U.S. cosmetics and skincare manufacturer Estee Lauder said it is not experiencing a slowdown in business in China. The company announced profit estimates that exceeded analyst forecasts.
According to Reuters, the company said it is expecting full-year 2019 sales to expand between seven to eight percent. The forecasts came after the cosmetics provider posted robust growth during the past several months and by the last quarter of 2018.
Chief Executive Officer Fabrizio Freda said that "at this point in time," Estee Lauder is not looking at a decline in growth in China despite fears that foreign companies may be affected by the slowdown in the world's second largest economy.
Industry experts noted that Estee Lauder and other firms in the skincare and cosmetics sectors are experiencing a boom in business in China. The rising interest in these products is driven largely by millennials who spend on beauty products when they visit retail stores or even duty-free outlets.
In Q4 2018, the cosmetics brand saw growth of 18 percent in the Asia-Pacific region. The most notable expansion in sales came from the skincare segment as it expanded to $1.59 billion in the fourth quarter.
While Estee Lauder admitted that there could be challenges along the way, including several global trade disputes that could hamper the supply chain, the company is confident that it can reach its full-year growth estimates.
As of the Q1 2019, the company was able to hike its shares, gaining 64 cents per share, despite some fears about trade wars that could affect the global cosmetics and skincare industry.
Meanwhile, the global beauty industry reacted positively to news of Estee Lauder's growth and upbeat estimates for fiscal 2020. According to the Wall Street Journal, the company's shares soared by 13 percent on Monday's trading.
Other brands such as Ulta Beauty gained one percent on its stock, L'Oreal SA gained 1.8 percent, while e.l.f. Beauty saw an increase of 8.6 percent. These stocks gained despite the ongoing struggle that many retail firms are experiencing due to the trade war's tariffs.
In line with the rallying of some beauty brands, the global cosmetics industry is expected to generate up to $429.8 billion within the next three years. The figures are estimates for the period of 2016-2022.
Some of the beauty products that are expected to drive growth in the sector are the following segments: hair care, deodorants, makeup products, and color cosmetics. Analysts said the increasing popularity of online stores is also expected to help spur growth in the industry.
