Estee Lauder Companies Inc. EL recently completed its investment in Have & Be Co. Ltd., a South Korean company. Through this investment, which was announced in October, Estee Lauder is buying Have & Be Co.’s skin care brands Dr. Jart+ and Do The Right Thing (‘DTRT’). The terms of the investment were not disclosed.
Dr. Jart+ is a Seoul-based, global high-growth skin care brand featuring quality and innovative products designed to address specific skin care needs. The acquisition of Dr. Jart+ is expected to benefit the company as the brand is sold in many countries around the world, primarily in Asia and the United States, through various department stores, specialty-multi and e-commerce channels including Sephora. Also, it will give the company a strategic opportunity to develop one of Korea’s most promising high-growth skin care brands.
Estee Lauder’s investment also includes an interest in DTRT, which is a men’s-focused skin care brand that fuses Korean innovation with a bold New York style. DTRT’s line of cleansers, lotions, moisturizers and serums are sold in Korea through various channels and in the United States through Sephora and BirchboxMan.
Estee Lauder has made several strategic acquisitions in the past to enhance its portfolio. Last year, the company had announced two buyouts, one in October and another in December. It took over two key prestige skin care brands — RODIN olio lusso and GLAMGLOW in Oct 2014 to boost Estee Lauder’s skin care portfolio as well as increase its international presence.
Apart from skin care, Estee Lauder has acquired high-end fragrance and lifestyle brand, Le Labo (The Lab) and high-end fragrance brand Editions de Parfums Frédéric Malle in Oct 2014 and Jan 2015, respectively. Such acquisitions help the company to expand its portfolio and customer base.
Overall, Estee Lauder has been posting better-than-expected results over the past several quarters backed by organic sales growth, product innovation and cost savings measures. The company expects to invest in new products as well as services to make buying easier for customers. Though Estee Lauder expects growth opportunities in product categories like beauty, channels and countries in fiscal 2016, economic challenges will persist. The company is cautious of slower retail growth in Hong Kong and China, a decline in spending by Russian and Brazilian travelers, the impact of the MERS virus on its travel retail business in Korea and unfavorable currency.
Estee Lauder has a Zacks Rank #2 (Buy).
Stocks to Consider
Other stocks that are well-positioned in the consumer staples sector include Omega Protein Corp. OME, B&G Foods, Inc. BGS and Campbell Soup Company CPB. All sport a Zacks Rank #1 (Strong Buy).
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