EMERGING MARKETS

Emerging markets represented nine percent of our total sales in fiscal 2008. Some of our most promising growth opportunities are in the emerging markets of the "BRIC" countries: Brazil, Russia, India and China. Consumer spending in these markets is climbing dramatically as these economies continue to expand. The high-net worth segment specifically is growing rapidly in these regions-increasing nearly eight percent in China and over 20 percent in India since 2006-a particularly promising trend for our luxury products.

As these upwardly mobile consumers actively seek world-class beauty products and customized service, our brands are there to deliver. We are focused on growing our presence in China where amongst our brands, Estée Lauder was the fastest growing brand. In 2002, we had two brands at 20 counters in six cities in China. Today, we have eight brands in as many as 84 department stores and 40 Sephora stores in 33 cities throughout this growing region.

Russian women boast one of the highest spends on beauty products in the world as a percentage of income. We opened an Estée Lauder store in Moscow across from Red Square in 1981, making us the first Western fragrance brand in what was still the Soviet Union. We've grown ever since: M·A·C, La Mer and Estée Lauder are consistently among the top-selling brands in Tsum, a leading Russian department store.