

The Ordinary, which sells serums, peels and oils in the $6.50 to $10 range, is by far Lauder's most affordable brand. Lauder acquired a majority stake in Deciem, maker of skin-care brand The Ordinary, in 2021, valuing it at $2.2 billion. While ultra-high-end brands like Tom Ford and La Mer have served as key growth vehicles for Lauder in the past, and continue to do well, the company is turning its focus to its lowest-price brand as its next big growth driver. Luxury brands such as La Mer and Tom Ford may not make the mass access cut," she said. "I would expect them to maintain a degree of selectivity. She added it's not likely that the company's most high-end brands will end up in mass retail. "More brands equals more business for the portfolio," Wissink said.
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Jefferies analyst Stephanie Wissink told Insider that the company is recognizing that these mass retail partnerships are important avenues for brand exposure and customer acquisition, especially for its prestige legacy brands like Clinique, MAC Cosmetics and Smashbox, which have suffered from slumping foot traffic in the company's mall locations. Historically, Lauder's core distribution channel for its prestige brands has been department stores. The company's push into mass retail this year is a sign that Lauder, maker of luxury brands like Tom Ford, Jo Malone, and La Mer, is loosening its tight grip on distribution channels on many of its brands. Some of Lauder's mid-priced brands, such as Clinique, Too Faced, The Ordinary, are already sold in Ulta and Sephora shop-in-shops in Target and Kohl's. While the company's sales were up 10% to $4.25 billion in its fiscal third quarter, it had to cut its outlook for fiscal 2022 nearly in half due to uncertainty over COVID lockdowns in China, a key market for the beauty company. Lauder's stock price dropped as much as 12.3% on Tuesday.įreda attributed the company's decision to push further into mass retail to the "promising evolution of the retail landscape both in-store and online in the United States for prestige beauty."įreda did not mention which prestige brands in the company's portfolio will be entering Kohl's and Target. Mass retail represents an important growth opportunity for Lauder. On the company's earnings call Monday, President and CEO Fabrizo Freda said Estée Lauder plans to usher more of its brands into mass retail in the second half of the year through Sephora and Ulta Beauty's existing partnerships with Kohl's and Target.
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