10 Updates

Higher Passenger Traffic From Asia-Pacific Should Bolster Estee Lauder Travel Retail Sales

Apr 3 2014, 8:28am CDT | by

In FY2013, prestige beauty product maker Estée Lauder reported sales of approximately $10.2 billion compared to $9.7 billion in sales in FY2012, a 5.2% increase. The company sells its...

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15 weeks ago

Higher Passenger Traffic From Asia-Pacific Should Bolster Estee Lauder Travel Retail Sales

Apr 3 2014, 8:28am CDT | by

In FY2013, prestige beauty product maker Estée Lauder reported sales of approximately $10.2 billion compared to $9.7 billion in sales in FY2012, a 5.2% increase. The company sells its products through various upscale departmental stores, specialty retailers, prestige salons and spas. In total, Estée Lauder estimates it has close to 30,000 points of sale within these distribution channels, generating sales of its beauty products across the world. Additionally, the company also markets its products through freestanding stores, duty-free and travel retail outlets worldwide, and also its own and other authorized retailer websites.

In this note, we provide an analysis of Estée Lauder’s travel retail business , underlining various factors that impact the division’s performance and its potential value contribution to overall top line for the company. We have a $75 Trefis price estimate for Estée Lauder, which stands at an 11% premium to its market price.

See Our Full Analysis for Estée Lauder

A Look At Estée Lauder’s Travel Retail Business
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Travel retail sales for Estée Lauder increased to over $1 billion in FY2012, driven by the increase in global passenger traffic. For fiscal 2013, sales from the travel retail channel grew at thrice the pace of global passenger growth rate. According to data from the IATA, global passenger demand expanded 5.2% in 2013, from close to 3 billion passengers in 2012. This should put Estée Lauder’s travel retail sales growth rate at over 15% for fiscal 2013, to stand at approximately $1,156 million. Much of the 15% growth rate in travel retail comes from the sale of skin care products. As a percentage of overall revenue, this marks a sizable 11.4% contribution from the travel retail channel for Estée Lauder.

Asia-Pacific Passenger Traffic Growth Should Support Strong Travel Retail Expansion
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A major factor for travel retail revenues standing at three times global passenger traffic is the combination of expanding disposable income in the Asia-Pacific region, along with strategic positioning of travel retail outlets by Estée Lauder. The main customer base for a travel retail outlet is the global passenger, and hence, positioning such outlets in high traffic corridors is key to having a higher growth rate.

International passenger demand is the highest for the Middle Eastern region at 12.1% in 2013. Similarly, emerging market regions of Latin America, Africa and Asia-Pacific registered growth rates of 8.1%, 5.5% and 5.3% respectively, in international passenger demand. Meanwhile, developed economies of Europe and North America had growth rates of 3.8% and 3% in international passenger demand. The Asia-Pacific region, in addition to outpacing passenger demand from developed economies, leads the world passenger traffic with a 29% share according to Airbus, followed by Europe and North America at 26% and 25% respectively.
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Estée Lauder has capitalized on the strong demand for international travel from Asian customers and is the leading travel retailer in the Asia-Pacific market. By the end of fiscal 2012, the company had a total of 1,600 travel retail outlets worldwide. However, we believe a majority of these travel retail outlets to be situated in travel corridors popular among Asian customers, given their expanding discretionary wallet share. Going forward, the company could continue to establish itself as a strong travel retailer within the Asia-Pacific region by opening more stores.

Travel Retail Investments Should Lead To Market Share Expansion For Estée Lauder

Going forward, Airbus expects domestic travel within China and India to drive overall Asia-Pacific passenger demand, with annualized growth rates of 7% and 10% respectively through 2032. In addition to strong domestic travel growth, international travel corridors (such as Intra Asia, Asia – Middle East, Asia – PRC and Central Europe – Western Europe) are expected to see a higher demand in passenger traffic than the global growth rate of 4.7% annually through 2032. This burgeoning demand surrounding the Asia-Pacific and Middle East regions should drive future investments into travel retail from cosmetics companies.

We expect Estée Lauder to increase its investments into the travel retail business in the future, driven by the higher revenue growth rate from the division. Through its travel retail channel, Estée Lauder has achieved a 15% top line growth rate compared to 4% for overall revenues in CY2013. Additionally, growth in travel retail is primarily resulting from the sale of skin care products. At the end of CY2013, we estimate Estée Lauder’s skin care market share to stand at approximately 7.6%. However, higher investments into travel retail should be able to drive future revenues and expand its skin care market share in the future.

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Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

"GOLDEN ASIA" Tokyo Premiere Press Conference
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

The Prince Of Wales Visits The Royal International Air Tattoo
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Mi ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensati ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

6 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

6 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Baz ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

6 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansar ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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