The Estée Lauder Companies E-Portfolio

The Estée Lauder Companies

“Telephone, Telegraph, Tell-a Woman” – Estée Lauder

 Founded in 1946 by Estée Lauder, the Estée Lauder Companies started out with only four skin care products. The first major order came from Saks Fifth Avenue and was for $800 worth of products. Early on, with little experience of the business world, Estée had an instinct to conduct business in a new way. She believed that the best way to promote her products was to try them directly on potential customers. She believed that in doing so, they would feel the difference and no doubt purchase a full product. She gave away gifts and samples with purchase to promote early on.

Believing heavily in the power of word of mouth Estée began advertising. She hand-picked the pale turquoise colour for the brand’s jars. She believed that the colour conveyed a sense of luxury and would match bathroom decors. Armed with her earliest success Youth Drew, bath oil created in 1953 she unknowingly began an empire that would change the face of the cosmetics industry.[1]

The foundation and values of The Estée Lauder Companies are simple: creativity, entrepreneurship, and integrity.

Lead by Fabrizio Freda, current President and CEO[2], The Estée Lauder Companies Inc. is one of the world’s leading skin care, makeup, fragrance and hair care product manufacturers. The company currently sells beauty products under 29 brand names which are available globally in over 150 countries and territories.[3] The price and range of product suits men and women from the entry-level prestige to the premium luxury user.

The 2012 Fiscal record results posted on the Estée Lauder website state that Net sales were $9.7 billion with a gross margin of 79.5%, and Operating expenses margin of 14.2%. The Net earnings for 2012 of $901 million, and the cash flow from operations totalling more than $1.1 billion.[4] Operating expenses is a broad term to cover costs such as:

• Fixed long term operating costs: buildings, patents, copyrights, plants, rent, insurance, permits and equipment.
• This budget would also cover variable costs such as employee expenses, wages, packaing materials, advertising expense, raw material and utilities.

Below are some graphs taken from the 2012 Annual Report .pdf found on The Estée Lauder website.

The Estée Lauder brands and products are split into several groups (showing 26 of 29 brands):

• Salon and Pharmacy Channel - Aveda, Bumble and bumble, and Darphin
• Fragrance Licensing and Creative Incubator - Aramie, Lab Series Skincare for Men, Tommy Hilfiger, Kiton, Donna Karan, Michael Kors, American Beauty, Flirt!, GoodSkin Labs, Coach, Grassroots Research Labs, and Ermenegildo Zegna.
• Prestige Skin Care and Alternative Channels - Clinique, Origins, and Ojon
• High-End Prestige Brands and Makeup Artist Brands - Estée Lauder, MAC, Bobbi Brown, Prescriptives, La Mer, Jo Malone, Tom ford and Smashbox.

Prices for these products range from $10 to $200+.

With extensive advertising on TV, magazines and internet campaigns it’s no wonder why Estée Lauder is one of the world’s leading beauty providers. They have a YouTube channel filled with helpful how-to videos and interviews with make-up artists.

The Estée Lauder Companies Inc. is no stranger to the fashion world. Check out this clip of Tom Pecheux as he does make up for Anthony Vaccarello, Designer, on Paris Runway.

The Estée Lauder Companies are supporters of Breast Cancer Awareness and donate regularly to the Breast Cancer Research Foundation. In 2010 the Estée Lauder Companies set a Guinness World record for the most buildings illuminated in pink light for 24 hours. The record included 38 historic landmarks.[5] A video of the record can be viewed here. 

Since October of 2011, the Estée Lauder brand has donated more than $8.5 million to the Breast Cancer Research Foundation.[6]

Other brands and the charities they support include:

• MAC and the AIDS Fund – 100% of the proceeds from MAC’s VIVA Glam products are donated to the fund. (Since 1994)

The success of Estée Lauder is driven by great people, great product and great causes. They are ever changing and evolutionary while still maintaining their classic brands.