Kristen AdamsErika Espinoza

Freshtah HamidiLatisha Jones

Company Overview

Company Overview: Products/Brands

Company Overview: We are committed to…

Company Overview: 2012 Net Sales

43%

38%

13%5%

Net Sales 2012

Skin care products

Makeup products

Fragrance products

Hair care products

Liquidity Ratios

Liquidity Estee Lauder

L'Oreal Competitor Comparison

Current ratio 1.81 1.08 BetterAcid Test Ratio 1.35 0.80 BetterAverage collection period 39.84 55.91 BetterAccounts Receivable Turnover 9.16 6.53 BetterInventory turnover 2.03 2.85 Worse

Overall, in comparison to Loreal, The Estee Lauder Companies Inc. is in better shape of turning its assets into cash in a more timely manner.

Asset Management Ratios

Asset Management Estee Lauder

L'Oreal Competitor Comparison

Total asset turnover 1.47 0.76 BetterFixed asset turnover 7.89 7.06 Better

Estee Lauder is more effective in utilizing its assets to generate sales in comparison to its top competitor. This is shown with higher turnover ratios.

Capital Structure Ratios

Capital Structure Estee Lauder

L'Oreal Competitor Comparison

Debt Ratio 58.5% 34.3% WorseTimes Interest Earned 0.02 - -

With a higher debt ratio, Estee Lauder appears less appealing to shareholders due to its dependence on borrowing funds to finance its assets. There is a substantial difference when compared to its top competitor, L'Oreal.

Profitability RatiosProfitability Estee

LauderL'Oreal Competitor

ComparisonGross Profit Margin 79.5% 71.3% BetterOperating Profit margin 13.0% 17.1% WorseNet Profit Margin 8.8% 12.0% WorseOperating Return on Assets 19.1% 12.9% BetterReturn on Equity 31.4% 13.8% Better

Overall, Estee Lauder is in better shape than L'Oreal. With a higher gross profit margin, Estee Lauder's ability to control its expenses is better. Estee Lauder's operating profit margin and net profit margin are not as competitive, meaning its expenses are high in comparison to its sales. Estee Lauder has a better operating return on assets, meaning that it earned more net operating income per dollar of investment in assets. Estee Lauder has a much better return on equity, showing its cost control. This ratio makes Estee Lauder more appealing to stockholders as it shows their investments pay off.

Strategy

• In 2009, Estee Lauder officially initiated its long term strategy.

• “We continue to focus on fewer but more impactful products and an increasing number geared to local consumers in specific markets.” - Fabrizio Freda, CEO, President, & Director

Strategy

• The strategy includes a variety of different activities and sub-strategies that helped increase sales and revenues throughout the past four quarters.– Pull-push marketing – Put efforts in offering best in class, high-class point of sale

services both in person and online to increase customer satisfaction.

– Expand all branches globally• Estee Lauder was able to achieve success in all the

strategies listed above while reducing costs of their products.

The Industry

• Growth of the Anti- Aging segment in the beauty industry

• The use of celebrities in ad campaigns

• Magazine and television ad-space for beauty companies have been increasing tremendously

The Competitors

• L'Oreal• Avon Products• Revlon• Elizabeth Arden• Bare Escentuals

External Factors

• Currency Fluctuation– 57% of sales revenues come from markets that are

outside of the U.S. – Sales performances fluctuate as the value of the

U.S. dollar fluctuates.• The emergence of new competitors• The state of the worldwide economy