Estee Lauder looks online for new markets
The makeup manufacturer's e-sales have tripled in the past 5 years, and the company expects the growth to continue.
In the past fiscal year, the company launched e-commerce and mobile sites in six new markets, bringing the total to fifteen.
For the current year, it plans to add six more markets into its fold. Dennis McEniry, the president of Estee Lauder Companies Online, told analysts on the company's recent year-end earnings call that the company registered strong double-digit growth in sales from every region addressed by their brand sites as illustrated by a 24% overall growth in 2012. In the U.S. alone, the online sales grew by 20% year on year. Online sales grew 34% in the U.K., 55% in Germany and 40% in China.
We currently have a price estimate of $64 for Estee Lauder, which is 6% above its current market price.
E-commerce to help reach previously unexplored markets
The company reported that online sales have tripled in the last five years and that the big brands constitute more than half of sales. Skin care is the top-selling category, followed by make-up; fragrances contribute the least to online sales. The company expects to leverage growth in emerging markets like China, India and South Africa better through e- and m-commerce.
We expect the growing online presence to bring in more business for the company as its products become increasingly accessible to locations where it currently does not have physical presence. This is inline with their observation that almost two-thirds of online sales in China came from cities where they have no brick-and-mortar stores.
In addition, the growth in disposable incomes across emerging economies should help Estee Lauder gain more of the global market share for its products. The company's portals will also let shoppers receive advice from beauty advisers via live chat, email or telephone. These services are being adapted for the mobile platform while being progressively rolled out in other markets. This is expected to boost brand and company loyalty, bringing in further sales, especially in the already established markets.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.