at the airport. We saw a +100 percent increase in pre-order sales thanks, in part, to the opening of 55 additional travel-related e-commerce websites.

Prestige beauty remains vibrant and dynamic, growing approximately four to five percent annually, with both established brands growing and new brands launching continuously. Among the many choices, there is intense competition to attract and retain consumers. We see growth coming from consumers purchasing beauty products more frequently – in fact, the average U.S. consumer uses 12 brands per day – and their decision to buy is increasingly based on product first, brand second.

For our prestige brands, real success is not just attracting consumers to try our products, but turning them into loyalists. High-quality products and franchises, the best ingredients and the most effective formulas drive repeat purchases in a crowded competitive landscape. Our brands’ lifelong devotees love to try new products – because trying new things is part of the fun – but will return to their “hero” favorites time and time again.

This fiscal year, the Estée Lauder brand continued to support and leverage two hero franchises, Advanced Night Repair and Double Wear. Advanced Night Repair continues to be a powerful growth engine for the brand with a range of new innovative products such as its Intensive Recovery Ampoules and the recent launch of Advanced Night Repair Eye Concentrate Matrix. Double Wear is the best-selling prestige foundation in many markets, attracting consumers across generations to the brand. Double Wear’s continued success was fueled by the strong performance of Double Wear Cushion Stick and the launch of Double Wear Cushion Compact, a packaging innovation coveted by Chinese consumers.

China continues to lead in luxury shopping, and is reportedly on pace to become the world’s largest beauty market. Chinese consumers, once skin care-centric, are expanding and evolving their beauty buying habits, with many more now trying and buying the latest makeup looks.

The "selfie" culture is thriving in China, and consumers are looking to WeChat, Weibo and Youku to inspire their beauty purchasing decisions as they seek inspiration and education. These social media platforms have revolutionized the way consumers shop and what they’re buying, leading to significant growth opportunities in the makeup category. The Estée Lauder brand performed strongly in China this fiscal year, as consumers responded positively to the brand’s in-store and social media campaigns.

This is the eighth consecutive year we generated strong organic growth and outperformed the industry. We proved that we can pivot our business, execute with speed and excellence, and make courageous choices that create momentum for the coming years.