Estee Lauder saw its online business grow double digits last quarter during the coronavirus pandemic, CEO Fabrizio Freda told CNBC’s Jim Cramer after the company reported its latest financial results.
“The consumer finds a way to get the product they want” and “found a way to buy our product online more than usual,” he said in a “Mad Money” interview Friday.
Earlier that day Estee Lauder posted an upside surprise in its fiscal third-quarter report. The cosmetics company reported bringing in $3.3 billion in total revenue and producing 86 cents in profits per share. Those numbers beat Wall Street estimates of $3 billion in revenue and 73 cents in earnings per share.
While sales were down nearly 11% from the year-ago quarter, including declines in all three of its product segments, skin care proved to be the most resilient of the bunch. Compared with double-digit declines in its makeup, hair care and fragrance categories as deep as 21%, skin care product sales dipped about 1% during the first three months of 2020, which were affected by the Covid-19 outbreak.
Consumers may cut back on buying cosmetics and perfumes as they are quarantined at home, but they continue to buy products that address their health and wellness while locked inside, Freda said.
“Consumers around the world are buying more skin care” and it’s “thriving as a category,” he explained.
“At the same time, you just need to imagine that we are all working with different technologies, like Zoom or Skype, etc., and many people want to look OK in these video interactions.”
Estee Lauder said online sales accelerated between February and March as the coronavirus outbreak spread across Europe and the Americas. The cosmetics company shut down most of its retail stores in March as stay-at-home orders went into effect and society began to practice social distancing.
Estee Lauder has begun reopening retail stores in Asia after shutting down in February, the company said. It’s not clear when the New York-based company expects to reopen locations in Europe, the Middle East, Africa and the Americas.
“In China the recovery has been pretty fast,” Freda said.
Shares of Estee Lauder fell more than 2% to $172.54 at Friday’s close. Shares remain down about 16% on the year, but the stock is up 25% from its March lows during the coronavirus-induced market sell-off.
