It was a busy earnings call this week, with beauty retailers and beauty companies alike sharing positive earnings reports. Both Kohl’s Corporation and Target Corporation reported positive sales growth, while both are simultaneously rolling out shop-in-shop beauty experiences with Sephora and Ulta Beauty, respectively. And Bath & Body Works and The Estée Lauder Companies had record growth: Bath & Body Works reported its first standalone earnings after separating from L Brands on August 3, and The Estée Lauder Companies said its sales exceeded $16 billion for the first time ever.
Below, Glossy rounded up the need-to-know facts from the week of earnings.
Target announced its earnings on Tuesday, Aug. 17, stating that sales rose in every merchandise category, from apparel to grocery, even when compared with last year’s pandemic-fueled sales growth.
Specifically, the Essentials and Beauty categories delivered high single-digit growth this quarter. Within Essentials, baby care grew by more than 20%, and beauty “continued to gain market share on comp growth” in the high single-digits, according to Christina Hennington, Target Corporation evp and chief growth officer. This was in advance of the August rollout of 100 Ulta Beauty shop-in-shops in its own stores.
“[Ulta Beauty represents] the next chapter in Target’s already strong beauty story,” said Hennington, on the earnings call. “The shared values and cultures between our businesses, and our collective desire to inspire and elevate the shopping experience, make this long-term partnership a major win for both Companies and our guests.”
Bath & Body Works
Also on Aug. 17, Bath & Body Works published its first earnings report as a standalone private company, after it was spun off by L Brands on Aug. 3. And it was a solid quarter for the company. Second-quarter sales growth was 54%, compared to the same period in 2019, and its e-commerce business was up by 128% compared to 2019. According to the earnings report, all categories grew, and the strong sales demand allowed Bath & Body Works to pull back on promotional activity compared to its 2019 investments.
Bath & Body Works plans to become a $10 billion business over the next 3-5 years. Part of the plan to achieve this includes testing new product categories via its e-commerce business, potentially including skin care and hair care, and entering further line extensions within the home category, like cleaning or laundry products.
Comparatively, Victoria’s Secret announced in its earnings on Wednesday that its sales rose to $1.61 billion, from $1.07 billion a year ago. But its revenues haven’t yet returned to pre-pandemic levels, even as consumers head back to stores. The company has not yet shared a financial outlook for the full year.
The Estée Lauder Companies
The Estée Lauder Companies published its earnings on Wednesday, Aug. 18, and notably, sales exceeded $16 billion for the first time ever, an increase of 9% from the 2019 fiscal year, fueled by skin care and fragrance.
La Mer was called out for its double-digit sales growth in the 2021 fiscal year. Clinique, too, saw skin-care sales grow by double-digits, pushing the overall brand to “high single-digit sales growth,” said Fabrizio Freda, president and CEO of The Estée Lauder Companies, on the call. Overall, Net sales in skin care rose 42% in the fourth quarter compared to the same period last year.
Meanwhile, net sales in makeup jumped 70%, compared to fiscal year 2020.
“We anticipate the momentum in makeup will build around the world, driven by local reopenings and increasing social and professional user education, just as we saw in the fourth quarter,” said Freda. “Indeed, makeup started to improve at the end of fiscal year 2021, driven by our hero sub-categories of foundation and mascara.”
“We expect results to be driven by a continuation of existing trends we’ve seen for the past several quarters,” said Nik Modi, RBC Capital Markets analyst, in a report. “[It was] a strong quarter for Estée Lauder as they lap the worst of the 2020 pandemic results. Results and the full-year guide came in better than expected and, importantly, we think the company is set up for strong long-term performance.”
In its earnings report on Thursday, Aug. 19, Kohl’s shared that its revenue rose 31% year-over-year to $4.45 billion. This was higher than analyst estimates of $4.02 billion. E-commerce sales increased 35%, compared to the same period in 2019, but represented only 26% of total sales. That was a decline from 41% year-over-year, but higher than its 2019 share of 20%.
According to Stephanie Wissink, Jefferies equity analyst, this e-commerce penetration was lower than expected, but she believes the step-back could prove temporary due to pent-up in-store shopping demand. That in-demand shopping is potentially being fueled by the Sephora shop-in-shop partnership.
Kohl’s is in the process of opening its first 200 shop-in-shops planned for 2021, which will be followed by 400 in 2022 and at least 850 by 2023. The shop-in-shops are 2,500 square feet. There is also an online Sephora shop through Kohls.com, which launched Aug. 1.
“They get to tap into our 65 million customer base, and we get to tap into younger customers who today don’t have the convenience of getting [beauty products in-store],” said Michelle Gass, Kohl’s Corporation CEO on the call. “On a local level, of course, when we open a store, we’re doing a lot of digital and social marketing as we introduce customers to our website. It’s really across the board, taking advantage of all our marketing levers.”