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ESTEE LAUDER

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by

Sloane Davis

on 7 February 2014

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Transcript of ESTEE LAUDER

FINANCIAL ANALYSIS PROJECT
Estee Lauder Companies, Inc.
Rosemary Marino, Kerry Nicollet
Sloane Davis, Olivia Chu
Background
Location: Midtown, New York
Ending date of last fiscal year:
June 30, 2013
Corporation's Common Stock
Estee Lauder owns 39% of the total common stock and about 86% of the voting power
Fiscal 2013 Overview (Ended at June 30th)
Net Sales: $10.2 Billion
Operating Income: $1.5 Billion
Total Assets: $7.1 Billion
Income Statement
Growth Revenue: 4.8 %
Balance Sheet
Total growth in assets: 8.37 %

Current Assets 60.14% 58.47%
Long Term Investments 12.34% 13.39%
Fixed Assets 18.90% 18.68%
Intangibles 2.37% 2.88%
Other Assets 6.24% 6.57%
Current Liabilities 1934.6 2125.8
Total Liabilities 3843.4 3845.5
Stockholders Equity 3286.9 2733.2
2013
2012
Statement of Cash Flows
Operating Activities 1.02 B 856.9M
Investing Activities 461 M 420.7 M
Financing Activities 419.2 M 204 M
2013
2012
Significant Accounting Policies
Cash & Cash equivalentS
Estee Lauder defines their cash equivalents as all highly liquid investments with original maturities of three months or less
Inventories
FIFO
(first in first out)
Finished goods
Promotional Products
Raw Materials
Account receivable


The implications of this change are based upon the evaluation of accounts receivables aging, historical trends and specific exposures.
Stock Market Information
52 week high/low: $75.77 / $57.53

Dividends paid quarterly: $0.20

Earnings Per Share: $2.58

Stockholders' Equity: $3,286.9


RATIO
ANALYSIS

Profit Margin
Return of Assets
Return on Stockholders Equity

P/E Ratio 25.7 times 26.7 times
Accounts Receivable Turnover 9.12 times 9.69 times
Inventory Turnover Ratio 1.93 times 2.02 times
Current Ratio 2.25 1.81
2013
2012
14.49%
12.98%
14.9 %
13.38%
33.72 %
31.77 %
analysis of Solvency
Competitor comparison
Location: Paris, France

Markets over 500 brands

Mission: To make beauty universal in a sustainable and responsible way.



Executive Summary
Target Market:
MAC, Bobbi Brown, La Mer, Smashbox: high-end consumers, make-up artists
Clinique & Origins: ingredient conscious consumers
Tom Ford, Coach, Michael Kors- high-end fragrance consumers

Business Model: 12 factories in 5 countries (U.S., Belgium, Switzerland, UK, Canada)

Distribution Channels: Upscale department stores, freestanding company stores, specialty retailers, upscale perfumeries, pharmacies, in-flight, duty-free shops, & the internet

Customers & Marketing: Social media, airports, television commercials, magazine ads.

Competition: L’Oreal, Avon Products, Proctor and Gamble

Future
Net Sales: forecasted to grow between 6%-8% Foreign currency translation: expected to negatively impact sales between 1% -2%

The company expects to roll out the major wave of its Strategic Modernization Initiative (SMI) in July 2014 in certain of its locations.
Thank You!
Any Questions?

The corporations revenue performance has been increasing over the last few years. In 2013, the revenue for Estee Lauder has reached over 10 million dollars, making it the first time they ever reached double digits
Consumer demand, product innovation, and advertising will have the greatest influence in next year's revenue.
Mission & Vision
Mission: Bringing the Best to Everyone We Touch and Being the Best in Everything We Do

Vision: The global leader in prestige beauty; well-diversified, brand-building powerhouse of unrivaled creativity and innovation
BRANDS
American Beauty
Aramis
Aveda
Bobbi Brown
Bumble and bumble
Clinique
Coach
Darphin
Donna Karan
Ermenegildo Zegna
GoodSkin Labs
Gassroots Research Labs
Jo Malone
Kilton
La Mer
MAC
Michael Kors
Smashbox
Tom Ford
Tommy Hilfiger
News and Events
Feb 2012
Estee Lauder company’s share lost 2.3 percent to $57.48
Mar 2013
Estee Lauder M.A.C driving sales from Nigeria to Brazil
Aug 2013
Web Sales top $500 million in fiscal 2013
Oct 2013
Estee Lauder cosmetics sends money toward breast cancer causes (Bobbi Brown, Marc Jacobs)
Nov 2013
Lauder granddaughters become billionaires on beauty boom (Aerin and Jane Lauder
Primary Products: Skincare, Makeup, Fragrance, and Hair Care Products.
Investor Presentation
Estee LAUDER's Challenges
L'Oreal Products:
L’Oreal Paris- Revitalift
Maybelline- Baby Lips
L’Oreal Luxe- Urban Decay
The Body Shop
Increased Competition

Consolidations, restructurings, bankruptcies and reorganizations in the retail industry

Changes in consumers' wants with regards to beauty

Changes in global or local conditions

Productivity
As per Estee Lauder's CEO, EL's plans for 2014 are:
Maximize access to consumers through e-commerce, m-commerce, and freestanding stores.
Invest in new marketing strategies - particularly with fragrance products.
Continue to expand our market globally - China, the Middle East, Brazil & Africa.
Develop Luxury Brands
$1.495.7 (2013)
$1,053.7 (2012)
(millions)
$1,566.7 (2013)
$1,604.7 (2012)
(millions)
Debt to Equity: 1.17 (2013) 1.41 (2012)

Times Interest Earned: 20.91 (2013) 21.58 (2012)

Cash Coverage: 16.6 (2013) 15.25 (2012)

Profitability Ratios

Liquidity Ratios

Operational Ratios

Gross Margin % Comparison

2013 Estee Lauder ranked #279 on Forbes 500 List
Full transcript