President, Chief Executive Officer, and Director at Estée Lauder Companies
Thank you, Rainey, and hello to everyone. It is good to be with you today. Since we spoke in mid-August, the headwinds of COVID-19 restrictions in China, high inflation globally and a strong U.S. dollar intensified significantly. Amid the increased complexity, we delivered organic sales down 5%, in line with our outlook, and adjusted diluted EPS higher than expected. Even in these conditions, our multiple engines of growth strategy empower us to seize prevailing growth opportunities. Indeed, we realized outstanding performance in many developed and emerging markets around the world to partially offset the impact of COVID-19 restrictions in Asia travel retail and domestic China as well as tighter inventory management by some retailers in the U.S.
To reflect these prolonged and heightened external pressure, we are reducing our outlook for fiscal year 2023, most notably for the second quarter. While Tracey will discuss our revised outlook in detail, there are three primary drivers. The first is the impact of ongoing COVID-19 restriction in Asia travel retail, particularly Hainan. The restrictions are leading to a slower return of tourism versus what retailers had anticipated, resulting in tightening of inventories. While it is significant, this near-term temporary pause does not diminish our deep conviction in Hainan for the long term as it is among the best brand-building destination for new consumers acquisition. The second driver is the tightening of inventory by some retailers in the U.S., and the third is the far stronger U.S. dollar.
Encouragingly, beyond these headwinds, consumer demand is robust in markets which are emerging from the pandemic, evidenced in the underlying fundamentals of our first quarter results and retail sales growth. Our optimism in the long-term growth opportunities for our brands and for prestige beauty is intact. During fiscal year 2023, we plan to continue investing in our brands, including for innovation, advertising, strategic entry into new countries and expanded consumer reach to grow profitable prestige beauty share. We expect a gradual sequential improvement to low double-digit organic sales growth and high teens adjusted EPS growth on a reported basis in the second half of fiscal year 2023.
As these pressures begin to abate, the momentum in other areas of our business builds and our ongoing investments drive growth. Let me now share some insights from our first quarter. As while we had headwinds, we also had many bright spots that give us confidence in the second half and beyond. We realized double-digit organic sales growth in many large developed and emerging markets around the world. Japan and the U.K. grew strongly, alongside Brazil, India, the Middle East and Thailand, to name just a few. Brick-and-mortar prospered in these markets as we welcome consumers with high-touch services, engaging activations and newness. Domestic China delivered sequentially improving organic sales trends of down single digits driven by excellent growth online, a better performance in brick-and-mortar.
Our luxury brands, La Mer and Tom Ford Beauty, contributed to online growth, as did Aveda and Bobbi Brown, among others. We are very encouraged by the terrific results of our expanded consumer reach on JD and Douyin. From a retail sales perspective in the online channel, we grew nearly twice as fast as prestige beauty in China to gain share. In the U.S., our freestanding store excelled, benefiting from both enhanced omnichannel capabilities and greater demand for our high-touch services, be it artistry at MAC or personalization at Jo Malone London and Le Labo. Specialty-multi also performed especially well, powered by traditional stores and enhanced by the partnership of Ulta Beauty at Target and Sephora at Kohl's. Clinique, MAC and Bobbi Brown led growth.
Given excellent results in Ulta Beauty over the last year, MAC and Bobbi Brown are further expanding their presence. We continue to see promise in the U.S., evidenced in its overall retail sales growth in prestige beauty despite the recession risk and the strong performance our brands delivered in freestanding stores and specialty-multi. We remain committed to investing in innovation, advertising and granular consumer acquisition strategies as we aim to best capture the market growth opportunities. Looking at brands globally. 13 brands rose organically, collectively increasing high single digit to represent over half of our organic sales. Among the 13, MAC excelled in makeup, La Mer in luxury skin care, Jo Malone London in fragrance and Aveda in hair care.
While The Ordinary, our newest brand, appeal to consumers with its authenticity and innovative approach to ingredient transparency. Fragrance sales rose an outstanding 18% organically and expanded in every region. Tom Ford Beauty, Jo Malone London, Le Labo, KILIAN PARIS and Editions de Parfums Frederic Malle all contributed, driven by sought-after innovation and heroes as our luxury and artisanal portfolio evolves from strength to strength. For example, Jo Malone London's momentum continue with gains balanced across the regions. Innovation served as a catalyst for growth. In China, the new Night Collection resonated beautifully as did the limited edition Brit Collection. Globally, the brand brilliantly leveraged its hero strategy, creatively reimagining the power of English pear and freesia, in a campaign to recruit new consumers.
Demand for fragrance was even stronger as ongoing supply issues of glass and componentry constrains this still excellent sales growth. Profitability for fragrance improved despite the significant currency headwinds, further evidence of the benefits derived from our strategic pivot to the higher end of the category. Hair care double-digit organic sales growth was fueled by increasingly diverse growth engines. We were thrilled to launch Aveda in Mainland China, marking our entry in prestige hair care in the market. In the U.S., Bumble and bumble realized gains from strong results in Ulta Beauty at Target and expansions into Macy's.
In skin care, while the Estee Lauder, Dr. Jart and Origins brands were most pressured by reduced retail traffic and travel in China, several brands still prospered. La Mer, Bobbi Brown and The Ordinary grew organically driven by coveted heroes and newness to showcase the gains to be had from entry prestige through luxury. Innovation also resonated strongly in skin care, which bodes well for the future when these transitory pressures abate. In China, Estee Lauder luxury oriented Re-Nutriv was highly sought-after, and the launch of Re-Nutriv Ultimate Diamond Transformative Brilliant Serum boosted overall demand for the franchise.
Clinique Smart Clinical Repair gained momentum in China and also in the U.S. as its new moisturizer complemented the regimen's popular serum and eye cream, which launched last year. The Clinique Smart franchise benefit its 360-degree marketing campaign of these three products, featuring powerful scientific credentials and claims. Makeup renaissance was evident as markets both reopened and evolved in recovery. The category growth in emerging market was especially striking a broad base from Latin America to the Middle East, India and Southeast Asia, while makeup also grew in most developed markets in Western Europe, along with Japan and Korea.
MAC had a remarkable quarter, fueling passion for makeup around the world, growing high single digits organically. Consumer embraced its unparalleled artistry, and the brand innovation proved captivating, especially Powder Kiss Velvet Blur Slim Stick for the lipstick finish and elevated packaging as well as MACStack mascara. MAC's creative marketing activations further contributed to growth. In Southeast Asia and Latin America, the brand's TikTok challenges realized standout results, driving significant new consumer acquisition on Lazada's Super Brand Day, a strong double-digit volume growth across Latin America as over 400 content creators contributed to the campaign.
Before I close, I'm also pleased to share that today, we will release our fiscal year 2022 social input and sustainability report. It features exciting progress, made possible by the extraordinary efforts of our employees around the world across our ESG areas of focus and previously stated goals. The report also details new goals for electric vehicles, water reduction and responsible sourcing. Finally, on the last few earnings calls, I discussed actions we were taking to make more progress in our commitment to racial equity as well as women advancement and gender equality, which are also reflected in the report. In conclusion, the current external pressures are many.
However, as we look ahead, we remain confident in our focus on advancing our long-term growth strategy, further balancing and diversifying our multiple engines and fully leveraging the long-term promise of prestige beauty. We aim for fiscal year 2023 to be another year of progress on our strategy despite the headwinds. In the first quarter alone, we set the stage to expand our luxury portfolio, having announced a deal to create BALMAIN BEAUTY with the couture fashion house. We extended our consumer reach in productive distribution in high-growth channels to match success across regions and continue to strategically expand brands into new countries with Aveda launch in domestic China.
We also welcome colleagues into our new China innovation labs in Shanghai, amplifying our ability to best create for the Chinese consumer. And we began limited production for skin care in our new manufacturing facility near Tokyo. I would like to close with my deepest thanks to our employees for their exceptional commitment amid the complexity of the environment. Your creativity, wisdom and passion are beyond compare. Thank you. And I will now turn the call over to Tracey.