The cosmetics giant recently reported a sales slowdown in its second quarter in Asia, particularly in China and Hong Kong, along with weakness in Korea.
This appointment and focus on the region is said to be Estée’s way of boosting slowing numbers, particularly its China presence in Tier 1, 2,3 and 4.
“In China, prestige beauty growth remains solid even though it has slowed,” said the firm’s president Fabrizio Freda.
The growing middle class in China are approaching more prestige products and Freda says Estée is "adjusting our strategy to this new reality."
However, brand awareness is lower in Tier 2, 3, and 4 cities, making brick-and-mortar building a necessity.
The CEO also cited travel retail sales as another reason for a domestic slowdown, stating that “the combination of our sales with the Chinese consumer is still very, very strong, even if there is this slowdown trend internally.”
Disappointing results
In its recently released financial report, Lauder revealed on a global scale, that it had suffered from softer-than-expected demand in some markets.
According to Freda, net sales decreased by 6.5% in the Asia Pacific region, primarily reflecting lower local currency sales in China, Taiwan and Korea.
The lower sales in Korea reflected continuing difficult economic conditions and competitive pressures, and Estée Lauder expects to see continued weakness in prestige beauty in Korea, albeit at a more moderate pace.
However, there were higher operating results in Korea than in other countries, such as Japan, Thailand, China, Hong Kong, and Taiwan; with the latter trio all reporting double-digit decreases, primarily reflecting the impact from the accelerated retailer orders.
The brand's strongest local currency growth was generated in Australia, Japan, Hong Kong and the Philippines.