Estee Lauder Credit Analysis

Estee Lauder Credit Analysis
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SWOT Analysis
Strengths
Estee Lauder manufactures and markets personal care and make-up products and the company has a strong brand and product portfolio.
The revenue has increased in the past three years for the financial years ended June 30 2017 to 2019 from 11.824 billion to 14.863 billion (Estee Lauder, 2019).
Low cost structure compared to major competitors

Threats
Foreign exchange and geo-political risks pose a threat as Estée Lauder operates in more than 100 countries
Rise of counterfeit products

Weaknesses
The North American market is a major market accounting for 15% of sales, but many department stores are closing

Opportunities
Estée Lauder's is diversifying the products' distribution network to remain competitive (Vora, 2019)
Rising consumer spending in the US

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Estée Lauder has a strong brand portfolio, which influences customer loyalty and spending. Additionally, the company’s revenue, the net income is increasing, and Estée Lauder maintains a low cost structure compared to the competitors. However, the company relies on store sales, and this will affect profitability as the retail market in the US declines. A diversified portfolio of products and distribution channel is essential to grow. Estée Lauder operates in many countries and this increases the risk of adverse foreign exchange movement and geo-political events (The Morningstar, 2019).Risk Rating
Estée Lauder has low risks and is in a strong market position, meaning that it would be rated as “A”. Even as the retail sector continues to decline in the US. Estée Lauder has a diversified portfolio of products and increasingly focused on growing the e-commerce segment. In 2019 there was an operating loss of $ (194) million in the Americas, while there was profit in the previous two years, but the loss was offset by higher growth in the Europe, Middle East & Africa market and Asia/Pacific marke...