Estee Lauder (EL) Invests In DECIEM, Strengthens Portfolio
Zacks Investment Research | Jun 16, 2017 03:22AM ET
In order to strengthen its beauty portfolio further, Estee Lauder Companies Inc. (NYSE:EL) recently invested in DECIEM – a fast-growing multi-brand company. Terms of the investment were not disclosed.
Founded in 2013 in Toronto, DECIEM has its own laboratory, manufacturing, e-Commerce sites, retail stores and marketing infrastructure. DECIEM offers a broad range of products across price points through its own multi-brand stores, department stores, e-Commerce, TV shopping networks and select retailers, primarily in the U.S., U.K., and Canada. It has launched 10 brands to date – including The Ordinary and NIOD.
Estee Lauder is one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. DECEIM is a global leader in prestige beauty, which sells more than 25 brands in over 150 countries. Thus, this investment is likely to benefit Estee Lauder.
Estee Lauder is one of the world's leading players in the cosmetics industry.Furthermore, its portfolio of flagship brands includes the likes of Estee Lauder, M-A-C, Jo Malone London, Smashbox, Bobbi Brown and Tom Ford, which are globally recognized. This provides a competitive advantage and bolsters its well-established market position. Moreover, Estee Lauder remains focused on innovation which ensures constant revenues growth.
The company’s business is gaining impetus of late, driven by many brands, channels and markets that experienced strong momentum. Since the beginning of fiscal 2017, sales have been improving. The company expects sales to improve further in the fourth quarter and the trend is expected to continue in fiscal year 2018.
Further, consumers’ rising demand for beauty products, particularly in the luxury arena and makeup, led to robust growth in its high-end brands and continued double-digit growth in the makeup category. In addition, the company is witnessing strong growth in the fastest-growing beauty channels, with travel retail, online and specialty-multi, each rising strong double digits.
The company is expected to remain focused on its prestige beauty industry that has been growing steadily for years. The pace of growth is likely to be faster than other sectors.
Despite economic challenges and volatility slowing the pace of market growth in Hong Kong and several emerging markets, Estee Lauder expects global prestige beauty industry to grow 4–5% during the year,
The company’s stock gained 6.2% in the last year, outperforming the Zacks categorized Cosmetics and Toiletries industry’s fall of 13.6%. Notably, the industry is part of the bottom 28% of the Zacks Classified industries (192 out of the 265).
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Estee Lauder currently carries a Zacks Rank #3 (Hold).
A better-ranked stock from the same space, carrying a Zacks Rank #2 (Buy), is Inter Parfums, Inc. (NASDAQ:IPAR) . You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here .
Investors can also count upon Aramark (NYSE:ARMK) and MGP Ingredients, Inc. (NASDAQ:MGPI) from the broader consumer staple sector. Both the stock carry a Zacks Rank #2.
Inter Parfums has an average positive earnings surprise of 15.6% in the trailing four quarters.
Aramark and MGP have positive earnings surprise of 4.45% and 27.09%, respectively.
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