Estée Lauder Expects Deeper Drop in Fiscal Year Sales on Soft Chinese Market
By Sabela Ojea
Estée Lauder logged higher in sales in the latest quarter amid a recovery in its Asia travel retail business, but guided for a deeper drop in full-year sales amid a continued softness in the prestige beauty market in Mainland China.
The beauty company behind Clinique, MAC Cosmetics and La Mer, on Wednesday posted a fiscal third-quarter net profit of $330 million, or 91 cents a share, compared with $156 million, or 43 cents a share, for the same period a year earlier.
Stripping out one time items, the company's earnings per share came in at 97 cents, ahead of the 50 cents per share anticipated by analysts.
Sales rose 5% to $3.94 billion, beating analysts expectations of $3.92 billion and in line with management views. The company said skin care and makeup sales rose 8% and 3%, respectively, also seeing a sequential recovery these categories. Sales for fragrances remained flat and haircare sales dropped 3%.
In its key Asia Pacific region, Estée Lauder saw a 1% decline in sales amid a recovery in its Asia travel retail business. Meanwhile, sales in the Americas rose 3%, even though North America sales were flat. In Europe and the Middle East region, sales climbed 12%.
"We expect accelerating momentum in organic sales growth in the fourth quarter, and for operating margin in the second half of fiscal 2024 to not only be stronger than the first half but also to expand from the year-ago period," Chief Executive Fabrizio Freda said.
Estée Lauder expects fourth-quarter sales to rise 5% to 9%, with earnings per share of 11 cents to 22 cents, and adjusted earnings per share of 18 to 28 cents. Wall Street forecasts an increase in quarterly sales of 13%, and earnings and adjusted earnings per share of 74 cents and 75 cents, respectively.
Regarding its outlook for the year ending in June, Estée Lauder guided for a decrease in sales of 3% to 2%, and organic net sales to fall between 2% to 1%. It also guided for earnings per share of $1.96 to $2.09, and adjusted earnings per share of $2.14 to $2.24.
The company had most recently forecast a full-year sales and organic net sales decline 1% to a 1% increase and guided for earnings per share of $2.04 to $2.20 and adjusted earnings per share of $2.08 to $2.23.
Wall Street forecasts a 0.8% decline in full-year sales to $15.81 billion, as well as earnings per share and adjusted earnings of $2.19 and $2.25, respectively.
Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix
(END) Dow Jones Newswires
May 01, 2024 07:34 ET (11:34 GMT)
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