The Italians have a saying, “Chi vá piano, vá lontano” (He who goes slow, goes far.) It is a policy that Fabrizio Freda, CEO of Estée Lauder, has taught his company as they acquire more beauty companies
The company has to grow – but plans to do so at a measured pace. Instead of buying companies outright, management now invests in them, acquiring a minority interest that will let them learn about the company, its products, and its culture. An Estée Lauder minority investment is like an engagement period before marriage – the perfect opportunity to confirm there is a good, sustainable fit.
A minority investment was recently made by Estée Lauder in beauty brand Haeckels, a UK brand. This will leave the company with more autonomy in the first stages of the partnership, very much like a budding a romance. Haeckels is said to plan international expansion and looks to Estée Lauder for guidance. The company will benefit from Estée experience. At the same time, Estée Lauder can meet the company’s management and assess its key people.
Proctor and Gamble has taken the same steps; they recently invested in beauty brands Quai Tula and Farmacy. L’Occitane, on the other hand, bought the skincare brand Sol de Janeiro outright for $450 million.
Unilever also uses the same strategy as Estée Lauder. Through its Unilever Ventures, it offers smaller investments to young brands such as skincare company True Botanicals and participated in Saie’s seed. Similarly, Coty took a 20% investment in the Kim Kardashian West brand. Earlier it invested in KKW Beauty.
Clearly, the Estée Lauder strategy to generate growth through investment in companies that have a global appeal works well for this giant enterprise. And we see others across the beauty industry adopting a similar plan.
The pandemic caused by Covid-19 contributed to a change of pace – for both Lauder and the entire beauty industry. When L’Oréal’s CEO, Nicolas Hieronimus, reviewed the pandemic, he saw a huge appetite for beauty and noted that “beauty is essential for humans”. The global beauty market grew by +8% last year, after declining by 8% in 2020. He pointed out that the global beauty market growth was driven by skincare and fragrances, while makeup is recovering more slowly. According to Nicolas Hieronimus, “apart from makeup, all categories are nearly back to their 2019 levels”.
Since Estée Lauder’s fiscal year does not match L’Oréal’s annual year (the Lauder company’s fiscal year ends June 30,} it is hard to compare experiences.
In the annual report Estée Lauder reported the following results. One must keep in mind that these figures do not match the annual global figures cited by L’Oréal and do not include the recent strong Christmas sales. However, they do indicate the strength of skin care and make-up. In the fiscal year 2019 (ended June 30) skin care was 44% of total sales, in 2020 it was 52% and in 2021 it was 58%. Make-up in the three years went from 26% to 33% to 39%. Fragrance went from 12% to 11% and then returned to 12%. Hair-care was steady at 4% for the three periods.
As the Lauder company emerges from the pandemic, it will benefit from customers worldwide returning to their favorite beauty brand as they did this past holiday season. The current high inflation has customers veering to beauty brands they know and like in order to feel good. After all, jar of skincare or a new lipstick can continue to enhance looks for weeks, and that makes the purchase worthwhile.
POSTSCRIPT: In fiscal 2021 that ended June 30, 2021, Estée Lauder reported net sales of $16, 215 million (an increase of +13%). It is the home of many popular brands, including Estee Lauder, aramis, Clinique, Lab Series, Origins, M.A.C., Bobby Brown, La Mer, Aveda, Jo Malone, Bumble and bumble, Darphin, Tom Ford Beauty, smashbox, Aerin, Le Labo, Edition de Parfums Frederic Malle, GlamGlow, Kilian, Too Faced, Dr. Jart+, and The Abnormal Beauty Company (DECIEM). The company also has exclusive global license agreements with Tommy Hilfiger and Donna Karen New York. For DKNY., Michael Kors, Ermenegildo Zegna, the company currently manages a diversified designer fragrance portfolio.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
