Recently, a reporter from Nandu · Wancai Society conducted a survey and found that brands under Est é e Lauder Group, such as Hai Lan Zhi Mi, Est é e Lauder, and Zu Ma Long, have raised their prices starting from February 19th, with some products raising prices ranging from 10 to 100 yuan.
Several brands under Est é e Lauder Group have seen price increases for some products
Specifically, Estee Lauder small brown bottle eye cream rose from 550 yuan to 565 yuan, Zhiyan collagen cream 75ml version rose from 1080 yuan to 1130 yuan, and black diamond essence 30ml version rose from 1900 yuan to 1980 yuan.
The price of Hailan Mystery, a high-end brand belonging to the group, also rose. The price of Hailan Mystery classic essence face cream rose from 920 yuan to 945 yuan for 15ml models, and from 3080 yuan to 3160 yuan for 60ml models. The price of some specifications was not adjusted. The customer service of the official flagship store of the brand Tmall said, "The price of 30 ml face cream series, essence series, essence oil products and some facial mask products has not increased."
Est é e Lauder Tmall's official flagship store customer service stated that this suggested retail price adjustment applies to all authorized retail channels.
On February 22nd, a reporter from Nandu · Wancai Society visited a counter in a shopping mall in Tianhe District, Guangzhou, and confirmed that counters such as Est é e Lauder, Hai Lan Zhi Mi, and Zu Ma Long had updated the price tags of the products for this price adjustment. The salesperson at the Zumalong counter told reporters that the 30 milliliter version of the Classic Fragrance series has been raised from 660 yuan to 670 yuan, and the 100 milliliter version has been raised from 1390 yuan to 1400 yuan.
Regarding the reason for this price increase, Est é e Lauder Tmall's official flagship store customer service stated that product pricing needs to consider various factors, including raw material prices, operating costs, and transportation and warehousing costs. They will evaluate and adjust the suggested retail prices of some products in a timely manner.
Frequent price increases or pressure related to declining performance
In fact, as early as last year, Est é e Lauder had raised the prices of some of its products multiple times.
According to media reports, in early May 2023, Est é e Lauder (Shanghai) Trading Co., Ltd. issued a notice on the proposed increase in retail prices of goods. On July 1, 2023, online flagship stores of Est é e Lauder related brands raised prices by 2.3% to 25.6%. During January 2023, Est é e Lauder Group also issued a price increase notice, with its subsidiaries Est é e Lauder, Clinique, Tom Ford, Yuemuzhiyuan, Bobbi Brown, and Zumarong raising their retail prices by less than 10%.
The frequent price increases may be related to the pressure of declining performance. In the past two years, Est é e Lauder's performance has been slightly lackluster.
In early February, Est é e Lauder released its second quarter financial report for the 2024 fiscal year. As of December 31, 2023, Est é e Lauder had a net sales revenue of $4.28 billion, a 7% decrease from $4.62 billion in the same period last year, and a net profit of $313 million, a 18.39% decrease from $394 million in the same period last year. The main reason for the decline in performance is the weakness of Asian tourism retail and the high-end beauty market in mainland China.
Divided by product category, the revenue of the skincare business decreased by 10%, with net sales of Est é e Lauder, Clinique, and Origins decreasing, while The Order and La Mer performed strongly; The revenue of cosmetics business fell by 8%, while the sales of perfume business remained flat. The decline of Estee Lauder brand was offset by the growth of Le Labo and Jo Malone London.
In the fiscal year 2023, Est é e Lauder Group's net sales amounted to $15.91 billion, a 10% decrease from the previous year's $17.74 billion. The net profit was 1.01 billion US dollars, showing a significant decline. The previous year's net profit was 2.39 billion US dollars.
According to previous reports from Nandu, Est é e Lauder Group announced this year that it will further expand its profit recovery plans for the fiscal years 2025 and 2026, including restructuring measures of 3% to 5% layoffs, which will involve 1860 to 3100 employees. Est é e Lauder expects that the restructuring plan will drive operating profits to increase to $1.1 billion to $1.4 billion. Est é e Lauder stated in its latest financial report that it expects the group's organic net sales to recover double-digit growth in the second half of the 2024 fiscal year.
Xu Xiongjun, a strategic positioning expert and founder of Jiude positioning consulting company, stated in an interview with Nandu Wancai that international beauty brands have the ability and space to pay a premium. By raising prices to achieve sales growth, they can widen the gap with domestic or low-end brands in the fiercely competitive beauty market. Maintaining high brand value is a more advantageous marketing strategy for them.