The Estée Lauder Companies Inc. (NYSE: EL) today reported $1.90 billion in net sales for its fiscal first quarter ended September 30, 2008, an 11% increase over the $1.71 billion reported in the prior-year quarter. Excluding the impact of foreign currency translation, net sales rose 10%.

The Company reported net earnings for the quarter ended September 30, 2008 of $51.1 million, a 31% increase compared with $39.1 million last year. Diluted net earnings per common share for the quarter rose 30% to $.26 compared with $.20 reported in the prior year.

William P. Lauder, Chief Executive Officer said, “In spite of a very challenging global macroeconomic environment, we met our sales growth target and exceeded our EPS estimate for the quarter. We achieved our goals on the strength of our brands and the efforts of our employees who demonstrated time and again the value of our products to consumers. Our performance in the period underscored, once more, the importance of our investments in emerging markets as well as our presence in more established international markets. We also continued to benefit from product innovation, multi-channel distribution and consistent brand building investments. Looking forward, we are convinced that these strategies, along with our commitment to strong execution and disciplined spending, will continue to be key drivers of both our top line and bottom line performance.

“In the near term, we see this as a time of extraordinary uncertainty. We believe the global economic challenges will be extensive and ongoing, and we are managing our business with these expectations in mind. We remain focused on our core strengths and in directing our resources to the greatest growth opportunities, while vigilantly taking necessary steps to protect our bottom line where we can. We believe that the slowdown in the global economy will impact our overall sales growth for the remainder of the fiscal year, and the unprecedented strengthening of the U.S. dollar against several major currencies will also have a negative impact on our results. With this in mind, we are revising our full 2009 fiscal year estimates for sales growth in constant currencies to 3% to 5% and earnings per share to $2.20 to $2.50.”

For the fiscal 2009 first quarter, on a reported basis, as well as in constant currency, sales increased in all product categories within each of the Company’s geographic regions, except for hair care in the Americas.

Skin Care

• The 16% net sales growth in skin care products in the current quarter was particularly strong in view of the 9% sales gain in the category in last year’s first quarter. This growth was primarily fueled by double-digit increases in the Company’s international businesses.
• The recent launches of Perfectionist [CP+] Wrinkle Lifting Serum and Cyber White EX by Estée Lauder, as well as Moisture Surge Extended Thirst Relief and Superdefense SPF 25 Age Defense Moisturizer from Clinique contributed incremental sales.
• The category’s growth also benefited from increases in our La Mer brand and products such as the 3-Step Skin Care System from Clinique and Tri-Aktiline Instant Deep Wrinkle Filler and Eyliplex-2 by good skin™.
• Operating income increased, primarily reflecting improved results from certain of the Company’s core brands due to the strong sales gains.

Makeup

• Makeup sales increased sharply, with solid double-digit gains reported in international markets along with a mid-single digit sales increase in the Americas.
• The Company’s makeup artist brands continued to generate strong sales growth during the quarter, principally in international markets.
• Higher makeup sales were also generated from the launch of High Impact Lip Colour SPF 15 and reformulated Superfit Makeup from Clinique, as well as Estée Lauder Signature Blush and Sumptuous Bold Volume Lifting Mascara by Estée Lauder.
• Operating income increased, primarily reflecting improved results from certain of the Company’s core brands and makeup artist brands stemming from the higher sales.

Fragrance

• Fragrance sales increased, primarily driven by newer fragrance offerings. While current year sales compared favorably to the prior year, the Company continues to face challenges in this product category, primarily in the United States.
• The launch of Sensuous by Estée Lauder and the international introduction of DKNY Delicious Night contributed to the sales growth.
• The increased sales also benefited from the performance of various Tom Ford and Jo Malone fragrances.
• Operating loss in the fragrance product category widened in the current quarter primarily reflecting lower net sales of designer fragrance products, partially offset by favorable results related to launches of new Estée Lauder fragrances.

Hair Care

• Sales of hair care products decreased, primarily due to the conclusion of Bumble and bumble’s hotel amenities program.
• Aveda net sales benefited from the launch of Dry Remedy Shampoo and Conditioner and the recent acquisition of an independent distributor.
• Higher sales were posted at Ojon, which was acquired in July 2007.
• Hair care reported an operating loss in the current quarter compared to an operating profit in the prior-year period, primarily due to the conclusion of the Bumble and bumble amenities program and an increase in selling and marketing expenses related to the positioning of the Ojon brand for future growth.
  
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  The Estée Lauder Companies Inc. is one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. The Company’s products are sold in over 140 countries and territories under the following brand names: Estée Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, M•A•C, Bobbi Brown, Tommy Hilfiger, Kiton, La Mer, Donna Karan, Aveda, Jo Malone, Bumble and bumble, Darphin, Michael Kors, American Beauty, Flirt!, Good Skin™, Grassroots, Sean John, Missoni, Daisy Fuentes, Tom Ford, Mustang, Coach, Ojon and Eyes by Design.
  
  Learn more about fragrances, skin care and makeup.