Lauder: This is the secret to cosmetics success

William Lauder
Adam Jeffery | CNBC
William Lauder

The shopping habits of the modern woman are changing, and cosmetics companies need to meet her wherever she shops if they want to capture her business, William Lauder told CNBC on Wednesday.

While the Internet is an important selling point, the Estee Lauder executive chairman said his company is not simply chasing sales online. The consumer is also migrating from department stores to specialty stores, such as Sephora and Bluemercury.

"As she's shifting, we're shifting with her to places the she likes to shop," he said in a "Squawk Box" interview.

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A decade ago, Estee Lauder generated 75 to 80 percent of its sales through other retailers. Today, the company drums up the majority of its revenues through its online channels and its own retail stores.

Controlling the retail experience allows Estee Lauder to meet changing consumer tastes. He noted that Estee Lauder's second largest distributor, Macy's, is considering offering a product line and shopping environment similar to Bluemercury's within its department stores.

The retail giant announced plans last month to buy Bluemercury for $210 million.

"I can't tell you from a financial basis whether it's a good deal, but I think strategically it's very interesting for them and I applaud them," he said.

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Shares of Estee Lauder have recently traded at an all-time high. The stock is up more than 7 percent at about $82 this year.

The company reported higher-than-expected earnings in the second quarter but said full-year sales would come in below previous estimates due to currency headwinds and slowing growth in its China and Hong Kong markets.

Lauder said the fall in the value of Brazil's real had also led to softening sales in there, and Europe is a mixed bag. However, business in the United States remains strong ,and the company is doing excellently in the Middle East, particularly Dubai, Saudi Arabia and Kuwait, he said.