INVESTOR DAY - Estée Lauder Companies...forward-looking statements are described in our Investor...
Transcript of INVESTOR DAY - Estée Lauder Companies...forward-looking statements are described in our Investor...
INVESTOR DAY2019
OLIVIER BOTTRIE GLOBAL PRESIDENT, TRAVEL RETAIL AND RETAIL DEVELOPMENT
A WORLD OFOPPORTUNITY
TRAVEL RETAIL:
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 address our expectations regarding sales, earnings or other future financial performance and liquidity, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like “expect,” “will,” “will likely result,” “would,” “believe,” “estimate,” “planned,” “plans,” “intends,” “may,” “should,” “could,” “anticipate,” “estimate,” “project,” “projected,” “forecast,” and “forecasted” or similar expressions. Factors that could cause actual results to differ materially from our forward-looking statements are described in our Investor Day materials as well as 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, 2018. The Company assumes no responsibility to update forward-looking statements made herein or otherwise.
Our Investor Day materials also include non-GAAP financial measures. We use certain non-GAAP financial 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, or do not reflect our underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze operating performance from period to period. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. 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 in our Investor Day materials as well as on the Investors area of the Company’s website, www.elcompanies.com, under the heading “GAAP Reconciliation.”
FORWARD-LOOKING INFORMATION AND NON-GAAP DISCLOSURES
WE INTEND TO DO EVEN GREATER THINGS IN THE YEARS TO COME
TRAVEL RETAIL HAS BEEN ONE OF THE BIGGEST CONTRIBUTORS TO ELC’S SUCCESS:
DOUBLE DIGIT NET SALES CAGR…
… WITH ANNUAL NOP GROWTH FASTER THAN SALES
ELC TRAVEL RETAIL: HISTORIC GROWTH OVER THE PAST DECADE, FY09-18
CY18 TRAVEL RETAIL BEAUTY RETAIL SALES (EST.):
’15-’18 CAGR OF 14%, 2X
BUILDING CAPABILITIES TO WIN IN ONE OF THE MOST ATTRACTIVE MARKETPLACES
THE RATE OF GLOBAL PRESTIGE BEAUTY
$28BN
Source: Generation, ELC TRWW Analysis
IN THE PAST DECADE, WE HAVE GAINED 760 BPS OF SHARE AND ARE NOW #1 IN GLOBAL TRAVEL RETAIL PRESTIGE BEAUTY MARKET SHARE, CY09-18 (EST.)
OUR FOCUS HAS PRODUCED AMAZING SHARE RESULTS
IN CY18, ELC GREW >30%, MORE THAN 3X THE RATE OF PRESTIGE BEAUTY IN TR (EST.)
’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 EST.
13.9%
20.0%21.5%
21.1% #2 PLAYER IN GLOBAL TR PRESTIGE BEAUTY
Source: Generation, ELC TRWW Estimates, Press Releases
OUR UNIQUE MODEL HAS THREE KEY COMPONENTS
LEVERAGE A&P AND INNOVATION OF THE COUNTRY OF ORIGIN
FOLLOW CONSUMER TRAVEL CORRIDORS: CHINESE TRAVELER EXAMPLE
BUILD PRESENCE ACROSS ALL DUTY FREE CHANNELS
1
2
3
8%
1%
10%
75%
AIRPORTS INFLIGHT AQUATICDOWNTOWN ONLINE
6%
Source: air4cast; ELC TRWW Analysis
TRAFFIC, SPEND PER PAX, CONVERSION SUGGEST HUGE GROWTH POTENTIAL; CONVERSION IS THE LARGEST DRIVER
THE FUNDAMENTALS OF TRAVEL RETAIL
SPEND / PAXCY18 (EST.)
EMERGING TRAVELERS’ DUTY FREE SPEND RELATIVE
TO DEVELOPED PAX
2–4X
CONVERSION: DUTY FREE BEAUTY SHOPPERS
CY18 (EST.)
LONG TERM POTENTIAL
40%50%
30%
35%
30%15%
NON VISITORS
BROWSERS
BUYERS
ANNUAL AIR TRAFFIC, CY19 (EST.)(SELECT NATIONALITIES, MM)
KEY EMERGING TRAVELERS REPRESENT TREMENDOUS
GROWTH OPPORTUNITY
British
American
Chinese
Middle Eastern
Indian
Russian
Brazilian
TOTAL 226
11
31
41
51
92
213
95
118
428
397
356
305
213
118
439
Source: Air4Cast, m1nd-set, TRWW Analysis
OUR COMPETITIVE ADVANTAGE RESTS ON FIVE KEY PILLARS
WE ARE UNIQUELY POSITIONED TO WIN IN THIS HIGH GROWTH ENVIRONMENT
#2ABILITY TO REACH MORE TRAVELERS WITH HIGH PRODUCTIVITY/ DOOR
#3UNIQUE CAPABILITIES FOR OUTSTANDING GO-TO-MARKET EXECUTION
#1DISTINCTIVE TOOLS AND PRODUCTS TO CONVERT EMERGING PAX
#4BUILDING OF EQUITY AND RECRUITMENT OF LUXURY CONSUMERS
#5DIGITAL ENGAGEMENT OF CONSUMERS ALONG THE TRAVEL JOURNEY
TOOLS (CHINESE TRAVELER EXAMPLE)
ELEMENTS EXAMPLE
Pre-Travel
Social platform engagement
CRM targeting / pre-tailing
At Airport
Geo-targeting in terminal
Corridor specific ‘pop-ups’
In-Store
Bilingual Demo + Signage
Tailored Assortment
PRODUCTS (EXCLUSIVE TO OUR CHANNEL)
SENSE OF PLACE GIFTING (SELF)
TRAVEL BEAUTY GIFTING (OTHERS)
: NEW TOOLS AND PRODUCTS TO EXPAND CONSUMER REACH & CONVERSION#1
FY19 (EST.) COVERAGE BY BRAND IN EXISTING LOCATIONS
HIGHEST PRODUCTIVITY / DOOR ACROSS ELC
Estée Lauder, Clinique, ADF
MAC, La Mer, Jo Malone London, Origins, Bobbi Brown
Tom Ford Beauty (Full Line), GlamGlow, Lab Series
Kilian, Aveda, Too Faced, Frederic Malle, Darphin, Becca,
Le Labo3%
8%
15%
90%
NEW OPPORTUNITIES IN THE ABSOLUTE GROWTH OF DOORS (CHINA EXAMPLE)
20+ DUTY FREE DOORS PLANNED IN CY19–20 FOR CHINA ALONE
DOWNTOWN
HAINAN OFFSHORE
PRE-TAIL (ECOMMERCE)
INTL. AIRPORTS
IN BOTH EXISTING DOORS AND IN NEW PLANNED LOCATIONS
#2: OPPORTUNITIES TO INCREASE PROFITABLY OUR COVERAGE OF TRAVELERS
STORE DESIGN & VISUAL MERCHANDISING
ATTRACTING CONSUMERS WITH THE LATEST
GENERATION COUNTERS
TRAVEL RETAIL EXCLUSIVES (INNOVATION HUB)
LAUNCHING 200+ TRAVEL RETAIL SPECIFIC PRODUCT
OFFERINGS IN FY19
INTEGRATED MARKETING
DEPLOYING 270+ TR SPECIFIC DIGITAL
CAMPAIGNS IN FY19
DIGITALMARKETING
ECOMMERCE
SHOPPERINSIGHTS
& CATEGORYSTRATEGY
COMMUNICATION
#3: SPECIALIZED CAPABILITIES FOR OUTSTANDING GO-TO-MARKET EXECUTION
FLAGSHIP STORE ENVIRONMENTS
BEIJING CAPITAL INTERNATIONAL AIRPORT
TERMINAL 3
LARGE SCALE, OUT OF HOME MEDIA
HEATHROW AIRPORT ‘LIFT WRAP’
EYE-CATCHING NON-TRADITIONAL
FORMATS TRAVELING TOWNHOUSE, LONDON HEATHROW T2
MARQUEE EVENTS
CDFG SANYA (HAINAN) WITH EL BRAND AMBASSADOR
59% OF PRESTIGE BEAUTY BUYERS’ FIRST PURCHASE IS IN TRAVEL RETAIL
TO STRENGTHEN BRAND EQUITY AND RECRUIT NEW CONSUMERS#4: LUXURIOUS BRANDED EXPERIENCES
Sources: m1nd-set, TRWW Analysis
59% OF PRESTIGE BEAUTY BUYERS’ FIRST PURCHASE IS IN TRAVEL RETAILSources: m1nd-set, TRWW Analysis
FLAGSHIP STORE ENVIRONMENTS
59% OF PRESTIGE BEAUTY BUYERS’ FIRST PURCHASE IS IN TRAVEL RETAILSources: m1nd-set, TRWW Analysis
LARGE SCALE, OUT OF HOME MEDIA
59% OF PRESTIGE BEAUTY BUYERS’ FIRST PURCHASE IS IN TRAVEL RETAILSources: m1nd-set, TRWW Analysis
MARQUEE EVENTS
59% OF PRESTIGE BEAUTY BUYERS’ FIRST PURCHASE IS IN TRAVEL RETAILSources: m1nd-set, TRWW Analysis
EYE-CATCHING NON-TRADITIONAL
FORMATS
DIGITAL FIRST, TRAVEL RETAIL CAMPAIGNS 3 TIMES AS MANY IN 3 YEARS
TREMENDOUS CONSIDERATION DRIVER: 2/3’S OF SHOPPING DECISIONS MADE PRE-TRAVEL
ECOMMERCE SHOP ONLINE, PICK-UP AT AIRPORT
HUGE BOOSTER OF CONVERSION: NEW POTENTIAL SHOPPING MOMENT
ACROSS THE TRAVEL JOURNEY
#5: WELL DEVELOPED MEANS OF ENGAGING CONSUMERS DIGITALLY
“WHEN IT COMES TO COMMERCIAL REAL ESTATE, AIRPORTS OFFER THE TWO BIGGEST FACTORS LINKED TO RETAIL SUCCESS: LOCATION AND FOOT TRAFFIC”
–NY TIMES, SEPT 4, 2018
“AIRPORTS ARE BUILDING, AND VYING FOR BUSINESS, MORE THAN EVER: FROM INDOOR WATERFALLS TO NONSTOP FLIGHTS TO BUSINESS HUBS, AIRPORT COMPETITION TAKES OFF…”
–WALL STREET JOURNAL, NOV 14, 2018
FOR
EST
VALL
EY, J
EWEL
CH
AN
GI A
IRPO
RT
IMA
GE
BY
CH
AN
GI A
IRPO
RT
GR
OU
P
“AIRPORTS ARE NOW CONSIDERED THE SHOPPING MALLS OF MODERN TIMES… LUXURY AIRPORT STORES ARE THE CURATORS OF BRAND IDENTITY”
–JING DAILY, SEPT 6 / NOV 3, 2018
IMA
GE
BY
CH
AN
GI A
IRPO
RT
GR
OU
P
CONCLUSION: ELC IS UNIQUELY POSITIONED TO EXPAND ITS LEADERSHIP IN THIS HIGH GROWTH AND PRESTIGE MARKETPLACE
A WORLD OFOPPORTUNITY
TRAVEL RETAIL:
OLIVIER BOTTRIE GLOBAL PRESIDENT, TRAVEL RETAIL AND RETAIL DEVELOPMENT
SANDRA MAIN GLOBAL BRAND PRESIDENT, LA MER AND BOBBI BROWN
STEPHANE DE LA FAVERIE GLOBAL BRAND PRESIDENT, ESTÉE LAUDER
GUILLAUME JESEL GLOBAL BRAND PRESIDENT, TOM FORD BEAUTY