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The Estee Lauder Companies Inc. EL is surely worth a shot, given its robust growth endeavors, which helped the company to put up a superb show in the recently reported second-quarter fiscal 2019. Notably, shares of the company have gained close to 14% since it reported results on Feb 5, which has helped this Zacks Rank #1 (Strong Buy) stock rally 21.5% in the past month compared with the industry’s 20.8% growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s delve deeper into the factors aiding Estee Lauder’s growth story.
Acquisitions Boosting Top Line
Estee Lauder has made several strategic acquisitions to enhance its portfolio. The acquisitions of BECCA and Too Faced (during first-quarter fiscal 2017) have strengthened its fastest growing prestige portfolio. Notably, sales of BECCA witnessed solid increase in the fiscal second quarter, courtesy of the holiday season. The investment in DECIEM, a fast-growing multi-brand company, is also likely to aid beauty sales. The company’s previous moves in this regard include the buyout of sophisticated Paris-based brand, By Kilian, and the takeover of key prestige skin care brands, RODIN olio lusso and GLAMGLOW. Such acquisitions aided the company to expand its portfolio, apart from helping it attain the respective loyal customer base.
Sturdy Online Business
Estee Lauder has a strong online business and the company expects it to be a major growth engine for the upcoming years. The company is implementing new technology and digital experiences, including online booking for each store appointment, omni-channel loyalty programs and high-touch mobile services. These initiatives and the company’s digital-first mindset have been boosting its online sales, in turn aiding the top line. During the second quarter of fiscal 2019, the company’s e-commerce sales rose in double digits across all channels — brand.com, retail.com and third-party websites. Estee Lauder focuses on widening its global online presence by adding new sites and expanding retailer distributions.
Travel Retail a Solid Driver
Estee Lauder has been strongly focusing on enhancing its travel retail business, which is a major sales driver for the company. Travel retail sales remained sturdy in the second quarter of fiscal 2019, with 13 brands depicting solid growth. Many countries like the U.K. and China witnessed solid growth. Estee Lauder’s travel retail sales have been benefitting from rise in traffic, effective launches, impressive marketing strategies and unique product range. Further, the company expects the travel retail business to gain from rising passenger traffic, favorable fundamentals and higher conversions. Well, the company is committed toward undertaking more efforts to enhance conversions through strategic initiatives.