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Estée Lauder Cos. Inc. (NYSE:EL)

This company has been moved to the archive! The financial data has not been updated since August 18, 2023.

Common-Size Income Statement

Estée Lauder Cos. Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
Net sales 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -28.69 -24.27 -23.64 -24.85 -22.79 -20.78
Gross profit 71.31% 75.73% 76.36% 75.15% 77.21% 79.22%
Selling, general and administrative -60.18 -55.75 -57.79 -60.42 -59.59 -62.53
Restructuring and other charges -0.35 -0.75 -1.26 -0.51 -1.45 -1.69
Goodwill impairment 0.00 0.00 -0.33 -5.68 -0.46 0.00
Impairments of other intangible and long-lived assets -1.30 -1.36 -0.83 -4.30 -0.15 0.00
Operating expenses -61.83% -57.86% -60.21% -70.91% -61.65% -64.22%
Operating income 9.48% 17.87% 16.15% 4.24% 15.56% 15.00%
Interest expense -1.60 -0.94 -1.07 -1.13 -0.89 -0.94
Interest income and investment income, net 0.82 0.17 0.31 0.34 0.39 0.41
Other components of net periodic benefit cost 0.08 0.01 -0.07 -0.03 -0.01 0.00
Other income, net 0.00 0.01 5.22 3.90 0.48 0.00
Earnings before income taxes 8.78% 17.12% 20.54% 7.32% 15.52% 14.47%
Provision for income taxes -2.43 -3.54 -2.81 -2.45 -3.45 -6.31
Net earnings 6.35% 13.58% 17.73% 4.87% 12.07% 8.16%
Net earnings attributable to noncontrolling interests and redeemable noncontrolling interest -0.03 -0.10 -0.03 -0.08 -0.06 -0.07
Net earnings attributable to The Estée Lauder Companies Inc. 6.32% 13.47% 17.70% 4.79% 12.01% 8.10%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

The financial performance of the entity between 2018 and 2023 is characterized by significant volatility in operating margins and net profitability, with a notable peak in efficiency in 2021 and 2022 followed by a sharp contraction in 2023.

Gross Profitability and Cost of Sales
Gross profit margins remained relatively stable between 75% and 79% from 2018 through 2022. However, a significant decline is observed in 2023, where gross profit dropped to 71.31%. This compression is directly attributable to an increase in the cost of sales, which rose from a low of 20.78% in 2018 to its highest level of 28.69% in 2023.
Operating Expenses and Efficiency
Selling, general and administrative expenses fluctuated throughout the period, reaching a minimum of 55.75% in 2022 before rising to 60.18% in 2023. A substantial spike in total operating expenses occurred in 2020, reaching 70.91% of net sales. This peak was driven primarily by non-recurring charges, specifically goodwill impairment of 5.68% and impairments of other intangible and long-lived assets of 4.30%.
Operating Income Trends
Operating income exhibited extreme variance, dropping to a low of 4.24% in 2020 during the period of high impairment charges. A strong recovery followed, with operating income peaking at 17.87% in 2022. This upward trend reversed sharply in 2023, with operating income falling to 9.48%, reflecting the combined impact of higher cost of sales and increased administrative spending.
Non-Operating Items and Net Earnings
Net earnings attributable to the company showed significant swings, from a low of 4.79% in 2020 to a peak of 17.70% in 2021. The 2020 and 2021 periods were influenced by substantial "Other income, net," which contributed 3.90% and 5.22% to net sales, respectively, effectively cushioning the impact of operating volatility. By 2023, net earnings attributable to the company declined to 6.32%, influenced by rising interest expenses, which reached 1.60% of net sales, the highest level in the analyzed period.

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