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Jane Hertzmark Hudis, Executive Group President, The Estée Lauder Companies

Effective September 1, 2022, the company’s brand portfolio evolved into two brand clusters led by Jane Hertzmark Hudis, Executive Group President, and Stéphane de La Faverie, who has been promoted to Executive Group President. This new brand leadership structure is designed to ensure continued portfolio-wide alignment, enabling the business to focus on the greatest areas of opportunity. Jane and Stéphane will continue to report directly to Fabrizio Freda.

“This evolution further positions The Estée Lauder Companies’ brands to win with consumers in a complex and continuously changing beauty landscape, while elevating our internal talent bench and organizational planning to position us well to deliver on the company’s long-term strategy with agility,” said Fabrizio Freda. “The strength of our portfolio reflects the strength of our leadership team, and this evolution leverages the track record and high potential of each leader to take our business to even greater heights in the future.”

Stéphane de La Faverie, Executive Group President, The Estée Lauder Companies

Building upon their enterprise-wide leadership responsibilities, Jane and Stéphane, in partnership with the Brand Presidents, will oversee their brands’ businesses, equity and innovation, continuing to work in close alignment with all internal functions and regions. Additionally, they will work closely with brand and value chain leaders to drive the strategy and growth plans for the company’s product categories and key subcategories.

“We have been and will continue to be a brand-led company. This exciting update to the organization will further enable our brands’ industry leadership,” said William P. Lauder.“Leveraging ELC’s internal talent pipeline globally underscores our commitment to create new professional development and career advancement opportunities for the next generation of leaders across our organization.”

This organizational evolution aligns with ELC’s forward-looking corporate strategy and Compass to accelerate the company’s ability to deliver now while simultaneously preparing for the future. The company’s top brand leaders are organizationally aligned in a management structure designed to promote cross-brand synergies and advance development at multiple levels of the organization. In line with the company’s internal talent vision, this announcement also includes the appointment of several leaders to elevated brand roles within the clusters of Jane and Stéphane.

Executive Group President Jane Hertzmark Hudis will continue leading one of the company’s brand clusters, with a portfolio of brands that includes: La Mer and Bobbi Brown; TOM FORD BEAUTY; M·A·C; Clinique and Origins; Aveda; Bumble and bumble; and Dr.Jart+. Jane will also continue her enterprise-wide executive leadership of skin care and hair care, which are important growth-driving categories for our company. All the current brand leaders will remain the same, with the exception of Sandra Main taking direct responsibility of La Mer. In addition, Jane will continue as an executive sponsor for key strategic enterprise-wide priorities, including initiatives focused on marketing excellence and winning with Chinese consumers.

As one of the most accomplished, visionary executives in prestige and luxury beauty, Jane has a proven track record of leading, building, and transforming global brands to achieve outstanding broad-based growth. Jane will leverage her tenured expertise, including her vast knowledge of China, luxury beauty, and consumer-centric local relevance, to further enable her brand portfolio to win across categories, regions, and channels.

Jane is a passionate advocate of leadership development, mentorship, and women’s advancement. In addition to her enterprise-wide responsibilities at the company, Jane co-founded The Estée Lauder Companies’ Women’s Leadership Network (“WLN”) in 2017 to inspire and engage women across the organization, helping them become exceptional leaders and mentors. Under Jane’s co-executive sponsorship, WLN has become the company’s largest employee resource group with a presence in every region.

As Executive Group President, Stéphane de La Faverie will continue to lead one of the company’s brand clusters including Estée Lauder and AERIN Beauty; Jo Malone London; Le Labo; KILIAN PARIS, Editions de Parfums Frederic Malle, Darphin Paris and LAB Series; and DECIEM (The Ordinary, NIOD, and Avestan). Additionally, Stéphane will add ELC’s California-based brands to his portfolio – Too Faced; Smashbox and GLAMGLOW – expanding his category leadership to now include makeup, in addition to fragrance and subcategories of home, bath and body, and men’s skin care and grooming. With the exception of Estée Lauder, all the leaders of the brands now in Stéphane’s portfolio remain the same. Stéphane will also continue to drive integrated planning and end-to-end business operations enterprise-wide.

Stéphane’s promotion to Executive Group President reflects his outstanding track record of building successful global brands and his deep expertise across categories and channels, helping build fragrance as a powerful engine of growth for the company, and leading the Estée Lauder brand to be one of the world’s most beloved prestige beauty brands.

Stéphane’s strength as an inclusive and empathic leader, and his ability to balance emotional inspiration, authenticity and strategic insights to drive long-term, sustainable growth, have helped him successfully build his portfolio of brands and nurture a winning leadership team.

Additional Brand Leadership Updates

• Justin Boxford has been appointed Global Brand President, Estée Lauder. He will report to Stéphane. A separate announcement on Justin’s appointment will be shared in the coming days.

• Sandra Main, Global Brand President, La Mer and Bobbi Brown, will assume direct leadership of La Mer and will oversee Bobbi Brown until a new leader is named. Sandra will continue reporting to Jane.

• Michelle Freyre has been promoted to Global Brand President, Clinique and Origins, expanding her brand oversight. Michelle will report to Jane.

• Amber Garrison, who assumed the role of Global Brand President, Origins in July 2022, will continue as a member of Jane’s leadership team and report to Michelle Freyre.

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• Tara Simon will be promoted to the role of Global Brand President, Too Faced, effective July 1, 2022. She will continue to report directly to Fabrizio Freda, President and Chief Executive Officer, ELC.

• Jerrod Blandino and Jeremy Johnson, Co–Founders, Too Faced Cosmetics, will depart the brand to embark on new entrepreneurial projects and endeavors, effective June 30, 2022.

“Tara has been a fantastic leader at Too Faced since she joined the brand two years ago, and I know that she will continue to leverage her brand building expertise to drive an emotional connection with consumers through inspiring products and unique experiences. I am confident that under Tara’s leadership, Too Faced is well-positioned for its next phase of growth,” said Fabrizio Freda. “And we are so grateful for Jerrod and Jeremy’s outstanding work over the last six incredible years spent as part of the ELC family.”

Please read additional details below.

Tara Simon Promoted to Global Brand President, Too Faced

In her elevated role as Global Brand President, Tara will continue enabling her team to capture and realize fast-growing opportunities for the brand, while further contributing to the company’s category strategy for makeup.

Prior to joining Too Faced and ELC as Senior Vice President/General Manager, Too Faced, in 2020, Tara built an incredible career with ULTA Beauty, where she most recently served as Senior Vice President of Merchandising, Prestige Beauty.

Jerrod Blandino and Jeremy Johnson, Co-Founders, Too Faced Cosmetics, to Depart Brand

Twenty-four years after founding the iconic Too Faced brand, and after six years as part of The Estée Lauder Companies’ family, Jerrod Blandino and Jeremy Johnson will depart the brand and company effective June 30, 2022 to pursue other opportunities. As visionary creatives and entrepreneurs, Jerrod and Jeremy are looking forward to the next phase of their journey, as they will continue to leverage the founder spirit that has driven the success of all their endeavors.

Jerrod and Jeremy began their careers behind the counter of the Estée Lauder brand, where they quickly discovered the transformative power of makeup. Their unique artistry experience combined with their powerful entrepreneurial spirit inspired them to create a brand that celebrates individuality and sparks joy. Today, Too Faced remains driven by this same vision, and is recognized as one of the most dynamic makeup brands in the world delivering products that inspire playfulness and purpose, fueled by a culture of innovation, creativity, and fun.

“Jerrod and Jeremy started the brand with a simple, yet compelling creative concept, and transformed it into something that is truly extraordinary,” said William P. Lauder, Executive Chairman, ELC. “We look forward to seeing where the next phase of their journey takes them and wish them all the best as they set out on new adventures.”

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The 2022 winners included: AM + DM (Ahmad Barber & Donte Maurice) (Neal Preston Photography Award), Jo Baker (Sue Cabral-Ebert Makeup Award), Jenny Cho (Frida Aradottir Hairstyling Award), Melissa Dezarate (Groomer of the Year), Alexx Mayo (Norma Patton-Lowin Makeup Award), Tym Wallace (Lawrence Davis Hairstyling Award) and Wayman + Michal (Wayman Bannerman & Micha McDonald) (Sharen Davis Styling Award).

Amouage’s Renaud Salmon with Molly Ringwald and Marco Parsiegla

The 2022 honorees included: Ann-Margret  (The Timeless Beauty Award), Frida Aradottir(Outstanding Achievement In Hairstyling), Sue Cabral-Ebert (Outstanding Achievement In Makeup & SFX Makeup), Lawrence Davis (Outstanding Achievement In Hairstyling), Sharen Davis (Outstanding Achievement In Costume Design), Drew Elliott (MAC Cosmetics) (Product of the Year), Diane Gomez-Thinnes (Galderma) (The Beauty Enhancement Award), Marco Parisiegla (Amouage) (The International Beauty Award), Norma Patton-Lowin(Outstanding Achievement In Makeup), Neal Preston (Outstanding Achievement In Photography), Stefanie Spodek (Fragrance of the Year on behalf of Estee Lauder’s Luxury Collection).

The 2022 presenters included: Saisha Beecham, Dyan Cannon, Larry Cherry, Christine Chiu & Dr. Gabriel Chiu, Laura Dern, Jill Eikenberry, Yolonda Frederick-Thompson, Bobby Holland, Candice Lambert, William Lauder, Marissa Marino, Molly Ringwald, Angelica Ross, Saniyya Sidney, Larry Sims, Troye Sivan, Courtney B. Vance, Jon Voight, Anne Winters, Kiyah Wright, with celebrity appearances by Corbin Bernsen (Actor, LA Law), Karina Brez (Founder of Karina Brez Jewelry and Former Miss USA), Logan Browning (Actress), Shelby & Tommy Chong (Actor/Comedian), Casey Dandridge (Model), Cesar Deleon Ramirez (Former HBA Hairstyling Winner), Drew Elliott (Creative Global Director of MAC Cosmetics), Nabil Hayari (HBA’s Official Couturier, HAYARI PARIS),Reema Khan (Brow Bar by Reema), Jaime King (Actress), Lizzo (Artist), Taryn Manning(Actress), Aida Rodriguez (HBA Host), Renaud Salmon (Chief Experience Officer of Amouage), Vincent Spinnato (Founder of Vincenzo Skincare), Chrissy Teigen (Model/Personality), Kym Whitley (Actress/Comedian), and more.

The Estee Lauder Companies’ Executive Chairman William P. Lauder with daughter Danielle Lauder.

Danielle Lauder, actress, entrepreneur and the great-granddaughter of Estée Lauder, officiated as the Ambassador for this year’s Hollywood Beauty Awards.

Galderma is the Title Sponsor of the 7th Hollywood Beauty Awards.

Christopher Guy is the official designer of the HBA’s Holly statuette.

Every year, the award ceremony benefits Helen Woodward Animal Center (HWAC) for their incredible efforts in rescuing animals from natural disasters and finding their forever homes. For direct donations and to support HWAC through HBAs, visit: www.animalcenter.org/hba

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“I am so thrilled that the work of these worthy organizations can continue to reach more communities through WRITING CHANGE. Representation in literacy matters. For youth, literacy is a pathway to social expression that leads to progress. I truly believe that words lead to actions that can change the world. I am so proud of the work that I know is to come, and I look forward to this first year of impact through WRITING CHANGE.” – Amanda Gorman, Estée Lauder Global Changemaker

“Amanda is a role model for an entire generation of new leaders, and we are deeply inspired by her energy, passion, and thought-leadership. We’re honored and excited to be behind these incredible organizations making amazing crossroads in literacy.” – William P. Lauder, Executive Chairman, The Estée Lauder Companies

SUSTAINED PROGRESS IN LITERACY

Literacy builds self-efficacy and esteem, unlocks opportunity, and empowers people to participate fully in their community and in society. Yet, despite the steady rise in literacy rates over the years, more than 773 million children and adults¹ around the world are illiterate, most of whom are girls and women. In the United States, over 43 million adults² lack functional literacy skills and nearly two-thirds of high school graduates are still reading below grade level.

The COVID-19 pandemic has further disrupted education and magnified the pre-existing inequalities in the access to tools, resources, and programming that are essential to sustained progress in literacy and learning, particularly in low-income or rural communities and in communities of color.

“We are so proud to launch WRITING CHANGE. This program is deeply tied to our company’s long-standing commitment to the advancement of education, particularly for women and girls – and was deeply inspired by Amanda’s belief in literacy as a pathway to change and its mission. Amanda herself demonstrates the power of storytelling and the impact of words on the lives of young people and how words can be a catalyst to effect change.” – Fabrizio Freda, President and CEO, The Estée Lauder Companies

Over three years, WRITING CHANGE will invest in organizations working to close the literacy gap and support efforts that work to advance systemic changes across three focus pillars:

• Access: Equitable access to literacy programs to ensure education is a fundamental right, especially for the communities in need.

• Advocacy: The publication and advocacy of diverse writers and young leaders to advance representation in literature at all levels.

• ArtisticExpression in Youth: Community programming that advances creativity and cultivates a passion for artistic and social expression in youth through writing, particularly for girls of color.

The WRITING CHANGE initiative will track and evaluate grantee impact on an annual basis in close coordination with the nonprofit partners, including robust reporting on programmatic progress across each pillar.

FIRST-YEAR GRANTEES

In its first year, WRITING CHANGE will focus on U.S. organizations with the potential to expand globally in years two and three. The WRITING CHANGE grant recipients were selected based on their proven ability to catalyze impact for youth, families, and diverse communities, demonstrated ability to collaborate across the nonprofit sector, and their ability to broaden their programmatic scale through WRITING CHANGE’s pillars of access, advocacy, and artistic expression. In its first year WRITING CHANGE will fund five U.S.-based organizations:

ACCESS

• American Library Association (ALA): The largest library organization in the world, ALA works to promote libraries and library education in order to enhance learning and ensure access to information for all. Funds from WRITING CHANGE will support an innovative pilot project for twelve libraries in the U.S. to partner with local artists to implement arts programming that builds literacy and digital skills for distinct populations – including youth at risk of low educational or employment attainment. The ALA digital access program aims to expand libraries’ reach into their community and increase libraries’ visibility as a path to educational persistence, economic mobility, and civic participation. The project emphasizes diverse artistic expression as a platform for community and aims to reach approximately 3,600 individuals in its first year.

ADVOCACY AND REPRESENTATION

• We Need Diverse Books (WNDB): A 501(c)(3) nonprofit organization that runs twelve exciting initiatives united under one goal – to combat systemic racism and oppression by creating a world where everyone can find themselves on the pages of a book. Through support from WRITING CHANGE, WNDB will further its work in tailored grants, mentorship programs, workshops, and community building, with particular support provided to advance The Native Fund, The Black Creatives Fund, and the Revisions Workshop.

ENGAGING YOUTH IN WRITING AS A FORM OF ARTISTIC AND SOCIAL EXPRESSION

• Girls Write Now: For 25 years, Girls Write Now has been breaking down barriers of gender, race, age, and poverty to mentor the next generation of writers and leaders who are impacting businesses, shaping culture, and creating change. They match young adults – over 90% of color, 90% high need, 75% immigrant or first generation, and 25% LGBTQIA+/gender expansive – with professional writers and multimedia makers as their personal mentors and immerse them in a supportive and networked community of writers, for life. Through support from WRITING CHANGE, Girls Write Now will aim to create a greater national presence in its core programming and Writing 360 program with an aim to reach 600 additional youth in the next year.

COMMUNITY SUPPORT

The WRITING CHANGE initiative will also fund two additional local community-based grants to Los Angeles-based organization WriteGirl and Minneapolis-based organization MIGIZI.

• WriteGirl: A Los Angeles-based creative writing and mentoring organization, WriteGirl spotlights the power of a girl and her pen. WriteGirl represents a community of more than 400 girls and 400 volunteer women writers who serve as creative writing mentors. 100% of WriteGirl graduating seniors have entered college, many on full or partial scholarships. WRITING CHANGE funding will support literacy-based programs for underserved girls through the WriteGirl Core Mentoring Program reaching girls with creative writing workshops, one-to-one mentoring by professional women, leadership development, and college/career-focused resources.

• MIGIZI:Based in Minnesota, MIGIZI provides a strong circle of support that nurtures the educational, social, economic, and cultural development of Native American youth. WRITING CHANGE will support MIGIZI’s First Person Production program equipping young Native people with 21st century media skills, teaching them how they can make a positive impact in Native media representation, and providing an arts and media space for emerging storytellers.

For more on WRITING CHANGE and the inaugural grantees, visit The Estée Lauder Companies’ corporate site, elcompanies.com/en/our-commitments/social-impact/writing-change-amanda-gorman.

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“We are thrilled that Mark will take on leadership of our home market in North America,” said Fabrizio Freda, President and Chief Executive Officer. “Mark has successfully built and led high-performance organizations throughout his 25 years at The Estée Lauder Companies, delivering incredible results through his visionary strategic leadership and collaborative style. I look forward to our continued close partnership as Mark leads our talented North America team to build on their successes as the region continues to gain momentum.”

As President, North America, Mark’s responsibilities will include guiding the North America Leadership Team to help maximize sales, profitability, and market share growth in the company’s dynamic and fast-evolving home market. He will build on the region’s many successes, leveraging his commercial expertise to help drive the business strategy, fuel the recovery, and unlock opportunities across brands, consumers, and channels.

Mark will have accountability for top- and bottom-line results in the U.S. and Canada across brands and channels. Working closely with the North America Leadership Team, he will drive ELC’s continued transformation as a digital-first organization fueled by Online. He will leverage the company’s strong retailer relationships to help optimize productivity and create exceptional omni-experiences for consumers.

Mark will partner closely with ELC’s Group and Brand Presidents and Function leaders on innovation pipeline sufficiency, elevated brand equity-building, and resource allocation to the largest growth opportunities. He will nurture the region’s organizational culture to enable brands to execute their strategies with the greatest support, focus, speed, and agility, while also driving greater integration and best practices across the portfolio.

Mark has had an exemplary 25-year career with ELC, much of it spent in Asia, with deep global leadership experience spanning the company’s brands, channels, regions, and affiliates. In these roles, he has delivered exceptional results, successfully leading strategically significant beauty markets, including ELC’s businesses in Canada and Japan.

As President, Asia/Pacific, since 2018, Mark has led the region to extraordinary new heights through regional strategies that support business acceleration and commercial operations to drive growth across all 13 Asia/Pacific affiliates. His tenacity in identifying and driving key business opportunities helped to grow net sales for Asia/Pacific significantly and double the region’s Online business between fiscal 2019 and 2021.

Mark was instrumental to the company’s multi-year transformation initiative focused on elevating and growing the company’s business in the Asia/Pacific region and winning with the Chinese consumer domestically and abroad. He has partnered closely with Joy Fan, newly appointed President and CEO, China, as well as the Travel Retail team, in one of the most competitive and dynamic prestige beauty markets in the world. He has also been central to the development of enterprise-wide initiatives to serve consumers with speed, innovation, and local-relevance, including the company’s investment in the first-ever manufacturing facility in Japan, the expansion of ELC’s innovation capabilities through its new China Innovation Center in Shanghai, as well as the acquisition of Dr.Jart+ and Do The Right Thing in 2019.

“Throughout his tenure, Mark has demonstrated an unwavering commitment to business success, while also commanding the deep respect of everyone with whom he engages and cultivating a strong sense of ambition, belonging, and pride across the company,” said William P. Lauder, Executive Chairman. “Mark’s inspiring leadership abilities, strong strategic vision, and focus on business performance and results are matched only by his commitment to our teams, making him well suited to take on this role at the helm of ELC’s home market in North America.”

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Organic Net Sales¹ Grew 18% and Adjusted Diluted EPS Increased 29% in Constant Currency

Positioned to Deliver Strong Holiday and Key Events

Confirming Full Year Outlook

The Estée Lauder Companies Inc. (NYSE: EL) today reported net sales of $4.39 billion for its first quarter ended September 30, 2021, an increase of 23% from $3.56 billion in the prior-year period. Net sales grew in every region and product category, reflecting the recovery in brick-and-mortar retail stores, primarily in western markets. Organic net sales increased 18%.

The Company reported net earnings of $692 million, compared with net earnings of $523 million in the prior-year period. Diluted net earnings per common share was $1.88, compared with $1.42 reported in the prior-year period. Excluding restructuring and other charges and adjustments as detailed on page 3, adjusted diluted earnings per common share increased 31% to $1.89, and rose 29% in constant currency.

Fabrizio Freda, President and Chief Executive Officer said, “We delivered excellent performance to begin fiscal 2022, despite the increased volatility and variability globally during the quarter, by virtue of our dynamic multiple engines of growth strategy. Our growth engines increasingly diversified, as we expected. Makeup, developed markets in the West, and brick-and-mortar reignited and complemented momentum in Skin Care, Fragrance, mainland China, Travel Retail in Asia/Pacific, and global Online². Impressively, relative to the pre-pandemic first quarter of fiscal 2020, the overall business is much bigger and more profitable.

Thirteen brands contributed double-digit organic sales growth versus the prior-year period, demonstrating the breadth of strength across our portfolio. Estée Lauder and M·A·C drove Makeup’s emerging renaissance, while La Mer and Clinique delivered stand-out results in Skin Care. Fragrance soared double-digits in every region, driven by Tom Ford Beauty and Jo Malone London. Our hero products performed exceptionally well and our innovation proved, once more, to uniquely capture consumer desires.”

Freda emphasized, “Looking ahead, we remain focused on the safety and well-being of our employees and consumers. For fiscal 2022, we continue to expect strong net sales and adjusted earnings per share growth with margin expansion. Our confidence in the long-term growth opportunities for global prestige beauty and our Company is reflected in the announcement today to raise the quarterly dividend.”

Freda concluded, “Today, we will release our Fiscal 2021 Social Impact and Sustainability Report. We are incredibly inspired by the achievements of our employees around the world in realizing great progress towards our social impact and sustainability commitments and goals.”

COVID-19 Business Update
The COVID-19 pandemic continued to disrupt the Company’s operating environment, impacting retail traffic and consumer preferences in the first quarter of fiscal 2022. The resurgence of COVID-19 cases and the rapid spread of the Delta variant in most parts of the world led to government restrictions to prevent further spread of the virus. These restrictions included the intermittent closure of businesses deemed non-essential, curtailment of travel, social distancing and quarantines.

Retail Impact
While most brick-and-mortar retail stores globally that sell the Company’s products, whether operated by the Company or its customers, were open during much of the first quarter of fiscal 2022, there were intermittent closures throughout the world. More specifically, in Continental Europe, much of Latin America and most of the Asia/Pacific region, many retail stores were temporarily closed for some period during the quarter due to the resurgence of COVID-19 cases. In much of Continental Europe and parts of the Asia/Pacific region, retail locations gradually reopened later in the quarter with capacity and other safety restrictions in place. Globally, in areas where stores were open, consumer traffic has not recovered to the pre-COVID-19 pandemic levels.

While international passenger traffic remained largely curtailed globally, passenger traffic in Europe, the Middle East & Africa and The Americas was somewhat improved, albeit significantly below pre-COVID-19 pandemic levels. The improvement was due, in part, to an increase in summer holiday travel as government restrictions were lifted, most notably in the United Kingdom, the United States, the Caribbean and Mexico. In Asia/Pacific, a surge in COVID-19 cases led to increased travel restrictions during much of the quarter.

Overall, online continued to grow led by areas where COVID-19 restrictions led to greater brick-and-mortar closures. Online sales were nearly double the pre-COVID level of fiscal 2020 first quarter.

Consumer Preferences
The COVID-19 pandemic-related closures of offices, retail stores and other businesses and the significant decline in social gatherings have influenced consumer preferences and practices. While the demand for makeup improved significantly versus the prior year, it continues to be the only category that remains below the pre-COVID-19 pandemic period, given fewer makeup usage occasions and ongoing mask wearing, while skin care, fragrance and hair care have all grown from pre-pandemic levels.

Supply Chain
The COVID-19 pandemic has contributed to global transportation delays due to port congestion, labor and container shortages, and shipment delays. As a result, higher transportation and logistics costs are expected to negatively impact cost of sales and operating expenses in the remainder of fiscal 2022. The Company expects to mitigate most of the impact to its business and costs through strategic price increases, product mix, timing of shipments, use of air freight and less congested ports, and cost savings in other areas.

Fiscal 2022 First Quarter Results
Organic net sales growth represents adjusted net sales excluding non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM) as well as the impacts from currency.

Adjusted diluted earnings per common share excludes restructuring and other charges as detailed in the following table.

Net sales and operating income in the Company’s product categories and regions outside of the United States benefited from a weaker U.S. dollar in relation to most currencies.

Total reported operating income was $935 million, a 33% increase from $705 million in the prior-year period. In constant currency, adjusted operating income increased 29%, primarily reflecting higher net sales and excluding the following items:

• Fiscal 2022 first quarter: $6 million of restructuring and other charges
• Fiscal 2021 first quarter: $9 million of restructuring and other charges and adjustments
• The favorable impact of currency translation of $18 million.

Skin Care

• Skin care net sales grew across every region, primarily led by La Mer and Clinique.
• The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 6 percentage point to net sales growth.
• Strong double-digit growth from La Mer reflected the brand’s significant strength with Chinese consumers. Net sales growth was driven by increases in hero products, including Crème de la Mer, The Moisturizing Soft Cream, and The Treatment Lotion. The launch of The Hydrating Infused Emulsion and targeted expanded consumer reach, including the launch on a new online platform in Southeast Asia, also contributed to growth.
• Clinique delivered double-digit growth driven by strong demand for its hero products, including Even Better Clinical Radical Dark Spot Corrector + Interrupter, and the launch of the Smart Clinical Repair Wrinkle Correcting Serum.
• Skin care operating income decreased, primarily reflecting product mix, strategic investments in advertising and promotional activities and difficult comparisons to a prior year launch, largely offset by higher net sales from La Mer.

Makeup

• Makeup net sales increased, reflecting a nascent recovery in western markets as usage occasions increased and the category benefited from the easier comparisons to the prior year. The increase was led by strong double-digit sales growth from Estée Lauder and M·A·C as COVID-19 restrictions eased somewhat and social events began to recover in certain locations.
• Growth from Estée Lauder was fueled by the Double Wear and Futurist foundation product lines as well as the successful launches of Double Wear Sheer Long-Wear Foundation and Pure Color Whipped Matte Lip Color.
• M·A·C’s growth reflected successful marketing campaigns to drive the makeup renaissance as COVID-19 restrictions subside, with particular strength in face and eye products.
• Makeup operating income increased, primarily reflecting higher net sales, partially offset by strategic investments to support the makeup recovery.

Fragrance

• Net sales grew in every region and across virtually all brands that sell fragrances, driven by continued resilience in luxury fragrance, easy comparisons versus the prior-year period, and the timing of shipments, including holiday shipments.
• Tom Ford Beauty grew strong double-digits, reflecting strength in Private Blend, including Oud Wood and Lost Cherry, and Signature, including Black Orchid. The launch of Ombre Leather Parfum and accelerated growth in emerging markets also contributed to growth.
• Jo Malone London’s net sales grew double digits primarily driven by strength in colognes, particularly in hero franchises like Wood Sage & Sea Salt and English Pear & Freesia. Bath & Body and Home also delivered strong growth reflecting consumer demand for home fragrance products during the pandemic.
• Designer fragrances growth primarily reflected timing of holiday shipments as well as easy comparisons in travel retail versus the prior year.
• Net sales from Le Labo and Estée Lauder rose strong double digits with growth primarily reflecting the opening of brick-and-mortar, improved traffic to those retail locations and initial shipments of Estée Lauder’s The Luxury Collection.
• Kilian Paris’ net sales nearly doubled, driven by retail reopening and demand for hero products, including Love, Don’t be Shy, and the successful launch of The Liquors franchise.
• Fragrance operating income increased, driven primarily by higher net sales partly offset by strategic investments to support brick-and-mortar reopening.

Hair Care

• Hair care net sales rose, reflecting increases from both Bumble and bumble and Aveda primarily due to the reopening of brick-and-mortar salons and retail.
• Hair care operating results were flat reflecting higher net sales offset by strategic investments to support the recovery as brick-and-mortar reopens.

The Americas

• Net sales grew throughout the region as brick-and-mortar largely reopened and traffic began to recover as government restrictions eased in many parts of the region. Growth in the region was led by double-digit increases in the United States and Latin America.
• The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 9 percentage point to net sales growth.
• Brick-and-mortar sales increased strong double digits, more than offsetting a modest decline in organic online sales. Brick-and-mortar benefited from a year-over-year increase in open retail locations as well as improved traffic in those locations. Logistics constraints also caused some retailers to increase orders, including accelerating holiday purchases.
• In North America, sales grew in every product category. The fragrance category continued to deliver double-digit growth, hair care increased double digits and skin care growth remained strong. Makeup, which was disproportionately impacted by the challenges stemming from the COVID-19 pandemic, returned to growth with a strong double-digit increase.
• In Latin America, sales grew double digits in every market and every category.
• Operating income in The Americas increased, primarily reflecting higher nets sales partially offset by strategic investments to support the reopening of brick-and mortar retail and the makeup recovery.

Europe, the Middle East & Africa

• Net sales grew in virtually every market, led by the United Kingdom, Russia and the Middle East. The growth reflects recovery in brick-and-mortar as vaccination rates rose compared to the prior year when retail traffic was negatively impacted by COVID-19.
• The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 2 percentage point to net sales growth.
• Sales increased in every category led by fragrance and makeup.
• Global travel retail sales increased double digits reflecting continued growth in Asia/Pacific, despite a surge in COVID-19 cases that led to increased travel restrictions there during much of the first quarter of fiscal 2022, as well as the partial return of summer holiday travel in Europe, the Middle East & Africa and The Americas.
• Organic online sales growth slowed from the fourth quarter of fiscal 2021, but remained positive, as brick-and-mortar recovered.
• Operating income increased, primarily driven by higher net sales partially offset by strategic investments behind key hero franchises and to support the reopening of brick-and-mortar retail.

Asia/Pacific

• Net sales growth primarily reflected increases in Greater China and Korea as COVID-related retail store closures in the rest of the region negatively impacted growth.
• The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 1 percentage point to net sales growth.
• Fragrance and skin care net sales grew double digits in the region and hair care increased single digit.
• The Company continued to focus its investments on digital marketing, resulting in strong double-digit online sales growth that more than offset the impact to brick-and-mortar from the resurgence of COVID-19 cases during the quarter.
• In mainland China, net sales grew double digits led by skin care and fragrance. Sales also increased double digits in nearly every channel.
• Operating income decreased, reflecting continued strategic investments despite increased headwinds from temporary restrictions due to COVID-19, which more than offset the higher net sales.

Cash Flows

• For the three months ended September 30, 2021, net cash flows provided by (used for) operating activities were $(81) million, compared with $358 million in the prior-year period, as working capital needs returned to a more normalized level for the first quarter, partially offset by higher earnings before taxes, excluding non-cash items.
• Capital Expenditures increased to $205 million compared to $116 million in the prior-year period, primarily driven by increased investment for a new manufacturing facility in Japan.
• The Company ended the quarter with $4 billion in cash and cash equivalents after returning $749 million cash to stockholders through dividends and share repurchases.

Outlook for Fiscal 2022 Second Quarter and Full Year
With multiple engines of growth across regions, brands, product categories and channels, the Company is well-positioned to continue to drive a gradual recovery as macro-conditions and market dynamics support it. The Company expects to invest in areas to support the recovery, including advertising, online, research and development and supply chain, to both drive growth in areas of opportunity and help nurture emerging trends in the rest of the business.

The full year outlook reflects the following assumptions:

• Global volatility and variability is expected to continue, including inflation, supply chain disruption and COVID-19 restrictions. In the context of this uncertain environment, the Company believes it can continue to mitigate emerging headwinds and manage through this environment while driving multiple engines of growth.
• A recovery of the makeup and hair care categories as countries reduce COVID-19 restrictions.
• Growth in developed markets in the west and in brick-and-mortar retail.
• Targeted new distribution throughout the year to retailers that provide broader consumer reach.
• A gradual resumption of international travel beginning later in the fiscal year.
• Benefit from a nearly full year incremental impact of DECIEM in net sales and operating results.
• Higher transportation and logistics costs are expected to negatively impact cost of sales and operating expenses in the remainder of fiscal 2022. The Company expects to mitigate most of the impact to its business and costs through strategic price increases, product mix, timing of shipments, use of air freight and less congested ports, and cost savings in other areas.
• Incremental savings from the Post-COVID Business Acceleration Program and reinvestment in advertising and capabilities.
• Full-year effective tax rate of approximately 23%.

The Company is mindful of ongoing risks related to the COVID-19 pandemic as well as risks related to social, economic and political matters, including restructurings and bankruptcies in the retail industry, geopolitical tensions, regulatory developments, global security issues, currency volatility, general economic challenges, including inflationary pressures and supply chain disruptions, and changes in consumer preferences that affect consumer spending in certain countries, channels and travel corridors. Longer-term, the Company expects to return to its growth targets of 6% to 8% sales growth, 50 basis points of operating margin expansion and double-digit adjusted diluted earnings per share growth in constant currency after a period of normalization as the impacts of COVID-19 subside.

Second Quarter Fiscal 2022

Sales Outlook

• Reported net sales are forecasted to increase between 11% and 13% versus the prior-year period.
• Organic net sales, which excludes the non-comparable impacts from acquisitions, divestitures and brand closures as well as the impact from currency, are forecasted to increase between 8% and 10%.

Earnings per Share Outlook

• Reported diluted net earnings per common share are projected to be between $2.47 and $2.59. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $2.51 and $2.61.
  • The Company expects to take charges associated with previously approved restructuring and other activities. For the Post-COVID Business Acceleration Program, the charges are estimated to be between approximately $10 million to $20 million, equal to $.02 to $.04 per diluted common share.
• Adjusted diluted earnings per common share are expected to be flat to down 4% on a constant currency basis. The prior year effective tax rate included the one-time benefit associated with the retroactive application of changes in global intangible low-taxed income (“GILTI”) U.S. tax regulations.
  • Currency exchange rates are volatile and difficult to predict. Using September 30, 2021 spot rates for the second quarter of fiscal 2022, the currency impact on diluted earnings per share is expected to be negligible.
• The increase in ownership of DECIEM is also expected to be negligible to diluted earnings per common share.

Full Year Fiscal 2022

Sales Outlook

• Reported net sales are forecasted to increase between 12% and 15% versus the prior-year period. This is ahead of the Company’s long-term goal of 6% to 8% as the business begins to normalize as it recovers from the impacts of COVID-19.
• Organic net sales, which excludes the non-comparable impacts from acquisitions, divestitures and brand closures as well as the impact from currency, are forecasted to increase between 9% and 12%.

Earnings per Share Outlook

• Reported diluted net earnings per common share are projected to be between $7.09 and $7.30. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $7.23 and $7.38.
  • The Company expects to take charges associated with previously approved restructuring and other activities. For the Post-COVID Business Acceleration Program, the charges are estimated to be between approximately $40 million to $70 million, equal to $.08 to $.14 per diluted common share.
• Adjusted diluted earnings per common share are expected to increase between 11% and 14% on a constant currency basis.
  • Currency exchange rates are volatile and difficult to predict. Using September 30, 2021 spot rates for fiscal 2022, currency is expected to be about $.04 accretive to diluted earnings per share.
• The increase in ownership of DECIEM is expected to be $.03 accretive to diluted earnings per common share.

Conference Call The Estée Lauder Companies will host a conference call at 9:30 a.m. (ET) today, November 2, 2021 to discuss its results. The dial-in number for the call is 888-294-4716 in the U.S. or 706-902-0101 internationally (conference ID number: 6086324). The call will also be webcast live at http://www.elcompanies.com/investors/events-and-presentations.

Cautionary Note Regarding Forward-Looking Statements
Statements in this press release, in particular those in “Outlook,” as well as remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like “expect,” “will,” “will likely result,” “would,” “believe,” “estimate,” “planned,” “plans,” “intends,” “may,” “should,” “could,” “anticipate,” “estimate,” “project,” “projected,” “forecast,” and “forecasted” or similar expressions.

Factors that could cause actual results to differ materially from our forward-looking statements include the following:

The Company assumes no responsibility to update forward-looking statements made herein or otherwise.

The Estée Lauder Companies Inc. is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. The Company’s products are sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, Tommy Hilfiger, M·A·C, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin Paris, TOM FORD BEAUTY, Smashbox, Ermenegildo Zegna, AERIN, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, and the DECIEM family of brands, including The Ordinary and NIOD.

ELC-F
ELC-E

This earnings release includes some non-GAAP financial measures relating to charges associated with restructuring and other activities. The following is a reconciliation between the non-GAAP financial measures and the most directly comparable GAAP measures for certain consolidated statements of earnings accounts before and after these items. The Company uses certain non-GAAP financial measures, among other financial measures, to evaluate its operating performance, which represent the way the Company conducts and views its business. Management believes that excluding certain items that are not comparable from period to period, or do not reflect the Company’s underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze operating performance from period to period. In the future, the Company expects to incur charges or adjustments similar in nature to those presented below; however, the impact to the Company’s results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP.

The Company operates on a global basis, with the majority of its net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates can affect the Company’s results of operations. Therefore, the Company presents certain net sales, operating results and diluted earnings per share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of its underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency information by translating current-period results using prior-year period monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005348/en/

Source: The Estée Lauder Companies Inc.

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