LEADING GROWTH BEAUTY - IN PRESTIGE

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LEADING GROWTH BEAUTY - IN PRESTIGE
LEADING
  GROWTH
IN PRESTIGE
   BEAUTY
    FABRIZIO FREDA
        PRESIDENT AND CEO
   THE ESTÉE LAUDER COMPANIES

  TRACEY T. TRAVIS
 EXECUTIVE VICE PRESIDENT AND CFO
   THE ESTÉE LAUDER COMPANIES

        SEPTEMBER 8, 2016
LEADING GROWTH BEAUTY - IN PRESTIGE
FORWARD-LOOKING INFORMATION
THE FORWARD-LOOKING STATEMENTS IN THIS PRESENTATION, INCLUDING THOSE CONTAINING WORDS LIKE “EXPECT,” “PLANS,” “MAY,” “COULD,” “ANTICIPATE,” “ESTIMATE,”
“PROJECTED,” “FORECASTED,” THOSE IN MR. FREDA’S AND MS. TRAVIS’S REMARKS AND THOSE IN THE “NEAR AND LONGER-TERM GOALS” SLIDE INVOLVE RISKS AND
UNCERTAINTIES. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE FORWARD-LOOKING STATEMENTS INCLUDE THE FOLLOWING:
(1) INCREASED COMPETITIVE ACTIVITY FROM COMPANIES IN THE SKIN CARE, MAKEUP, FRAGRANCE AND HAIR CARE BUSINESSES;
(2) THE COMPANY’S ABILITY TO DEVELOP, PRODUCE AND MARKET NEW PRODUCTS ON WHICH FUTURE OPERATING RESULTS MAY DEPEND AND TO SUCCESSFULLY ADDRESS
CHALLENGES IN THE COMPANY’S BUSINESS;
(3) CONSOLIDATIONS, RESTRUCTURINGS, BANKRUPTCIES AND REORGANIZATIONS IN THE RETAIL INDUSTRY, AND OTHER FACTORS CAUSING A DECREASE IN THE NUMBER OF
STORES THAT SELL THE COMPANY’S PRODUCTS, AN INCREASE IN THE OWNERSHIP CONCENTRATION WITHIN THE RETAIL INDUSTRY, OWNERSHIP OF RETAILERS BY THE
COMPANY’S COMPETITORS OR OWNERSHIP OF COMPETITORS BY THE COMPANY’S CUSTOMERS THAT ARE RETAILERS AND OUR INABILITY TO COLLECT RECEIVABLES;
(4) DESTOCKING AND TIGHTER WORKING CAPITAL MANAGEMENT BY RETAILERS;
(5) THE SUCCESS, OR CHANGES IN TIMING OR SCOPE, OF NEW PRODUCT LAUNCHES AND THE SUCCESS, OR CHANGES IN THE TIMING OR THE SCOPE, OF ADVERTISING,
SAMPLING AND MERCHANDISING PROGRAMS;
(6) SHIFTS IN THE PREFERENCES OF CONSUMERS AS TO WHERE AND HOW THEY SHOP FOR THE TYPES OF PRODUCTS AND SERVICES THE COMPANY SELLS;
(7) SOCIAL, POLITICAL AND ECONOMIC RISKS TO THE COMPANY’S FOREIGN OR DOMESTIC MANUFACTURING, DISTRIBUTION AND RETAIL OPERATIONS, INCLUDING CHANGES IN
FOREIGN INVESTMENT AND TRADE POLICIES AND REGULATIONS OF THE HOST COUNTRIES AND OF THE UNITED STATES;
(8) CHANGES IN THE LAWS, REGULATIONS AND POLICIES (INCLUDING THE INTERPRETATIONS AND ENFORCEMENT THEREOF) THAT AFFECT, OR WILL AFFECT, THE COMPANY’S
BUSINESS, INCLUDING THOSE RELATING TO ITS PRODUCTS OR DISTRIBUTION NETWORKS, CHANGES IN ACCOUNTING STANDARDS, TAX LAWS AND REGULATIONS,
ENVIRONMENTAL OR CLIMATE CHANGE LAWS, REGULATIONS OR ACCORDS, TRADE RULES AND CUSTOMS REGULATIONS, AND THE OUTCOME AND EXPENSE OF LEGAL OR
REGULATORY PROCEEDINGS, AND ANY ACTION THE COMPANY MAY TAKE AS A RESULT;
(9) FOREIGN CURRENCY FLUCTUATIONS AFFECTING THE COMPANY’S RESULTS OF OPERATIONS AND THE VALUE OF ITS FOREIGN ASSETS, THE RELATIVE PRICES AT WHICH
THE COMPANY AND ITS FOREIGN COMPETITORS SELL PRODUCTS IN THE SAME MARKETS AND THE COMPANY’S OPERATING AND MANUFACTURING COSTS OUTSIDE OF THE
UNITED STATES;
(10) CHANGES IN GLOBAL OR LOCAL CONDITIONS, INCLUDING THOSE DUE TO THE VOLATILITY IN THE GLOBAL CREDIT AND EQUITY MARKETS, NATURAL OR MAN-MADE
DISASTERS, REAL OR PERCEIVED EPIDEMICS, OR ENERGY COSTS, THAT COULD AFFECT CONSUMER PURCHASING, THE WILLINGNESS OR ABILITY OF CONSUMERS TO TRAVEL
AND/OR PURCHASE THE COMPANY’S PRODUCTS WHILE TRAVELING, THE FINANCIAL STRENGTH OF THE COMPANY’S CUSTOMERS, SUPPLIERS OR OTHER CONTRACT
COUNTERPARTIES, THE COMPANY’S OPERATIONS, THE COST AND AVAILABILITY OF CAPITAL WHICH THE COMPANY MAY NEED FOR NEW EQUIPMENT, FACILITIES OR
ACQUISITIONS, THE RETURNS THAT THE COMPANY IS ABLE TO GENERATE ON ITS PENSION ASSETS AND THE RESULTING IMPACT ON ITS FUNDING OBLIGATIONS, THE COST
AND AVAILABILITY OF RAW MATERIALS AND THE ASSUMPTIONS UNDERLYING THE COMPANY’S CRITICAL ACCOUNTING ESTIMATES;
(11) SHIPMENT DELAYS, COMMODITY PRICING, DEPLETION OF INVENTORY AND INCREASED PRODUCTION COSTS RESULTING FROM DISRUPTIONS OF OPERATIONS AT ANY OF
THE FACILITIES THAT MANUFACTURE NEARLY ALL OF THE COMPANY’S SUPPLY OF A PARTICULAR TYPE OF PRODUCT (I.E., FOCUS FACTORIES) OR AT THE COMPANY’S
DISTRIBUTION OR INVENTORY CENTERS, INCLUDING DISRUPTIONS THAT MAY BE CAUSED BY THE IMPLEMENTATION OF INFORMATION TECHNOLOGY INITIATIVES OR BY
RESTRUCTURINGS;
(12) REAL ESTATE RATES AND AVAILABILITY, WHICH MAY AFFECT THE COMPANY’S ABILITY TO INCREASE OR MAINTAIN THE NUMBER OF RETAIL LOCATIONS AT WHICH THE
COMPANY SELLS ITS PRODUCTS AND THE COSTS ASSOCIATED WITH THE COMPANY’S OTHER FACILITIES;
(13) CHANGES IN PRODUCT MIX TO PRODUCTS WHICH ARE LESS PROFITABLE;
(14) THE COMPANY’S ABILITY TO ACQUIRE, DEVELOP OR IMPLEMENT NEW INFORMATION AND DISTRIBUTION TECHNOLOGIES AND INITIATIVES ON A TIMELY BASIS AND WITHIN
THE COMPANY’S COST ESTIMATES AND THE COMPANY’S ABILITY TO MAINTAIN CONTINUOUS OPERATIONS OF SUCH SYSTEMS AND THE SECURITY OF DATA AND OTHER
INFORMATION THAT MAY BE STORED IN SUCH SYSTEMS OR OTHER SYSTEMS OR MEDIA;
(15) THE COMPANY’S ABILITY TO CAPITALIZE ON OPPORTUNITIES FOR IMPROVED EFFICIENCY, SUCH AS PUBLICLY-ANNOUNCED STRATEGIES AND RESTRUCTURING AND COST-
SAVINGS INITIATIVES, AND TO INTEGRATE ACQUIRED BUSINESSES AND REALIZE VALUE THEREFROM;
(16) CONSEQUENCES ATTRIBUTABLE TO LOCAL OR INTERNATIONAL CONFLICTS AROUND THE WORLD, AS WELL AS FROM ANY TERRORIST ACTION, RETALIATION AND THE
THREAT OF FURTHER ACTION OR RETALIATION;
(17) THE TIMING AND IMPACT OF ACQUISITIONS, INVESTMENTS AND DIVESTITURES; AND
(18) ADDITIONAL FACTORS AS DESCRIBED IN THE COMPANY’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING ITS ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 2016.

THE COMPANY ASSUMES NO RESPONSIBILITY TO UPDATE FORWARD-LOOKING STATEMENTS MADE HEREIN OR OTHERWISE.
LEADING GROWTH BEAUTY - IN PRESTIGE
NON-GAAP DISCLOSURES
THESE MATERIALS INCLUDE SOME NON-GAAP FINANCIAL MEASURES RELATING TO: CONSTANT
CURRENCY; CHARGES ASSOCIATED WITH RESTRUCTURING ACTIVITIES; ACCELERATED
ORDERS ASSOCIATED WITH THE COMPANY’S SMI ROLLOUT; THE VENEZUELA REMEASUREMENT
CHARGES; AND INTEREST EXPENSE ON DEBT EXTINGUISHMENT. WE USE SUCH MEASURES,
AMONG OTHER FINANCIAL MEASURES, TO EVALUATE OUR OPERATING PERFORMANCE, WHICH
REPRESENT THE MANNER IN WHICH WE CONDUCT AND VIEW OUR BUSINESS. MANAGEMENT
BELIEVES THAT EXCLUDING CERTAIN ITEMS THAT ARE NOT COMPARABLE FROM PERIOD TO
PERIOD HELPS INVESTORS AND OTHERS COMPARE OPERATING PERFORMANCE BETWEEN TWO
PERIODS. WHILE WE CONSIDER THE NON-GAAP MEASURES USEFUL IN ANALYZING OUR
RESULTS, THEY ARE NOT INTENDED TO REPLACE, OR ACT AS A SUBSTITUTE FOR, ANY
PRESENTATION INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN
CONFORMITY WITH U.S. GAAP. INFORMATION ABOUT GAAP AND NON-GAAP FINANCIAL
MEASURES, INCLUDING RECONCILIATION INFORMATION, IS INCLUDED ON THE INVESTOR AREA
OF THE COMPANY’S WEBSITE, WWW.ELCOMPANIES.COM, UNDER THE HEADING “GAAP
RECONCILIATION.”
LEADING GROWTH BEAUTY - IN PRESTIGE
WHO

   WE ARE
GLOBAL LEADER IN PRESTIGE
         BEAUTY

    $11 BILLION IN SALES

        25+ BRANDS

    150 COUNTRIES AND
       TERRITORIES

  MORE THAN 10 PRESTIGE
  DISTRIBUTION CHANNELS

46,000 EMPLOYEES WORLDWIDE
LEADING GROWTH BEAUTY - IN PRESTIGE
PRESTIGE BEAUTY IS A                                   GLOBAL GROWTH ESTIMATES
                                                            CAGR 2010 - 2015

 GROWTH                                       6%                      5-Year CAGR

INDUSTRY                                      5%

                                              4%

PRESTIGE BEAUTY IS ONE
OF THE FASTEST GROWING                        3%

      CATEGORIES
                                              2%
ELC IS SOLELY FOCUSED
 ON PRESTIGE BEAUTY
                                              1%

   WE LEVERAGE OUR
   POWERFUL BRAND                             0%
 PORTFOLIO TO PURSUE                                  PRESTIGE      MASS & DIRECT            HPC
  HIGH GROWTH AREAS                                    BEAUTY          BEAUTY

                                 BEAUTY DATA: ELC ESTIMATES, EUROMONITOR 2015 FOR SKIN CARE, MAKEUP AND FRAGRANCES.
                       HPC: AVERAGE OF PAST FIVE YEARS ORGANIC SALES GROWTH FOR SELECT CONSUMER GOODS COMPANIES.
LEADING GROWTH BEAUTY - IN PRESTIGE
ELC HAS REINFORCED                                                 SHARE OF GLOBAL PRESTIGE BEAUTY

                                    #1
                                                                                                       14.5%

                     ITS                                                            14%

           POSITION                                                                        13.5%

          AND GROWN
            SHARE                                                                   13%

                                                                                    12%

                                                                                           2010        2015

ELC ESTIMATES AND EUROMONITOR 2015 FOR PRESTIGE SKIN CARE, MAKEUP AND FRAGRANCES;
                            EXCLUDES TRAVEL RETAIL.
LEADING GROWTH BEAUTY - IN PRESTIGE
5 YEAR GLOBAL SALES GROWTH

   WE HAVE DELIVERED          8%

                              7%

  STRONG                      6%

  RESULTS
                              5%

                              4%

                              3%

                              2%
   SALES +7% IN CONSTANT
 CURRENCY; ABOVE INDUSTRY     1%

                              0%
   COST SAVINGS THROUGH             Estée Lauder Prestige Beauty Mass & Direct     HPC
                                                                   Beauty
RESTRUCTURING AND IMPROVED
    FINANCIAL DISCIPLINE       5 YEAR TOTAL SHAREHOLDER RETURN
                                         Estée Lauder              S&P 500         Peer Avg
 OPERATING MARGIN +250 BPS    200

                                                                                              +84%
                              180
DOUBLE-DIGIT EPS GROWTH IN                                                                    +77%
   CONSTANT CURRENCY
                              160

  MARKET CAP +$13 BILLION     140                                                             +40%

TOTAL SHAREHOLDER RETURN      120

+84%, ABOVE S&P 500 AND ~2X
   PEER GROUP AVERAGE         100

                               80
                                       2011      2012       2013       2014      2015    2016
LEADING GROWTH BEAUTY - IN PRESTIGE
RESULTS DRIVEN BY OUR

 ENDURING
STRENGTHS
 POWERFUL BRAND PORTFOLIO

UNRIVALED CREATIVITY, SERVICE
       AND INNOVATION

  BALANCED AND DIVERSIFIED
         BUSINESS

MULTIPLE ENGINES OF GROWTH

CULTURE OF ANTICIPATING AND
    EMBRACING CHANGE

    AGILITY IN INVESTMENT
         ALLOCATION
LEADING GROWTH BEAUTY - IN PRESTIGE
THE POWER OF

          OUR BRAND PORTFOLIO
                     PREMIUM

CLASSIC                              PROGRESSIVE

                 ENTRY PRICE POINT
LEADING GROWTH BEAUTY - IN PRESTIGE
WE ARE

 BRAND
BUILDERS
 FIT BRANDS TO BEST
   OPPORTUNITIES

ACQUIRE NEW BRANDS
  STRATEGICALLY
STRENGTH BY
                                                                        $4,446

CATEGORY
                                SKIN CARE
                               CAGR +3.6%                           $3,719

ALL CATEGORIES ARE GROWING                                                   $4,703
                                  MAKEUP
                               CAGR +6.9%                      $3,371
MAKEUP STRONG IN ALL REGIONS

INNOVATION SUPPORTS GROWTH
                                                  $1,487
                               FRAGRANCE
                               CAGR +3.8%       $1,236

                                                  $554
                                HAIR CARE
                               CAGR +5.1%        $432
                                                           FY2016     FY2011

                                            ($ MILLIONS)
WE ARE THE

  GLOBAL LEADER IN
  PRESTIGE MAKEUP
  27.7%

                13.0%

                              10.1%
                                            8.7%

                                                   5.0%

    ELC       L’OREAL        SHISEIDO       LVMH   KAO
EUROMONITOR 2015 GLOBAL PRESTIGE COLOR COSMETICS
CATEGORY GROWTH
   SUPPORTED BY

INNOVATION
   SUPERIOR QUALITY

RESEARCH & DEVELOPMENT

TECHNOLOGY & INNOVATION

 PATENT PORTFOLIO +40%
STRENGTH BY

 GEOGRAPHY                              AMERICAS
                                        CAGR 4.4%
                                                                         $3,796
                                                                                $4,710

ALL REGIONS AND VIRTUALLY ALL MARKETS
             ARE GROWING

 EMERGING MARKETS EXCL. CHINA +25%
                                                                               $4,381
   U.K. +DOUBLE-DIGITS FOR 3 YEARS          EMEA
                                        CAGR 6.1%
                                                                      $3,258

                                                             $2,173
                                     ASIA/PACIFIC
                                       CAGR 4.3%
                                                        $1,761

                                                                FY2016         FY2011
                                              ($ MILLIONS)
STRENGTH ACROSS                   12%                      Other*

MULTIPLE                            5%
                                    6%                      Perfumeries

CHANNELS                            8%

                                   11%
                                                            Brand.com

                                   12%                      Specialty-Multi

                                                            Freestanding
                                                            Retail Stores

                                                            Travel Retail
                                   46%

                                                            Department
                                                            Stores

                                 FY2016

                   *OTHER INCLUDES SALONS, SPAS, MILITARY AND PHARMACIES
SUSTAINABLE, RELIABLE GROWTH

10-YEAR COMPASS
      PROVIDES
      DIRECTION
   IDENTIFIES LONG-TERM BEAUTY TRENDS

 DETERMINES AREAS OF FASTEST GROWTH AND
   GREATEST OPPORTUNITIES TO FOCUS ON

   ALLOCATES RESOURCES IN AN AGILE WAY

       “KEEPS OUR BOAT IN THE WIND.”
CAPTURING GROWTH

  THE CHANGING
DYNAMICS IN BEAUTY
DEMOGRAPHIC SHIFTS

  INSPIRE
OUR BUSINESS
 AGELESS, MILLENNIAL, GEN Z
THE RISE OF
SOCIAL MEDIA
OUR LONG-TERM STRATEGY

  FOCUS ON
 THE BIGGEST
   GROWTH
OPPORTUNITIES
    INCREASING OUR REACH TO
 TARGET CONSUMERS BY CHANNEL
        AND GEOGRAPHY

    ENHANCING CONSUMER
 ENGAGEMENT WITH INNOVATIVE
   PRODUCTS AND SERVICES
OPTIMIZING DISTRIBUTION TO

             EXPAND CONSUMER
                  REACH
                                                   INDEXED DISTRIBUTION

                                   Jo Malone
  • MAINTAIN HIGH PRODUCTIVITY
             PER DOOR
                                     La Mer
• BRING BRANDS TO NEW CONSUMERS
                                       MAC
     • GLOBAL OPPORTUNITY
                                   Tom Ford
      • RECRUIT FROM MASS
                                  Smashbox

                                  Top Brands

                                               0       20   40    60      80   100
ELC HAS FURTHER OPPORTUNITY

      IN ONLINE
     PRESTIGE
      BEAUTY
                                        180    ONLINE VS TOTAL MARKETS
DOUBLE-DIGIT GROWTH IN EXISTING SITES
                                        160
 E/M-COMMERCE SITES IN ~ 30 COUNTRIES   140
 VERSUS MORE THAN 150 WITH BRICK AND    120
        MORTAR DISTRIBUTION             100

OPPORTUNITY TO ADD BRANDS TO EXISTING    80
 MARKETS & EXPAND INTO NEW MARKETS       60
                                         40
                                         20
                                          0
                                              Estee    Clinique   MAC   Bobbi   Jo Malone Smashbox
                                              Lauder                    Brown
                                                              ONLINE MARKETS
ELC ACCELERATING

 IN SPECIALTY-
MULTI BEAUTY
  GROWING DOUBLE-DIGITS IN CHANNEL

  APPEALING, EXPERIENTIAL RETAILING

WIN WITH BRAND PORTFOLIO, SPECIALIZED
  PRODUCT ASSORTMENT, INNOVATIVE
      MERCHANDISING, SAMPLING

OPPORTUNITY TO ADD BRANDS TO EXISTING
RETAIL & GROW WITH RETAILER EXPANSION
FAST GROWTH BRANDS DRIVE

ACCELERATION IN
 FREESTANDING
 RETAIL STORES
GROWING DOUBLE-DIGITS IN ~1,260 COMPANY-
      OPERATED STORES GLOBALLY                   ANNUAL STORE INCREASE
                                       250
    ENTER MARKETS WHERE PRESTIGE
                                       200
    DISTRIBUTION IS UNDERDEVELOPED
                                       150
      MARGIN ACCRETIVE BY YEAR 3       100
                                           50
       OMNICHANNEL CAPABILITIES             0
                                                FY2012 FY2013 FY2014 FY2015 FY2016
   NEW STORE FORMATS / LOWER COSTS
                                                MAC            Jo Malone   Bobbi Brown
                                                Acquisitions   Other
BROADENING CONSUMER REACH
                                                   TRAVEL RETAIL LOCATIONS

      IN TRAVEL
                                                 Kilian
                                         Frederic Malle

         RETAIL                                Le Labo
                                               Darphin
                                                Aveda
                                            GlamGlow
    EQUITY DRIVER FOR THE BRANDS            Jo Malone
                                          Bobbi Brown
INTERNATIONAL PASSENGER TRAFFIC RISING
                                            Smashbox
        INCREASE CONVERSION                    Origins
                                                  MAC
  EXPANDING BRANDS WITHIN CURRENT               La Mer
  DISTRIBUTION AND IN NEW AIRPORTS           Tom Ford
                                               Clinique
     NEWLY ACQUIRED BRANDS ADD
      INCREMENTAL OPPORTUNITY            Estee Lauder
                                                          0   500   1000   1500   2000
OPPORTUNITIES

   IN PRESTIGE
 DEPARTMENT
   STORES
INTERNATIONAL AND HIGH-END DEPARTMENT
         STORES ARE GROWING

       RETAILER.COM IS GROWING

  ALLOCATING RESOURCES TO AREAS OF
            OPPORTUNITY
OPPORTUNITIES

ENHANCING CONSUMER
    ENGAGEMENT
   HIGH-QUALITY, INNOVATIVE PRODUCTS

    NEW EXPERIENCES AND SERVICES
ARTISANAL AND EXPERIENTIAL

FRAGRANCE
PORTFOLIO OF

  LUXURY
FRAGRANCE
OUR STRATEGY IS
  SUPPORTED BY INCREASING

MODERNIZATION
AND EFFICIENCY
  COMPLETED MODERNIZATION OF
         KEY SYSTEMS

    CONTINUING INFORMATION
    TECHNOLOGY INVESTMENT

    LEADING BEAUTY FORWARD
           INITIATIVE

    COST LEVERAGE / SAVINGS
OUR STRATEGY IS SUPPORTED BY
            INVESTMENT IN

TALENT DEVELOPMENT AND
     CAPABILITIES
ELC IS WELL-POSITIONED

TO CONTINUE
TO WIN IN A
 VOLATILE
  WORLD
LEADING
  GROWTH
IN PRESTIGE
   BEAUTY
CONSISTENT, BEST-IN-CLASS
             SALES GROWTH
5 YEAR GLOBAL SALES GROWTH
                                                           •   PRESTIGE BEAUTY HAS
8%                                                             CONSISTENTLY GROWN
                                                               MID-SINGLE DIGITS
7%
                                                           •   ELC GREW FASTER THAN
6%                                                             GLOBAL PRESTIGE BEAUTY
                                                               OVER 5 YEARS
5%
                                                           •   GOAL TO GROW AT LEAST 1PP
4%
                                                               FASTER THAN PRESTIGE BEAUTY
                                                           •   ACQUISITIONS TARGETED TO
3%                                                             ADD ANOTHER POINT OF
                                                               GROWTH OVER THREE YEARS
2%
                                                           •   GEOGRAPHIC, BRAND AND
1%                                                             CHANNEL OPPORTUNITY

0%                                                         •   PRICING / MIX
        Estée    Prestige   Mass &      HPC
       Lauder    Beauty     Direct
                            Beauty
ELC 5 YEARS ENDED 6/30/16
BEAUTY DATA: ELC ESTIMATES, EUROMONITOR 2015 FOR SKIN CARE, MAKEUP AND FRAGRANCES.
HPC: AVERAGE OF PAST FIVE YEARS ORGANIC SALES GROWTH FOR SELECT EUROPEAN AND US BASED CONSUMER GOODS COMPANIES.
SMI-ENABLED COST SAVINGS
       AND EFFICIENCIES
$200

180
                                           OTHER
160

140                                        DEMO

120
                                           PROMO/ COLLATERAL
100

 80                                        A&P EFFECTIVENESS

 60
                                           INDIRECT PROCUREMENT
 40

 20                                        SUPPLY CHAIN
  0
                    FY2016

       •   ~$150 MILLION IN SAVINGS TARGETED IN FY2017
OPERATING MARGIN TRENDS
                                             +50    -40
                              +90            BPS    BPS   -30         +20      -50
                              BPS   16.1%                 BPS
         +110   -10                                             15.9% BPS      BPS     -10
         BPS    BPS 15.2%                                                              BPS   15.5%

14.2%

FY2012               FY2013         FY2014                      FY2015                       FY2016
                 ORGANIC GROWTH              CURRENCY IMPACT             ACQUISITIONS

      COST SAVINGS INITIATIVES                             CURRENCY TRANSLATION

         EXPENSE LEVERAGE                                 INVESTMENTS / ACQUISITIONS

    EFFICIENCY / EFFECTIVENESS                            RETAIL STORE ACCELERATION

                                                                 PRODUCT MIX

 NOTE: ALL FIGURES EXCLUDE CHARGES AND SMI SALES SHIFTS
SUSTAINED DOUBLE-DIGIT
             EPS GROWTH
                                 REPORTED       16%     12%       3%       5%       6-8%

•   LEVERAGING TOPLINE           CONSTANT
                                                17%     12%      12%      13%       8-10%
                                 CURRENCY
    GROWTH
•   MARGIN EXPANSION                                                                $3.38 to
                                                                                     $3.44
•   IMPACT OF ACQUISITIONS AND                                   $3.05
                                                                          $3.20
    CURRENCY                                            $2.95
                                               $2.64
•   OPPORTUNITIES IN TAX RATE
    AND SHARE REPURCHASES              $2.27

•   DOUBLE-DIGIT EPS GROWTH
    CAN CONTINUE

                                      FY2012   FY2013   FY2014   FY2015   FY2016    FY2017
                                      NOTE: EXCLUDES CHARGES AND SMI SALES SHIFTS
RETURNING CASH TO
                      STOCKHOLDERS
$ MILLIONS
                                       FY2012        FY2013         FY2014        FY2015         FY2016

  OPERATING CASH FLOW                     $1,127         $1,226        $1,535         $1,943        $1,789

             CAPEX                           421            461           510            473             525

      FREE CASH FLOW                        $706           $765        $1,025         $1,470        $1,263

          DIVIDENDS                          204            419           302            350             423

   SHARE REPURCHASES                         593            388           667            983             890

             TOTAL                          $797           $807          $969         $1,333        $1,313

   % OF FREE CASH FLOW                     113%           105%            95%           91%             104%

NOTE: FY2014 AND FY2015 OPERATING CASH FLOW INCLUDES THE IMPACT OF APPROXIMATELY $173 MILLION RELATED
TO THE SMI SALES SHIFTS.
CASH FLOW DEPLOYMENT

$ MILLIONS

                                         580         (5,218)
                              1,014
                 7,620

                                                                    (2,390)

                                                                                    (368)
                                                                                                   2,491

   1,253

 Ending Cash Operating Cash   Debt    Stock Based   Dividends /     Capital      Acquisitions   Ending Cash &
    2011         Flow                 Comp/Other    Buybacks      Expenditures                   Investments
                                                                                                    2016
NEAR AND
               LONGER-TERM GOALS
                                             FY2017         FY2017 - FY2019

  NET SALES GROWTH                        +6% TO +7%

NET SALES GROWTH IN
                                          +6% TO +7%          +6% TO +8%
CONSTANT CURRENCY

  OPERATING MARGIN                        FLEXIBILITY     +110 BPS TO +150 BPS

      DILUTED EPS                        $3.38 TO $3.44

  EPS GROWTH IN
                                         +8% TO +10%        +DOUBLE-DIGITS
CONSTANT CURRENCY

   INVENTORY DAYS
                                        IMPROVEMENT            ~150 DAYS
       TO SELL

NOTE: EXCLUDES RESTRUCTURING AND OTHER CHARGES.
OPERATING MARGIN GUIDANCE
         EVOLUTION

                                                  FY2017E     FY2018E         FY2019E
AUGUST 2014 GUIDANCE                               17.5%
FY2015 FX AND ACQUISITION
                                                   (0.7)
IMPACTS
   ADJUSTED                                        16.8%
AUGUST 2015 GUIDANCE                                        16.8% - 17.2%
FY2016 FX AND ACQUISITION
                                                                (0.6)
IMPACTS
   ADJUSTED                                                 16.2% - 16.6%
AUGUST 2016 GUIDANCE                                                        16.6% - 17.0%

NOTE: EXCLUDES RESTRUCTURING AND OTHER CHARGES.
INVEST IN BRANDS
REDUCE COSTS              DESIGN FOR LEVERAGE
                                                   AND CAPABILITIES

   •       LOWER OUR OVERHEAD COST BASE FOR ANNUAL NET
               BENEFITS OF $200 TO $300M BEFORE TAX
                   •   REDUCE OUR LEVERAGE RATIO
       •   REALLOCATE A PORTION OF NET BENEFITS TO FUND
                      PRIORITY INVESTMENTS
               •   SUSTAINABLE LONG-TERM GROWTH
CREATING VALUE
                                     TOTAL SHAREHOLDER RETURN

ONE YEAR                                                     FIVE YEAR

                                                                     Estée Lauder        S&P 500        Peer Avg
                                                              200

        ESTÉE LAUDER                        6.4%
                                                                                                                   +84%
                                                              180
                                                                                                                   +77%

                                                              160

                S&P 500              4.0%
                                                              140                                                  +40%

                                                              120

               -2.9%             PEER AVERAGE                 100

                                                               80
  -10.0%                  0.0%                 10.0%                 2011    2012     2013    2014    2015   2016

   SOURCE: BLOOMBERG, S&P 06/30/16. PEER GROUP INCLUDES P&G, AVON, BEIERSDORF, LVMH, L’OREAL AND SHISEIDO.
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