The Estée Lauder Companies (EL) Barclays 17th Annual Global Consumer Staples Conference summary

Industry and market trends

• Prestige beauty remains a highly desirable and fast-growing category, outpacing mass market growth and attracting more competitors due to lower barriers to entry.

• Consumers are more informed and discerning, researching products online and seeking specific benefits and ingredients, which has shifted marketing strategies and media mix.

• Expansion of distribution channels, including specialty multi, pharmacy, and online, is crucial to meet evolving consumer preferences.

• The competitive environment has intensified, requiring innovation and agility to capture consumer interest.

• Technology has enabled consumers to research and shop across multiple channels, increasing the importance of digital engagement.

Fiscal 2025 outlook and guidance

• Net sales growth guidance for fiscal 2025 is -1% to +2%, reflecting ongoing softness in China and travel retail, with growth expected in Europe (excluding travel retail), Japan, emerging markets, and North America.

• Destocking in Asia travel retail, particularly Hainan, and continued weakness in China are key headwinds for Q1, with inventory management a priority.

• Retail trends remain volatile and difficult to predict, impacting inventory and supply chain management.

• Margin expansion to 11-11.5% in 2025 is driven by the PRGP, with benefits from inventory reduction, pricing, and cost controls, especially in gross margin.

• PRGP is expected to deliver $1.1-$1.4 billion in net benefits over two years, with most gains in gross margin this year and a more even split with operating expenses next year.

Regional performance and strategy

• China is expected to return to mid-single digit growth (5-6%) once stabilized, resembling mature market growth rates rather than pre-pandemic double digits.

• Most Chinese consumers still shop domestically, with luxury skincare and fragrance performing well; Re-Nutriv and La Mer are gaining share.

• Emerging markets, including India, Mexico, Brazil, Middle East, Turkey, South Africa, and Southeast Asia, are around 10% of sales and often more profitable than mature markets due to efficient distribution.

• North America is focusing on expanding distribution in fast-growing channels (e.g., Amazon, Ulta, Sephora), reigniting skincare, and leveraging digital and consumer insights for growth.