Estée Lauder third quarter results pleases investors
The company said that sales for the quarter came in at $2.58bn, a rise of 1% compared to the previous year, while net earnings were up a healthy 28% to $272.1m, compared to $213.2m in the corresponding period last year.
The results have beaten the competition, making it the only major US-based cosmetics and personal care company to post a positive sales result so far this year, as US-based international businesses continue to battle currency headwinds bought on by the strength of the US dollar.
Factoring out the negative impact of currency translation, the sales results showed an increase of 8% at a constant currencies rate.
The results topped many Wall Street analysts’ forecasts, with eight analysts surveyed by Zachs estimating an average sales revenue of $2.55bn for the quarter.
“We posted an excellent third-quarter performance, exceeding our constant currency sales forecast that, combined with disciplined expense management, we leveraged into sharply higher earnings per share,” said Fabrizio Freda, President and CEO.
“Our growth this quarter again came from multiple engines, with particular strength in the United Kingdom and emerging markets, our luxury and makeup brands, and online, specialty-multi and freestanding store channels.”
By category the company results showed that the biggest gains were seen in make-up, where constant currency sales were up 14% to $1.08bn, as well as hair care, where constant sales were up 10% to $125.6m.
In the make-up category, the company said that sales improvements were generated from artist brands, whereas for hair care extensions to the Aveda and Bumble Bee brands were both successful.
In the company’s biggest segment, skin care, constant currency sales were up 4% to $1.10bn, which was generated by new launches that included Advanced Night Repair Eye Synchronized Complex II and Re-Nutriv Ultimate Diamond products.
Fragrance sales were up 7% in constant terms to $270.5m, driven mainly by Michael Kors, Jo Malone and Tom Ford.
On a regional basis, sales growth was driven by gains in the US for luxury, hair care and make-up, whereas the Europe, Middle East & Africa region reported constant net sales gains in all countries.
The strong third quarter has given way to an increased estimate for full-year sales growth, which executives now say should be in the region of 6 – 7% at constant currency rates, although the continued strength of the dollar will undercut this figure.
“We are revising our earnings per share estimate for the fiscal year to $2.92 to $2.97, adjusting for the higher impact of currency translation, while at the same time taking up the bottom of the range in constant currency. Our revised earnings per share forecast translates to 8% to 10% growth in constant currency.”