Estee Lauder reports a strong Q4 but outlook is weaker

By Simon Pitman

- Last updated on GMT

Estee Lauder has followed a string of other major cosmetic and personal care companies by reporting improved financial results, dampened by a less positive outlook.

The company recorded a 9.3 percent increase in reported sales for the quarter, up from $1.68bn to $1.84bn, which represented an 8.4 percent increase in local currencies, indicating a slight positive impact from currency translations.

Net income for the period increased to $23.9m, up from a loss in the same period last year of $17.9m, a figure that was attributable to the increased sales and cost savings from restructuring.

Skin care and make-up sales grow, fragrance falls

The company said that revenues for the make-up and skin care categories improved, while revenues for the fragrance division fell slightly during the quarter.

The company said that declining revenues in its fragrance division was mainly due to lower sales of designer fragrances, including DKNY, Tommy Hilfiger Men and Sean John Unforgivable Women.

The good performance in the skin care segment was largely attributable to strong sales growth in all geographic regions, while in the make-up category the growth was attributable to sales of make-up artist branded products.

Growth in share of global prestige beauty market

“We closed the fiscal year with an outstanding performance, achieving record results on many financial metrics, including cost of sales percentage, earning per share and operating cash flow,”​ said CEO Fabrizio Freda.

“Importantly we believe the company gained share globally in prestige beauty,”​ he added.

The prestige color cosmetics, skin care and fragrance player said that reported sales for the full year grew by 6.4 percent to $7.79bn, a figure that represented an increase of 4.7 per cent in local currency.

Outlook not so rosy

Net income for the year more than doubled, from $218.4m in the corresponding quarter last year to reach $478.3m, a figure that was driven by increased sales towards the end of the year and reduced costs from restructuring.

Looking ahead to the next financial year, like most of the big personal care and cosmetics players, Estee Lauder executives believe that the company will be in for a tougher time in the next few quarters.

For fiscal 2011, the company said that net sales are expected to increase by 3 to 4 per cent over the prior fiscal year, a figure that is expected to be negatively impacted by unfavorable currency exchange.

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