Analysis of Reportable Segments
Estée Lauder Cos. Inc. operates in 5 segments: Skin Care; Makeup; Fragrance; Hair Care; and Other.
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- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
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Segment Profit Margin
Estée Lauder Cos. Inc., profit margin by reportable segment
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Skin Care | ||||||
| Makeup | ||||||
| Fragrance | ||||||
| Hair Care | ||||||
| Other |
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 data reveals distinct trends across the various reportable segments over the six-year period ending June 30, 2023.
- Skin Care
- The profit margin for the Skin Care segment shows variability with an initial upward trend from 27.01% in 2018 to a peak of 32.01% in 2021. However, a significant decline follows, reaching 14.68% by 2023, indicating a substantial reduction in profitability in the most recent year.
- Makeup
- This segment exhibits considerable volatility and generally low profitability. After a decrease from 9.75% in 2018 to a negative margin of -30% in 2020, the margin remains negative or barely positive in subsequent years, with a slight recovery to 2.85% in 2022 but dropping just below zero again in 2023. This suggests persistent challenges in maintaining profitability.
- Fragrance
- The Fragrance segment demonstrates the most consistent positive trend. After a minor decline from 9.64% in 2018 to 1.09% in 2020, margins improve substantially over the following years, peaking at 18.18% in 2022 and slightly decreasing to 17.52% in 2023. This suggests strengthening profitability and robust segment performance.
- Hair Care
- The Hair Care segment's profit margin declines steadily from 11.23% in 2018, turning negative in 2020 and maintaining negative margins through 2023, reaching -5.21%. This trend implies ongoing profitability challenges and potential structural issues within the segment.
- Other
- The Other segment shows fluctuating margins, initially rising from 13.43% in 2018 to 17.39% in 2019, then dropping to 10% in 2020 and further to -4.44% in 2021. Data for 2022 is missing, followed by a recovery to 11.11% in 2023. The variability suggests instability but an overall ability to regain profitability.
Segment Profit Margin: Skin Care
Estée Lauder Cos. Inc.; Skin Care; segment profit margin calculation
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) before charges associated with restructuring and other activities | ||||||
| Net sales | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2023 Calculation
Segment profit margin = 100 × Operating income (loss) before charges associated with restructuring and other activities ÷ Net sales
= 100 × ÷ =
- Net Sales
- Net sales increased consistently from 2018 to 2022, rising from $5,595 million in 2018 to $9,886 million in 2022. This represents a steady growth trend over five years. However, in 2023, net sales declined to $8,202 million, signaling a notable decrease compared to the previous year.
- Operating Income Before Charges
- Operating income showed a general upward trend from $1,511 million in 2018 to a peak of $3,036 million in 2021. It then decreased to $2,753 million in 2022, followed by a sharp decline to $1,204 million in 2023. This indicates a significant reduction in profitability in the most recent year.
- Segment Profit Margin
- The segment profit margin improved from 27.01% in 2018 to a high of 32.01% in 2021, demonstrating enhanced profitability efficiency during this period. Following that peak, the margin decreased to 27.85% in 2022 and dropped substantially to 14.68% in 2023, reflecting reduced margin performance.
- Overall Observations
- Between 2018 and 2021, there was consistent growth in both net sales and operating income, accompanied by improving profit margins, indicating a period of strong financial performance in the Skin Care segment. From 2022 onward, despite still relatively high net sales, both operating income and profit margins declined sharply, especially in 2023. This suggests emerging challenges impacting profitability and efficiency, possibly related to increased costs, market conditions, or other operational factors.
Segment Profit Margin: Makeup
Estée Lauder Cos. Inc.; Makeup; segment profit margin calculation
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) before charges associated with restructuring and other activities | ||||||
| Net sales | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2023 Calculation
Segment profit margin = 100 × Operating income (loss) before charges associated with restructuring and other activities ÷ Net sales
= 100 × ÷ =
- Net Sales
- Net sales exhibited a declining trend from fiscal 2019 to fiscal 2021, falling from 5,860 million USD to 4,203 million USD, representing a substantial reduction. Following this decline, net sales showed a moderate recovery in fiscal 2022, increasing to 4,667 million USD, before slightly decreasing again to 4,516 million USD in fiscal 2023. Overall, net sales have not returned to the levels observed in 2018 and 2019.
- Operating Income (Loss) Before Charges Associated with Restructuring and Other Activities
- Operating income before restructuring charges declined sharply from 549 million USD in 2018 to 438 million USD in 2019. This was followed by a significant swing into operating losses in fiscal years 2020 and 2021, with losses amounting to 1,438 million USD and 384 million USD respectively. In fiscal 2022, the segment returned to positive operating income of 133 million USD, but this was not sustained as it reverted to a slight operating loss of 22 million USD in fiscal 2023. This pattern indicates volatility and challenges in maintaining profitability within the segment over the period examined.
- Segment Profit Margin
- The segment profit margin mirrored operating income trends, starting at 9.75% in 2018 and decreasing to 7.47% in 2019. A pronounced decline occurred in fiscal 2020 and 2021, with margins turning negative at -30% and -9.14% respectively, indicating significant profitability issues. In 2022, the margin improved to a modestly positive 2.85%, yet in 2023 it fell again to a slightly negative -0.49%. This suggests persistent pressure on profit margins despite some recovery attempts.
Segment Profit Margin: Fragrance
Estée Lauder Cos. Inc.; Fragrance; segment profit margin calculation
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) before charges associated with restructuring and other activities | ||||||
| Net sales | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2023 Calculation
Segment profit margin = 100 × Operating income (loss) before charges associated with restructuring and other activities ÷ Net sales
= 100 × ÷ =
- Net Sales
- Net sales for the segment fluctuated over the observed period. Starting at $1,826 million in 2018, sales slightly decreased to $1,802 million in 2019 before declining further to $1,563 million in 2020. This was followed by a rebound in 2021 with sales increasing to $1,926 million, and a strong growth trend continued in 2022 and 2023, reaching $2,508 million and $2,512 million respectively, indicating a recovery and expansion in market demand.
- Operating Income (Loss) Before Charges Associated with Restructuring and Other Activities
- Operating income showed notable variability during the period. It decreased from $176 million in 2018 to $140 million in 2019 and then dropped sharply to $17 million in 2020, reflecting a significant decline in profitability during that year. However, operating income improved markedly in 2021, reaching $215 million, followed by substantial growth to $456 million in 2022. In 2023, operating income slightly declined to $440 million but remained at a high level compared to earlier years.
- Segment Profit Margin
- Segment profit margin followed a pattern consistent with operating income fluctuations. The margin decreased from 9.64% in 2018 to 7.77% in 2019 and fell sharply to 1.09% in 2020, indicating considerable pressure on profitability. In 2021, the margin rebounded strongly to 11.16%, and continued to improve substantially in 2022 to 18.18%. There was a minor decline in 2023 to 17.52%, yet the margin remained significantly higher than in the earlier years, demonstrating improved operational efficiency and cost management.
Segment Profit Margin: Hair Care
Estée Lauder Cos. Inc.; Hair Care; segment profit margin calculation
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) before charges associated with restructuring and other activities | ||||||
| Net sales | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2023 Calculation
Segment profit margin = 100 × Operating income (loss) before charges associated with restructuring and other activities ÷ Net sales
= 100 × ÷ =
The financial performance of the Hair Care segment over the analyzed period reveals several notable trends in sales, profitability, and margins.
- Net Sales
- There is an overall upward trend in net sales from 2018 to 2023. Starting at $570 million in 2018, sales slightly increased to $584 million in 2019 before experiencing a decline to $515 million in 2020. From 2020 onward, net sales recovered and steadily grew to reach $653 million by 2023, representing the highest sales figure within the period.
- Operating Income (Loss)
- Operating income showed a declining trend throughout the period. In 2018, operating income was $64 million, which decreased sharply to $39 million in 2019. This was followed by losses from 2020 to 2023, with negative values ranging from -$19 million to -$34 million. The losses intensified progressively, with the largest operating loss recorded at -$34 million in 2023.
- Segment Profit Margin
- The segment profit margin similarly declined over the period. It started positively at 11.23% in 2018 but dropped substantially to 6.68% in 2019. From 2020 onwards, the margin became negative, indicating operational challenges affecting profitability. Margins remained below zero, decreasing from -3.69% in 2020 to -5.21% in 2023.
In summary, while sales for the Hair Care segment have generally increased post-2020, improving to the highest recorded figure in 2023, profitability metrics indicate a persistent decline. Operating losses have consistently deepened since 2020, and profit margins have deteriorated into negative territory, suggesting increased costs, pricing pressures, or other operational inefficiencies impacting segment earnings despite growing sales volumes. These patterns highlight a growing disconnect between revenue generation and profitability within the segment over the analyzed timeframe.
Segment Profit Margin: Other
Estée Lauder Cos. Inc.; Other; segment profit margin calculation
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) before charges associated with restructuring and other activities | ||||||
| Net sales | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2023 Calculation
Segment profit margin = 100 × Operating income (loss) before charges associated with restructuring and other activities ÷ Net sales
= 100 × ÷ =
The data for the "Other" reportable segment reveals several noteworthy trends over the six-year period ending June 30, 2023.
- Net Sales
- Net sales initially increased slightly from 67 million USD in 2018 to 69 million USD in 2019. However, there was a sharp decline in 2020 to 40 million USD, likely reflecting external challenges faced during that year. Subsequently, net sales demonstrated a gradual recovery, rising to 45 million USD in 2021, 49 million USD in 2022, and reaching 54 million USD in 2023. Despite this recovery, net sales in 2023 remain below the earlier peak levels observed in 2018 and 2019.
- Operating Income (Loss) Before Charges Associated with Restructuring and Other Activities
- Operating income showed a generally positive trend from 2018 to 2019, increasing from 9 million USD to 12 million USD. However, a sharp decline occurred in 2020, dropping to 4 million USD, followed by a negative operating income of -2 million USD in 2021, indicating operational losses during this period. Data for 2022 are not available, but in 2023, operating income rebounded to 6 million USD, signaling a partial recovery in profitability.
- Segment Profit Margin
- The segment profit margin exhibited a similar trajectory to operating income. It increased from 13.43% in 2018 to its peak of 17.39% in 2019, before sharply decreasing to 10% in 2020. In 2021, the margin turned negative at -4.44%, reflecting operational challenges and losses occurring in that year. The margin for 2022 is missing, but in 2023, it recovered to 11.11%, indicating improving profitability, although still below the peak margins recorded in 2018 and 2019.
Overall, the data reflect a significant impact on sales and profitability during the 2020-2021 period, followed by a phase of recovery from 2022 into 2023. While neither sales nor profit margins have fully returned to the pre-2020 peak levels, improvements in both metrics suggest stabilization and positive momentum in recent periods.
Net sales
Estée Lauder Cos. Inc., net sales by reportable segment
US$ in millions
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Skin Care | ||||||
| Makeup | ||||||
| Fragrance | ||||||
| Hair Care | ||||||
| Other | ||||||
| Returns associated with restructuring and other activities | ||||||
| Total |
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).
- Skin Care
- Skin Care net sales displayed a generally upward trend from 2018 to 2022, increasing from 5,595 million USD in 2018 to a peak of 9,886 million USD in 2022. However, in 2023, there was a notable decline to 8,202 million USD, representing a significant decrease from the previous year.
- Makeup
- Makeup segment net sales showed fluctuations with an overall declining trajectory during the period. After rising slightly from 5,633 million USD in 2018 to 5,860 million USD in 2019, sales dropped sharply in 2020 to 4,794 million USD and continued to decrease to 4,203 million USD in 2021. There was a modest recovery in 2022 to 4,667 million USD but a slight decline again in 2023, reaching 4,516 million USD.
- Fragrance
- Fragrance net sales experienced moderate variability across the years with an overall growth trend. Sales remained relatively stable around 1,800 million USD in 2018 and 2019, declined in 2020 to 1,563 million USD, and then increased significantly in 2021 to 1,926 million USD. This upward momentum continued with further increases to 2,508 million USD in 2022 and a slight rise to 2,512 million USD in 2023.
- Hair Care
- Hair Care segment sales exhibited a stable but modestly increasing pattern. Starting at 570 million USD in 2018, sales saw a slight dip in 2020 to 515 million USD but recovered subsequently, reaching 653 million USD in 2023, the highest value in the observed period.
- Other
- The Other segment showed relatively low sales values compared to other categories, ranging from 40 million USD to 69 million USD. There was a general incremental trend with a dip in 2020 to 40 million USD followed by modest increases in the following years, registering 54 million USD in 2023.
- Returns Associated with Restructuring and Other Activities
- These returns showed fluctuating negative values across the years, with notable spikes in 2021 (-14 million USD) and 2023 (-27 million USD), suggesting periods of increased restructuring or related cost impacts. The values in 2018 and 2019 were smaller in magnitude compared to later years.
- Total Net Sales
- Total net sales increased steadily from 13,683 million USD in 2018 to peak at 17,737 million USD in 2022. In 2023, total sales decreased to 15,910 million USD, indicating a contraction following two years of growth. This decline aligns notably with the decreases seen in the Skin Care and Makeup segments.
Operating income (loss) before charges associated with restructuring and other activities
Estée Lauder Cos. Inc., operating income (loss) before charges associated with restructuring and other activities by reportable segment
US$ in millions
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | |
|---|---|---|---|---|---|---|
| Skin Care | ||||||
| Makeup | ||||||
| Fragrance | ||||||
| Hair Care | ||||||
| Other | ||||||
| Total |
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 operating income (loss) before charges associated with restructuring and other activities reveals distinct trends across different segments over the analyzed six-year period.
- Skin Care
- This segment displayed a generally positive trajectory from 2018 through 2022, starting at $1,511 million and peaking at $3,036 million in 2021. However, in 2023, a considerable decline occurred, with income dropping sharply to $1,204 million, representing a notable decrease from the previous two years.
- Makeup
- The Makeup segment experienced significant volatility. It showed a decrease from $549 million in 2018 to $438 million in 2019, followed by a dramatic downturn in 2020, registering a substantial loss of $1,438 million. Subsequent years saw partial recovery, with losses shrinking to $384 million in 2021 and a return to slight profitability ($133 million) in 2022. In 2023, there was a small loss again of $22 million, indicating ongoing challenges in this segment.
- Fragrance
- The Fragrance segment steadily improved overall, starting at $176 million in 2018 and rising to $456 million by 2022. While the segment slightly declined to $440 million in 2023, it maintained a relatively high level of operating income compared to earlier years, demonstrating strength and resilience.
- Hair Care
- Operating income in Hair Care was generally weak and declining. From a small positive income of $64 million in 2018, it fell to minor positive figures in 2019, then transitioned into continuous losses from 2020 onward, deepening to a loss of $34 million by 2023. This signals persistent difficulties within this segment.
- Other
- The Other segment exhibited minor fluctuations, with modest positive income in most years except for a slight negative in 2021 and missing data in 2022. It recorded $6 million in 2023, suggesting small but inconsistent contributions to overall results.
- Total
- The total operating income mirrored the segment-level volatilities. After growing from $2,309 million in 2018 to $2,554 million in 2019, it sharply declined in 2020 to $689 million, largely attributable to the significant losses in Makeup and Hair Care segments. A robust recovery occurred in 2021 and 2022, peaking at $3,314 million in 2022, primarily driven by Skin Care and Fragrance. However, in 2023, the total again fell substantially to $1,594 million, reflecting the declines observed predominantly in Skin Care and the persistence of losses in other segments.