Estée Lauder(US:EL) Zhong Guo Jing Ying Bao·2025-08-29 14:46Core Insights - Estée Lauder reported an 8% year-over-year decline in organic net sales for the fiscal year 2025, with a loss of $785 million in operating profit [2][3] - The decline in the Chinese market was 6%, attributed to increased competition from local mid-to-high-end beauty brands and a failure to engage younger consumers [2][4] Financial Performance - For fiscal year 2025, Estée Lauder achieved organic net sales of $14.326 billion, down 8% from the previous year [2] - In mainland China, organic net sales were $2.741 billion, reflecting a 6% decline [3] - The company experienced a significant drop in net sales in previous fiscal years, with a 10.3% decrease in fiscal year 2023 and a 58% drop in net profit [3] Market Dynamics - The decline in sales is largely due to a downturn in global travel retail, which constitutes a significant portion of Estée Lauder's business [3][5] - The high-end beauty market is expected to grow by 2% to 3% in fiscal year 2026, with a recovery in travel retail anticipated [3] Competitive Landscape - Estée Lauder faces challenges from emerging local brands that are innovating in product concepts and marketing strategies, appealing to younger consumers [5][6] - The company has been criticized for its slow product innovation and lower R&D investment compared to competitors like L'Oréal [4][6] Strategic Challenges - Estée Lauder's reliance on travel retail channels and its slower product innovation cycle are seen as weaknesses in a rapidly changing market [6] - The company is also facing difficulties in adapting to the unique characteristics of the Chinese market, where online channels dominate and price competition is fierce [7] Future Outlook - The Chinese market is crucial for Estée Lauder, accounting for about 20% of its business, but the company must evolve its brand image and engage with younger consumers to avoid further declines [7] - Analysts suggest that the golden era for foreign mid-to-high-end brands in China may be over, with local brands increasingly taking the lead [7]