Red Star Capital Bureau reported on February 29 that at the beginning of the the Year of the Loong, the internationally renowned beauty giant Estee Lauder has implemented a new round of price increases. 1500 products, including Estee Lauder's small brown bottle eye cream, sea blue mystery "lady face cream" and other popular skin care products, have seen price increases, causing many consumer discussions.
Among them, Tom Ford Fierce Night Luxury Black perfume (100ML) had the most obvious price increase, rising from 1350 yuan to 1950 yuan, or more than 44%.
In early February, Est é e Lauder disclosed its performance for the second quarter of the 2024 fiscal year, which showed that the company's net profit was still declining. At the same time, it also announced a two-year and a half restructuring plan, including 3% -5% layoffs, with an expected number of layoffs of around 1800-3000 people. Est é e Lauder stated that this measure will drive an increase in operating profit of $1.1 billion to $1.4 billion.
1500 product price increases
Famous perfume rose by 44%
Following the price increase of luxury bags such as LV, luxury beauty and skincare products have also joined the price increase team.
On January 19th, Est é e Lauder issued a notice to its partners that starting from February 19th, the suggested retail prices of the company's related products and packages will be increased. According to Southern Metropolis Daily, Est é e Lauder has raised the prices of its 1500 products.
According to Southern Metropolis Daily
Specifically, multiple products with a wide audience are in the price increase category. Est é e Lauder small brown bottle eye cream has increased from 550 yuan to 565 yuan; The high-end brand Hailan Mystery classic essence face cream, known as the "lady face cream", increased from 920 yuan to 945 yuan for 15ml, from 3080 yuan to 3160 yuan for 60ml, and from 4655 yuan to 4780 yuan for 100ml.
In addition, the prices of about 1500 products under well-known brands such as Tom Ford, Zumalong, MAC Meike, and Yuemu Zhiyuan under the group have all increased, with an average increase ranging from 10% to 30%.
Among them, Tom Ford Fierce Night Luxury Black perfume (100ML) had the most obvious price increase, rising from 1350 yuan to 1950 yuan, or more than 44%.
Screenshot from e-commerce platform
For the reasons for the price increase, many brands under Est é e Lauder have the same caliber. It indicates that the pricing of the company's products needs to take into account various factors, including operating costs, transportation and storage costs, and currency exchange rates, and will adjust the suggested selling prices of some products in a timely manner.
Net profit for fiscal year 2023 decreased by nearly 60%
The layoff plan can reach up to 3000 people
From the perspective of career performance, Est é e Lauder's 2023 fiscal year did not go well.
In the fiscal year 2023, Est é e Lauder Group's sales for the entire fiscal year decreased by 10.3% year-on-year to $15.91 billion, and its net profit plummeted by nearly 58% to approximately $1.006 billion. By product category, the net sales revenue of the skin care business was 8.202 billion US dollars, a year-on-year decrease of 17%; The operating profit was 1.204 billion US dollars, a year-on-year decrease of 56%.
Entering the fiscal year 2024, the group's performance continues to decline.
As of September 30, 2023, the net sales for the first quarter were $3.52 billion, a 10% decrease from $3.93 billion in the same period last year; The net profit was $31 million, compared to the previous year's net profit of $489 million.
On February 5th, Est é e Lauder released its second quarter results, showing net sales of $4.279 billion, a 7% decrease from $4.62 billion in the same period last year; The net profit attributable to the company was 313 million US dollars, a decrease of 18.39% from the same period last year of 394 million US dollars.
Est é e Lauder also announced a two-year and a half restructuring plan. This includes layoffs of 3% -5%, with an estimated number of layoffs ranging from 1800 to 3000. Est é e Lauder expects this measure to result in restructuring costs of $500 million to $700 million, driving an increase in operating profit of $1.1 billion to $1.4 billion.
However, on February 6th, Est é e Lauder announced to the public that Est é e Lauder Group has no major adjustment plans in the Chinese market.
Betting on the Chinese market and positioning high-end products are key
According to China Business Daily, some imported cosmetics agents have announced that the brand will announce a price increase by the end of 2023, and agents and various channels will also increase their inventory before the price increase. During the period from the announcement of price increases by the brand to the official price increase of the product, agents and various channels can use this to digest a portion of the product inventory.
"After the Spring Festival, major cosmetics brands may adjust their prices to the highest point of the year, and then lower their product prices to catch up with promotions." Beauty blogger Vivian said, "This period is not the peak consumer season, but more like using price increases to establish the brand's high-end image in the minds of consumers."
According to a report from Beijing Business Daily, a senior researcher at Pangu Think Tank stated that the increase in raw material costs is an important factor. The fluctuations in the global economy may lead to an increase in the prices of cosmetic raw materials. In order to maintain the company's profit margin, brands may choose to increase the retail prices of their products. Brand positioning and market demand are also key factors in determining prices. High end beauty brands will price their products based on their luxurious or high-end image and the expectations of their target market to maintain their brand image.
It can be seen that Est é e Lauder has been taking frequent actions in the Chinese market recently.
Not only did it include the placement of advertisements in the popular TV series "Flowers" at the end of 2023, but it also took the opportunity to launch high-end new products. In 2023, Est é e Lauder Group invested in the beauty brand Codement founded by Chinese internet celebrity Zhou Yangqing through its subsidiary company.
According to Daily Economic News, Fu Yide, then President and CEO of Est é e Lauder Group, stated in a conference call, "In the fiscal year 2024, we will continue to focus on driving market growth, including restoring US market growth, normalizing Asian tourism retail inventory, and continuously expanding our market share in the high-end beauty market in China. In the fiscal years 2025 and 2026, we will further accelerate the implementation of profit recovery plans and strengthen profitability."
In addition, the relevant management also stated, "China is our second home country, with a considerable market share in key categories. We have a 30-year development history in China. In the future, there will be corresponding strategic deployments. China is the key to winning the high-end beauty market."
Comprehensive sources from 21st Century Economic Report, Southern Metropolis Daily, China Business Daily, and Beijing Business Daily