01—Abstract
Summary
Summary of the 10-K filed August 19, 2024. Cited figures are marked; the original filing is the authoritative source.
The Estée Lauder Companies Inc. reported fiscal 2024 (year ended June 30, 2024) net sales of $15.61 billiona, down 2% from $15.91 billion in fiscal 2023, with reported net sales decreasing due to volume declines of 8% partially offset by pricing of 7%.
Operating income fell 36% to $970 millionb, and operating margin declined to 6.2% from 9.5%, reflecting a $291 million goodwill impairment and $180 million trademark impairment tied to Dr.Jart+, plus $124 million in restructuring and other charges. Net earnings attributable to the company fell to $390 million, and diluted EPS was $1.08 versus $2.79 a year earlier. Skin care, the largest category, declined 4% in net sales, driven by mainland China softness and Asia travel retail; Asia/Pacific net sales fell 6%.
Management is pursuing a Profit Recovery and Growth Plan to rebuild margins in fiscal 2025 and 2026, with a restructuring program expected to cost $500 million to $700 millionc and yield annual gross benefits of $350 million to $500 million. The company completed its acquisition of the remaining interest in DECIEM (The Ordinary) on May 31, 2024, and reported cash and cash equivalents of $3.40 billion, total debt of $7.77 billion, and cash from operating activities of $2.36 billion. The Lauder family holds approximately 84% of the voting power, and the company disclosed an ongoing securities class action and a 2024 dividend of $.66 per share declared on August 16, 2024.
02—Key points
Key Highlights
- Net sales declined 2% to $15.61 billion, with volume down 8% partially offset by pricing up 7%.
- Operating income fell 36% to $970 million; operating margin was 6.2% versus 9.5% in fiscal 2023.
- Goodwill impairment of $291 million and trademark impairment of $180 million related to the Dr.Jart+ reporting unit.
- Diluted EPS was $1.08 versus $2.79; net earnings attributable to the company were $390 million.
- Profit Recovery and Growth Plan includes a restructuring program with expected charges of $500 million to $700 million and net benefits of $1.10 billion to $1.40 billion.
- Cash and cash equivalents were $3.40 billion, total debt was $7.77 billion, and operating cash flow was $2.36 billion.
- The Lauder family controls approximately 84% of voting power; the company is a controlled company under NYSE rules.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Estée Lauder Companies kept $0.02.
- Revenue$15.61B100.0%
- Cost of revenue−$4.42B28.3%
- Gross profit$11.18B71.7%
- Operating costs−$10.21B65.4%
- Operating income$970.0M6.2%
- Interest, other & tax−$580.0M3.7%
- Net income$390.0M2.5%
Where FY2024 revenue went
$15.61B- SG&A: $9.62B, 62% of revenue
- Cost of revenue: $4.42B, 28% of revenue
- Net income: $390.0M, 2.5% of revenue
- Other operating costs: $593.0M, 3.8% of revenue
- Interest, other & tax: $580.0M, 3.7% of revenue
Kept 2.5% as net incomeNet income $390.0M · 2.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed August 19, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $15.61B$15.91B | −1.9% |
| Cost of Revenue | $4.42B$4.56B | −3.1% |
| Gross Profit | $11.18B$11.35B | −1.4% |
| SG&A Expenses | $9.62B$9.57B | +0.5% |
| Operating Expenses | $10.21B$9.84B | +3.8% |
| Operating Income | $970.00M$1.51B | −35.7% |
| Interest Expense | $378.00M$255.00M | +48.2% |
| Net Income | $390.00M$1.01B | −61.2% |
| EPS (Basic) | $1.09$2.81 | −61.2% |
| EPS (Diluted) | $1.08$2.79 | −61.3% |
| Shares Outstanding (Basic) | 359.00M357.90M | +0.3% |
| Shares Outstanding (Diluted) | 360.80M360.90M | 0.0% |
05—Questions
Frequently Asked Questions
Why did operating income decline so sharply in fiscal 2024?
Operating income fell to $970 million from $1.51 billion, driven by lower net sales, a $291 million goodwill impairment and a $180 million trademark impairment for Dr.Jart+, and higher operating expenses, which rose to 65.4% of net sales from 61.8%. Skin care operating income dropped 42%, largely due to Dr.Jart+, Estée Lauder and Clinique.
What is the company doing to restore profitability?
The company launched the Profit Recovery and Growth Plan, including a two-year restructuring program to reduce roughly 1,800 to 3,000 positions globally. It expects restructuring charges of $500 million to $700 million through fiscal 2026 and annual target gross benefits of $350 million to $500 million once fully implemented.
Which regions and markets drove the sales decline?
Asia/Pacific net sales decreased 6%, reflecting lower sales in mainland China, where prestige beauty softness continued, and in Korea, led by Dr.Jart+ travel retail. Europe, the Middle East & Africa decreased 1%, mainly from Asia travel retail, while The Americas increased 1%.
How is the company's balance sheet and liquidity position?
At June 30, 2024, the company had cash and cash equivalents of $3.40 billion and total debt of $7.77 billion, with total debt at 59% of total capitalization. Its long-term debt was rated A with a negative outlook by S&P and A1 with a negative outlook by Moody's as of August 12, 2024, and it has a $2.5 billion revolving credit facility with no borrowings outstanding.
What leadership changes were disclosed?
Akhil Shrivastava is expected to become Executive Vice President and Chief Financial Officer effective November 1, 2024, succeeding Tracey T. Travis. Rashida La Lande is expected to become Executive Vice President and General Counsel effective August 19, 2024.
06—Continue