The Estee Lauder Companies Inc. manufactures and markets skin care, makeup, fragrance, and hair care products worldwide. The company offers a range of skin care products, such as moisturizers, serums, cleansers, toners, body care, exfoliators, acne and oil correctors, facial masks, cleansing devices, and sun care products; and makeup products for face, eyes, lips, and nails, as well as related items, including compacts, brushes, and other makeup tools. It also provides fragrance products in various forms comprising eau de parfum sprays and colognes, lotions, powders, creams, bath/shower products, candles, and soaps; and hair care products consisting of shampoos, conditioners, styling products, treatment, finishing sprays, and hair color products, as well as sells ancillary products and services. The company offers its products under the brands of Estee Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, MAC, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, Ojon, Smashbox, RODIN olio lusso, Le Labo, Editions de Parfums Frederic Malle, GLAMGLOW, By Kilian, BECCA, Too Faced, GoodSkin Labs, and Osiao. In addition, it operates as a licensee for fragrances and/or cosmetics sold under the Tommy Hilfiger, Donna Karan New York, DKNY, Kiton, Michael Kors, Tom Ford, Dr. Andrew Weil, Ermenegildo Zegna, AERIN, and Tory Burch brand names. The company sells its products through department stores, specialty multi-brand retailers, upscale perfumeries, pharmacies, and salons and spas; freestanding stores; e-commerce Websites; stores in airports and on cruise ships; in-flight and duty-free shops; and self-select outlets. The Estee Lauder Companies Inc. was founded in 1946 and is based in New York, New York.
Business Analysis of Estee Lauder
The Consumer Goods Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Estee Lauder compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Estee Lauder to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Estee Lauder with an interactive chart.
- Revenue Growth: Estee Lauder reported a revenue growth of 4.5% year-on-year during 2016. Personal Goods Industry grew at -0.4% in the same period
- COGS share of Revenues: As a percentage of revenue, Estee Lauder spent 19.4% of its total revenues on COGS. Personal Goods industry average (COGS share of revenue) in the same period was 50.6%
- R&D share of Revenues: Estee Lauder R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Estee Lauder spent 65.2% of its total revenues on Sales, Marketing, and General Administration (SG&A). Personal Goods industry average SG&A spending in the same period was 33.7%
- Inventory share of Revenues: As a percentage of revenue, Estee Lauder spent 11.2% of its total revenues on Inventories. Personal Goods industry average Inventory spending in the same period was 12.9%
- Accounts Payable share of Revenues: As a percentage of revenue, Estee Lauder invested 6.4% of its total revenues on Accounts Payable (A/P) Personal Goods industry average Accounts Payable investment in the same period was 10.2%
- Accounts Receivable share of Revenues: As a percentage of revenue, Estee Lauder invested 11.2% of its total revenues on Accounts Receivable (A/R). Personal Goods industry average Accounts Receivable investment in the same period was 9.5%
- PP&E share of Revenues: As a percentage of revenue, Estee Lauder invested 14.1% of its total revenues on Property, Plants, and Equipments (PP&E). Personal Goods industry average PPE investment in the same period was 19.5%
- Intangibles share of Revenues: As a percentage of revenue, Estee Lauder invested 14.0% of its total revenues on Intangibles. Personal Goods industry average Intangibles investment in the same period was 45.5%
- Net Margins: Estee Lauder Net Margins in the year 2016 were 9.9%. Personal Goods industry average Net Margins in the same period were 10.5%
Sector and Industry Association of Estee Lauder
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
Estee Lauder is associated with Consumer Goods Sector and Personal Goods Industry.
Consumer Goods sector is comprised of the following industries: Beverages; Personal Goods; Food Products; Diversified Food; Household Goods & Home Construction; Food Distribution; Tobacco; Toys and Games. The definitions for each of the industries is as follows:
- Beverages industry consists of: Brewing Companies - manufacturers of cider or malt products such as beer, ale and stout; Distillers and Vintners Companies - blenders and shippers of wine and spirits such as whisky, brandy, rum, gin or liqueurs; and Soft Drinks Companies - manufacturers, bottlers and distributors of nonalcoholic beverages, such as soda, fruit juices, tea, coffee and bottled water.
- Personal Goods industry includes: Clothing & Accessories Companies - manufacturers and distributors of all types of clothing, jewellery, watches or textiles, sportswear, sunglasses, eyeglass frames, leather clothing and goods, and processors of hides and skins; Footwear Companies - manufacturers and distributors of shoes, boots, sandals, sneakers and other types of footwear; and Consumer Packaged Goods Companies - makers and distributors of cosmetics, toiletries and personal-care and hygiene products, including deodorants, soaps, toothpaste, perfumes, diapers, shampoos, razors and feminine hygiene products.
- Food Products industry includes: Farming & Fishing companies - companies that grow crops or raise livestock, operate sherries or own non-tobacco plantation; Food Products Companies - food producers, including meatpacking, snacks, fruits, vegetables, dairy products and frozen seafood. It also includes producers of pet food and manufacturers of dietary supplements, vitamins and related items.
- Diversified Food industry includes companies that offer a diverse portfolio of food products across agricultural, animal and dairy product categories.
- Household Goods & Home Construction industry includes companies that offer: Durable Household Products - Manufacturers and distributors of domestic appliances, lighting, hand tools and power tools, hardware, cutlery, tableware, garden equipment, luggage, towels and linens; Nondurable Household Products - Producers and distributors of pens, paper goods, batteries, light bulbs, tissues, toilet paper and cleaning products such as soaps and polishes; Furnishings - Manufacturers and distributors of furniture, including chairs, tables, desks, carpeting, wallpaper and office furniture; Home Construction - constructors of residential homes, including manufacturers of mobile and prefabricated homes intended for use in one place.
- Food Distribution industry includes companies that distribute food, beverage and consumer goods to restaurants, healthcare, educational facilities, lodging establishments; equipment and supplies for the foodservice and hospitality industries.
- Tobacco industry includes Manufacturers and distributors of cigarettes, cigars and other tobacco products. It also includes tobacco plantations.
- Toys and Games industry consists of manufacturers and distributors of toys and video/computer games, including such toys and games as playing cards, board games, stuffed animals and dolls.
Industry Ranking of Estee Lauder
With $11.3 billion revenues, Estee Lauder ranked number 6 of all the companies in the US Personal Goods industry. There were a total of 52 public companies in the US Personal Goods industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Personal Goods industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.