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Despite this, the low implied growth rate of COH leads to attractive upside potential. EL has been gaining ground in the three regions it operates in: The Americas; Europe, the Middle East Africa; Asia/Pacific. Each of its product categories, skin care, makeup, fragrance, and hair care, has also been growing yearoveryear. However, this trend is increasing at a decreasing rate. In 2011, 2012, and 2013, respectively, the company grew revenues 13%, 10.3%, and 5% (if analyst predictions for EL's fourth quarter are correct). However, EL has been able to increase gross margins from 76.5% in 2010 to 79.5% in 2013. Operating margins have increased from 10.1% to 13.5% in the same period. EL may find it difficult to further attain growth through margin expansion since its gross margins are already so high. By comparison, Christian Dior's operating margin for their perfumes and cosmetics group for 2012 was 14.9%, so there may still be room for EL to increase operating margins. However, EL's slowing growth and already high gross margins may make it difficult to increase profits.
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