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Estee Lauder's Have & Be Buyout to Boost Skin Care Unit

Zacks Equity Research

The Estee Lauder Companies Inc. EL concluded the acquisition of two-thirds shares of Have & Be Co. — the Seoul-based skin care company — which owns brands like Dr. Jart+ and Do The Right Thing. In 2015, Estee Lauder had made a minor investment in Have & Be.

The company initially announced the acquisition of the remaining two-thirds shares in November. Management had stated that Have & Be had an enterprise value of $1.7 billion. Also, the company had earlier announced to fund this transaction with debt.

Have & Be Acquisition Holds Promise

Launched in 2005, Dr. Jart+ — Have & Be’s skin care brand — focuses on making high-quality products that combine dermatology, art and innovation. Cicapair and Ceramidin are some of the best known skin care collections of the brand. Dr Jart+ offers a broad range of exclusive moisturizers, masks, cleansers and serums, which are sold through specialty-multi channels, travel retail, freestanding stores, high-end department stores and online websites in over 35 countries worldwide.

Notably, Dr. Jart+ has become one of the most popular Korean skin care brands globally, especially among millennials in Asia and the United States. This fast growing brand is expected to help Estee Lauder strengthen its skin care business and expand operations in Asia/Pacific, North America, the U.K. as well as the travel retail network.

Well, Estee Lauder is witnessing rapid growth in its skin care segment driven by focus on innovation along with prudent marketing and advertising strategies in this category. Notably, skin care reported sales growth of 24% year over year (up 25% at cc) in the last reported quarter, backed by strength in Estee Lauder and La Mer brands.

We believe that, Estee Lauder’s strong focus on enhancing brand portfolio through strategic partnerships will expand customer base and propel innovation in the skin care market.

Notably, this Zacks Rank #3 (Hold) stock has increased 12.6% in the past six months compared with the industry’s rise of 8.8%.

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e.l.f. Beauty, Inc ELF, with a Zacks Rank #2 (Buy), has a long-term earnings per share (EPS) growth rate of 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Procter & Gamble Company PG, with a Zacks Rank #2, has a long-term EPS growth rate of 7.5%.

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