Estee Lauder just reported a great quarter. Revenue grew 10 per cent to $9.71 billion. And thanks to expanding profit margins, earnings per share jumped 23 per cent to $2.27.Areas of strength included skin care and makeup which jumped 14 per cent and 10 per cent respectively.
That’s great for Estee Lauder whose shares are surging.
But this may reflect deterioratoin in the U.S. economy.
Years ago, Leonard Lauder argued that during difficult economic times, women will increase purchases of lipstick and makeup and decrease purchases of higher priced goods like shoes and handbags. This phenomenon became known as the “lipstick indicator.“
Earlier this year, a team of psychologists tied the lipstick indicator phenomenon to mating psychology. Basically, during recessions the number of quality mates who offer financial security decrease. And the results of four separate experiments showed that women were likely to increase purchases of lipstick, perfume, and other products that might enhance their sex appeal.
If you buy into this indicator, then you might be concerned with the economy.