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Estée Lauder reports net sales increase of 8% for Q4

BY Vivian Gomez

NEW YORK — The Estée Lauder Cos. achieved record net sales and reported overall strong financial results for the fourth quarter and fiscal year ended June 30.

For the year, the company achieved record net sales of $10.97 billion, an 8% increase compared with $10.18 billion in the prior year. Even excluding the impact of foreign currency translation, net sales still increased 8%.

The company reported a 170 basis-point increase in operating margin, and net earnings for the year rose 18% to $1.20 billion, compared with $1.02 billion last year. Diluted net earnings per common share rose 19% to $3.06, compared with $2.58 reported in the prior year.

“Fiscal 2014 was another outstanding year for our company. We achieved record results across many metrics, including sales, operating margin, earnings per share and operating cash flow. Our topline growth was nearly double that of prestige beauty and was broad-based across regions, product categories and channels, despite slower industry growth in some key countries,” Fabrizio Freda, president and CEO, said. “Our emerging markets, makeup and luxury brands, and our online, freestanding store and travel retail channels led our growth. At the same time, we made careful investment choices to support the fastest areas of growth, while continuing to eliminate non-value-added costs. This excellent performance further demonstrates the resilience and consistency of our strategic business model and strengthened our leadership in global prestige beauty.”

Additionally, the company’s fiscal 2014 fourth-quarter and full-year results included the acceleration of sales orders by some retailers of approximately $178 million in advance of the company’s July 2014 implementation of its strategic modernization initiative in certain of its largest remaining locations. These orders would normally have been expected to occur in the company’s fiscal 2015 first quarter. This amounted to approximately $127 million in operating income, equal to approximately $.21 per diluted common share.

“Fiscal 2014 marks the fifth consecutive year that we achieved outstanding results for our company and stockholders and is a testament to our ability to execute our winning strategy,” Freda said. “The cornerstone of our success is powerful brands, a robust innovation pipeline and a sharp focus on fast-growth areas prioritized in our strategy. We are a growth company well positioned to identify, create and capture the best global opportunities in the growing prestige beauty industry. Increased efficiency and effectiveness, along with benefits from the recent substantial completion of our strategic modernization initiative, should allow us to reinvest for future growth, increase our profitability and continue to generate value for our stockholders.”

For the quarter, the company reported net sales of $2.73 billion, a 13% increase from $2.41 billion in the comparable prior-year period. Excluding the impact of foreign currency translation, net sales also increased 13%. Along with the accelerated retailer orders, fourth-quarter sales benefited from new products and growth in emerging and developed markets.

The company’s fourth-quarter sales growth reflects double-digit gains in the United States and travel retail, as well as double-digit local currency increases in many European emerging markets. In Asia/Pacific, local currency growth was led by strong increases in Japan, China and Hong Kong. Sales gains in the United States, travel retail and Japan include the effect of the accelerated retailer orders.

Looking ahead to fiscal 2015, the company estimates global prestige beauty will grow approximately 3% to 4%. The company expects to grow ahead of the industry by bringing highly innovative products to market and focusing on the fastest growing countries, product categories and channels. The company also expects to leverage its strong sales growth and continue to reduce non-value-added costs to further improve its operating margin in fiscal 2015.

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PhRMA: Americans more health-conscious, report higher costs

BY David Salazar

Washington — The second annual health survey by the Pharmaceutical Research and Manufacturers of America shows that Americans are more conscious of their health, and believe their own health is good. However, a majority of respondents report paying more for health care than in previous years.

According to the survey of about 1,200 adults conducted earlier this summer, two-thirds of respondents reported that they had a great or good year when it came to their personal health, which is slightly higher than the 61% who said the same thing last year. However, only about 20% of people said it had been a good year for the average American’s health, with 48% saying it had been OK.

“While Americans are optimistic about their own health and that of their families, they are significantly less positive about the health of the nation as a whole,” Hart Research Associates president Geoff Garin said. “These findings reveal a disconnect in perceptions of how Americans view themselves and that of the average American in the context of today’s rapidly evolving healthcare system.”

PhRMA points out that people also are paying more attention to their health, with 58% of people overall reporting they pay more attention to their health now than a few years ago. That number is highest among African Americans surveyed, with 68% reporting they’re more aware of their health now.

People also are turning more to sources outside the doctor’s office, with 78% reporting they look for outside information. Of these, 57%report that health and medical websites are the second-most used source of health information besides physicians. A quarter of them turn to pharmacists.

There are, however, a couple of less encouraging trends pointed out in the survey. One is that there is confusion about the health benefits of vaccines. Some 29% of those surveyed think the claim that vaccines cause autism in children has some degree of truth to it — 4% said it’s definitely true, while a quarter said that it’s probably true, despite it not being supported by scientific research.

When it comes to the cost of health care, 68% of African Americans, 60% of Hispanics and 57% of whites said they’re paying more for health care now than they were before. Among Hispanics, 35% reported the cost of going to a doctor as a very big obstacle to dong so, a sentiment shared by 25% of African Americans and 23% of whites.

 “It’s crucial to keep the patient at the center of the health care dialogue in order to improve health outcomes in America,” PhRMA president and CEO John J. Castellani said.

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Supervalu notifies customers of data breach

BY Ryan Chavis

EDEN PRAIRIE, Minn. — Supervalu announced that it experienced an intrusion into the part of its computer network responsible for processing payment card transactions. The company's retail food stores and some of its associated stand-alone liquor stores were affected by the breach.

The criminal intrusion may have resulted in theft of account numbers as well as expiration dates and other private information from payment cards. There's no evidence that any misuse of the data occurred, but the company said its making the announcement to be cautious. Immediate action was taken to secure the affected parts of the payment network.

“The safety of our customers’ personal information is a top priority for us,” said president and CEO Sam Duncan. “The intrusion was identified by our internal team, it was quickly contained, and we have had no evidence of any misuse of any customer data. I regret any inconvenience that this may cause our customers but want to assure them that it is safe to shop in our stores.”

Supervalu said it has made federal law enforcement authorities aware of the situation and is cooperating in their efforts to investigate the breach and identify those responsible.

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