Estee Lauder Companies, Inc. (the) · NYSE:EL
Estee Lauder Companies, Inc. (the) — Investor Day (March 2019)
67 slides from Estee Lauder Companies, Inc. (the)'s investor day presentation, Mar 6, 2019
Slide 1: Investor Day 2019
INVESTOR 2019 DAY
Slide 2: Estée Lauder Companies: The Best Diversified Pure Play
ESTÉE LAUDER COMPANIES: THE BEST DIVERSIFIED PURE PLAY FABRIZIO FREDA PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 3: Estée Lauder Companies: The Best Diversified Pure Play
ESTEE LAUDER COMPANIES: ee F D FABRIZIO FREDA PRESIDENT AND CHIEF EXECUTIVE OFFICER PURE PLAY
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Slide 5: Prestige beauty is one of the most attractive consumer segments
PRESTIGE BEAUTY IS ONE OF THE MOST ATTRACTIVE CONSUMER SEGMENTS Market LeadingAspirational Brands Repurchase Rates Affordable LuxuryPricing Power
Slide 6: We are the best diversified pure play
WE ARE THE BEST DIVERSIFIED PURE PLAY Solely focused on prestige beauty We are well diversified by: • Brands • Categories • Geographies • Channels • Consumer Segments • Price Points
Slide 7: Global prestige beauty growing faster than consumer staples
GELCOBHAALSPGRREOSWTINGEVBEENAUFATSYTIESR GROWING FAST CONSUMER STAPLES GLOBAL PRESTIGE BEAUTY ELC 13% 9% 7% 7% 7% 7% 6% 6% (1) Consumer Staples represents S&P Consumer Staples Index (FactSet). (2) Prestige Beauty represents 2017 Euromoni-to2r p%remium fragrance, premium skincare and premium cosmeti
Slide 8: Leading Beauty Forward provides resources for future growth
LEADING BEAUTY FORWARD PROVIDES RESOURCES FOR FUTURE GROWTH • Cost savings • Investment in new capabilities • Nearly doubled advertising $800 ADVERTISING I NVESTMENT +88% FY16 FY19E
Slide 9: ELC is delivering exceptional net sales growth
ELC IS DELIVERING EXCEPTIONAL NET SALES GROWTH 10-YEAR AVERAGE 8% 14.4 -14.5 $ IN BILLIONS 13.7 $14,700 $13,683 11.3 10.8 11.0 $11,824 FY09 FY10 FY1 1 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E Non-GAAP, adjusted for the adoption of the new revenue recognition standard (“ASC 606”); ELC data represents
Slide 10: CY2018 dollar growth bigger than top two prestige competitors
OUR CY2018 DOLLAR GROWTH WAS BIGGER THAN EACH OF THE TOP TWO PRESTIGE COMPETITORS • Absolute dollar growth surpasses prestige peers • We continue to attract new consumers 1,017 Competitor 2 ELC Competitor 1 ELC value added vs. top 2 competitors for CY2018 vs CY2017, translating the competitor varian
Slide 11: EPS grew more than double sales growth
EPS GREW MORE THAN DOUBLE SALES GROWTH 10-YEAR CAGR 21% $4.9$24-.9$65.00 $4.51 FY09 FY10 FY1 1 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E Non-GAAP; EPS adjusted for charges associated with restructuring and other activities, goodwill and other intangible asset impairments, changes in the fair value of
Slide 12: ELC constantly gained share of global prestige beauty
ELC CONSTANTLY GAINED SHARE OF GLOBAL PRESTIGE BEAUTY 14.4% 14.3% CY09 CY10 CY1 1 CY12 CY13 CY14 CY15 CY16 CY17 ELC Global Prestige share represents Euromonitor 2017 Global Premium Cosmetics, Premium Fragrances and Premium Skincare 13.9%13.9%14.0% 13.6% 13.3% 13.0% 13.8%
Slide 13: Created $50B of stockholder value since 2009
CREATED $50B OF STOCKHOLDER VALUE SINCE 2009 983% EL S&P 500 S&P CONSUMER STAPLES PEER AVERAGE 427% 210% 271% 30-Jun-09 30-Jun-10 30-Jun-1 1 29-Jun-12 28-Jun-13 30-Jun-14 30-Jun-15 30-Jun-16 30-Jun-17 29-Jun-18 28-Feb-19 Market Capitalization $56B $6B FactSet: as of 2/28/19. Peers represents L’Oreal
Slide 14: Favorable dynamics fuel global prestige beauty growth
FAVORABLE DYNAMICS FUEL GLOBAL PRESTIGE BEAUTY GROWTH
Slide 15: Prestige beauty tailwinds continue
PRESTIGE BEAUTY TAILWINDS CONTINUE DYNAMICS FUEL E BEADIGUITALTY REVOLUTION GROSHWIFTINTG H + + CONSUMER GLOBAL PREFERENCE FAVORABLE PDREMEOGSRATPHIIGC OPPORTUNITIES
Slide 16: Middle class expected to grow by 600M people
600M THE MIDDLE CLASS IS EXPECTED TO GROW BY PEOPLE, $5T IN ADDED GLOBAL SPENDING POWER BY 2028 REPRESENTING GREATER THAN Source: ELC Estimate
Slide 17: Per capita spend on prestige beauty is growing
PER CAPITA SPEND ON PRESTIGE BEAUTY IS GROWING 20 0 9 – 2017 +36A%ND THERE IS ST+I1L2L3% SUBSTANTIAL ROOINMCHINA IN THE US FOR GROW+T1H51% +49% IN INDIA IN BRAZIL Source: Per Capita Spend on Prestige Beauty represents 2017 Euromonitor Global Prestige Skincare, Prestige Haircare, Prestige Color Cosme
Slide 18: Still substantial room for growth
AND THERE IS STILL SUBSTANTIAL ROOM FOR GROWTH Source: Per Capita Spend on Prestige Beauty represents 2009 to 2017 Euromonitor Global Prestige Skincare, Prestige Haircare, Prestige Color Cosmetics and Prestige Fragrances sales divided by female population ages 1 5-64 (data.worldbank.org)
Slide 19: Annual per capita spend on prestige beauty
ANNUAL PER CAPITA SPEND ON PRESTIGE BEAUTY AND THERE IS STILL SUBSTANTIAL ROOM FOR GROWTH $255 IN THE US $276 IN SOUTH KOREA $23 IN CHINA $21 IN BRAZIL $2 IN INDIA Source: Per Capita Spend on Prestige Beauty represents 2009 to 2017 Euromonitor Global Prestige Skincare, Prestige Haircare, Prestige Co
Slide 20: Opportunity to trade mass to prestige
OPPORTUNITY TO TRADE MASS TO PRESTIGE UP FROM 47% Prestige Source: Mass represents 2017 Euromonitor Mass beauty and personal care, Prestige Beauty represents 2017 Euromonitor Premium beauty and personal care CHINA USA PRESTIGE MASS26% Prestige40% Prestige WEIGHTED AVERAGE ASIAN DEVELOPED MARKETS Bra
Slide 21: Strengths + Enhanced capabilities = Winning strategy for the future
STRENGTHS +ENHANCED = PROVEN CAPABILITIES WINNING STRATEGY FOR THE FUTURE
Slide 22: Innovation strengths plus enhanced capabilities
INPNR OVVEANTSITORENNGTHS + = ENHANCED CAPABILITIES • Brand-lWed, weIllNdiffeNrentIiatNed G STRATEGY FOR • Consumer inspired, creativity driven THE FUTURE
Slide 23: Innovation powered by data analytics and consumer insights
INNOVATION POWERED BY DATA ANALYTICS AND CONSUMER INSIGHTS • Record ~30% of net sales • Increasing success rate • Focus on hero franchises, local relevance, and best global opportunities • Improved speed to market
Slide 24: - • CLINIQUE " clinique iD • dramatically different hydrating jelly gelee hydratante tenement
- • CLINIQUE " clinique iD • dramatically different hydrating jelly gelee hydratante tenement dilferente <
Slide 25: Micro Essence with Sakura Ferment
Beauty Bloom. Let Asian New. Micro Essence with Sakura Ferment Estee Lauder puts over 30 years of fermentation exper tise in every drop. Created specifically for and tested on Asian ESTtE L-AUDER Micro ESTEE LALJDER women. Micro Essence Essence - • Skin Aclivuting Treatment I otion Lotiun expt:rtc r
Slide 26: Let Asian Beauty Bloom
Let Asian Beauty Bloom. New. Micro Essence with Sakura Ferment Estée Lauder puts over 30 years of fermentation expertise in every drop, Created specifically for and tested on Asian Women. Essengé Skin Activali Treatment I Lotion répare
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Slide 32: Jo Malone London
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Slide 33: Aveda products
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Slide 34: Our powerful digital agenda
OUR POWERFUL DIGITAL AGENDA
Slide 35: We are a leader in ecommerce
WE ARE A LEADER IN ECOMMERCE • 300+ brand sites in 50 counOtriesUR POWERFUL • Valuable consumerDIGITAL AGENDA engagement assets • Ecommerce comprises up to 30% of sales in key markets • About 30% annual growth
Slide 36: Social media has driven strong consumer engagement
SOCIAL MEDIA HAS DRIVEN STRONG CONSUMER ENGAGEMENT • All our brands advertise • Incredible consumer reach • Influencers, also as content • Higher ROI creators
Slide 37: High-tech high-touch
HIGH-TECH HIGH-TOUCH • New capabilities • Elevation of the luxury experience
Slide 38: Increased agility of resource reallocation to best growth opportunities
INCREASED AGILITY OF RESOURCE REALLOCATION TO BEST GROWTH OPPORTUNITIES
Slide 39: Our global geographic leadership
OUR GLOBAL GEOGRAPHIC LEADERSHIP SWEDEN UK FINL AND INCREASED AGPOL AINLD ITY OF CANADA RESOURCE RAEUSTRAIA LLBUOLGARICA ATION TO CZECHIA HUNGARY GREECE US BGEUATEMASL A TCÔTGE OHIOPWIA TH PAKISTAN HONG KONG CHINA TURKEY TUNISIA D'IVOIRE TAIWAN INDIA MYANMAR ET MEXICO OPANAMAPPORTNIUGERIA NITIES PHI
Slide 40: Potential for geographic expansion
POTENTIAL FOR GEOGRAPHIC EXPANSION Countries and Territories by Brand 185 Rodin Frédéric Malle Kilian Le Labo Bumble & BeccaToo Faced Aveda bumble Darphin Origins Smashbox Jo Malone GlamGlow La Mer Bobbi Brown Tom Ford MAC Clinique Designer Fragrances Estée Lauder Global Potential SOURCE: ELC Data 1
Slide 41: Potential for geographic expansion
POTENTIAL FOR GEOGRAPHIC EXPANSION Countries and Territories by Brand
Slide 42: Leaders in travel retail and global online
WE ARE NOW LEADERS IN THE TWO KEY CHANNELS OF THE FUTURE TRAVEL RETAIL AND GLOBAL ONLINE
Slide 43: Elevating the luxury experience for traveling consumers
ELEVATING THE LUXURY EXPERIENCE TRAVELING CONSUMERS FOR • Passenger traffic growing • Digitalization drives conversion • Brand expansion • Airports development
Slide 44: Significant opportunity for online penetration
SIGNIFICANT OPPORTUNITY FOR ONLINE PENETRATION Number of Brand Sites by Country 18 9 PHILIPPINES ITALY THAILAND RUSSIA JAPAN BRAZIL KOREA UK GERMANY US CHINA SOURCE: ELC Data 15 11 9 6 101010 8 5
Slide 45: Significant opportunity for online expansion
SIGNIFICANT OPPORTUNITY FOR ONLINE EXPANSION Ecommerce Net Sales Penetration 30% 27% 26% PHILIPPINES ITALY THAILAND RUSSIA JAPAN BRAZIL KOREA UK GERMANY US CHINA SOURCE: ELC Data 25% 19% 9%10% 7% 4%5% 22%
Slide 46: Direct to consumer
DIRECT TO CONSUMER • 300+ Brand sites • Third Party Platforms • 1500 FSS (e.g. Tmall)
Slide 47: Direct to consumer
Growing double digits DIRECT TO CONSUMER • 300+ Brand sites • Third Party Platforms • 1500 FSS High absolute profit Robust consumer data Platform for new business models (e.g. Tmall)
Slide 48: A strong brand building model
A STRONG BRAND BUILDING MODEL DEVELOPING LESS THAN $500M SCALING $500M-$1B LARGE GREATER THAN $1B NET SALES NET SALES NET SALES ALL OTHER BRANDS
Slide 49: Diversified brand portfolio serves key consumer segments
OUR DIVERSIFIED BRAND PORTFOLIO SERVES KEY CONSUMER SEGMENTS Premium Price Point Classic Lifestyle Progressive Lifestyle Entry Price Point
Slide 50: Our family culture and focus on inclusion and diversity
FAMILY CULTURE OUR & OUR FOCUS ON INCLUSION AND DIVERSITY OUR SUCCESS ENABLES
Slide 51: Culture word cloud
CHANGE RESPECT INNOVATION CREATIVE LEADERSHIP FASHION SERVICE PASSION INCLUSION PEOPLE PROFESSIONAL EXCELLENCE TRUST LOVE FAMILY FRIENDLY CARING TEAM SUPPORTIVE BEAUTIFUL GROWTH BEAUTY POSITIVE WELCOMING DIVERSITY FUN RESPECTFUL SUCCESS DIVERSEGOOD INCLUSIVE SOCIAL FAIR LUXURY DYNAMIC COMPETITIVE ST
Slide 52: Our values
INNOVATION pespECT PROFESSIONAL FAMILY DIVERSE <i INCLUSIVE QUALITY
Slide 53: Reverse Mentor Program
B \ REVERSE MENTOR PROGRAM
Slide 54: Reverse Mentor Program
REVERSE MENTOR PROGRAM
Slide 55: Reverse mentors global community
REVERSE MENTORS GLOBAL COMMUNITY 470+ GERMANY CANADA CHINA UK GLOBAL REVERSE MENTOR PARTICIPANTS KOREA SWITZERLAND FRANCE SPAIN JAPAN TURKEY US HONG KONG ITALY 300+ INDIA TAIWAN EXECUTIVE SENIOR LEADER PARTICIPANTS THAILAND MALAYSIA SINGAPORE 22 BRAZIL PARTICIPATING AFFILIATES CHILE AUSTRALIA SOUTH
Slide 56: Breast Cancer Campaign
.. I ESTEE LAUDER $=0MPANJES BREAST CNCER CAMPAI GN Breast cancer affects us all. #Tin1eToEndBreastCancer
Slide 57: New ESG goals
WE ARE EXCITED TO ANNOUNCE OUR NEW ESG GOALS…
Slide 58: Packaging goal by end of 2025
75-100% recyclable, refillable, reusable, recycled or recoverable, packaging by the end of 2025
Slide 59: Glossary of key ingredients online by 2025
Glossary of key ingredients online by the end of 2025
Slide 60: Science-based emissions target by end of 2020
Set our a science-based target covering Scopes 1,2, and3 emissions by the end of 2020
Slide 61: Science-based emissions target
Set a science-based target covering our Scopes 1,2, and 3 emissions by a the end of 2020
Slide 62: We will continue to adapt in a fast changing environment
WE WILL CONTINUE TO ADAPT IN A FAST CHANGING ENVIRONMENT
Slide 63: We are the best diversified pure play
WE ARE THE BEST DIVERSIFIED PURE PLAY In a league of our own
Slide 64: Confirming our 3-year targets and long-term outlook
CONFIRMING WE ARE THE OUR 3-YEARTARGETS IN CONSBTAENTSCUTRREDNCYIVERSSIFTRIOENDG • 6-8% net sales growthPURE PLALYONG-TERM • Double-digit EPS growth OUTLO OK own • Average margin expansion +50 bps annually • Gain share in global pIrenstigae bleeaautygue of our The long-term targets are non-GAAP meas
Slide 65: Best and most experienced global talent
WE ARE THE WBEEHSAVTE ADN IIMVPRESSIVSEIBFENICEH DOF EXPERIENCED AND PASSIONPAUTEREGLPOLBALYTALENT In a league of our own
Slide 66: Forward-looking information and non-GAAP disclosures
FORWARD-LOOKING INFORMATION AND NON-GAAP DISCLOSURES Statements in the Investor Day presentations, including remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may a
Slide 67: Forward-looking information and non-GAAP disclosures
FORWARD-LOOKING INFORMATION AND NON-GAAP DISCLOSURES Statements in the Investor Day presentations, including remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may a