LEADING GROWTH BEAUTY - IN PRESTIGE
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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
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.
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.”
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
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.
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.
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
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
THE POWER OF
OUR BRAND PORTFOLIO
PREMIUM
CLASSIC PROGRESSIVE
ENTRY PRICE POINT
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 COSMETICSCATEGORY 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 PHARMACIESSUSTAINABLE, 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 SERVICESOPTIMIZING 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 100ELC 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 MARKETSELC 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 EXPANSIONFAST 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 OtherBROADENING 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 2000OPPORTUNITIES
IN PRESTIGE
DEPARTMENT
STORES
INTERNATIONAL AND HIGH-END DEPARTMENT
STORES ARE GROWING
RETAILER.COM IS GROWING
ALLOCATING RESOURCES TO AREAS OF
OPPORTUNITYOPPORTUNITIES
ENHANCING CONSUMER
ENGAGEMENT
HIGH-QUALITY, INNOVATIVE PRODUCTS
NEW EXPERIENCES AND SERVICESARTISANAL 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 / SAVINGSOUR STRATEGY IS SUPPORTED BY
INVESTMENT IN
TALENT DEVELOPMENT AND
CAPABILITIESELC 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 FY2017OPERATING 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 SHIFTSSUSTAINED 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 SHIFTSRETURNING 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
2016NEAR 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 GROWTHCREATING 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.You can also read
