Estee Lauder Earnings Beat Estimates - Analyst Blog
02 May 2013 - 11:12PM
Zacks
Estee Lauder Companies Inc.(EL) posted
third-quarter fiscal 2013 earnings of 45 cents per share (excluding
restructuring charges), which climbed 19.0% from 38 cents in the
prior-year quarter. The results were ahead of management’s guidance
range of 28 cents to 32 cents. The reported earnings also exceeded
the Zacks Consensus Estimate of 33 cents by 36.4%.
Profits during the quarter were aided by solid performance in
the U.S. and the emerging markets.
Quarter in Detail
Net sales, excluding foreign currency translation, climbed 3% to
$2.29 billion. The increase was in the lower end of the company’s
guidance of 3%-4%. Sales growth was partly offset by soft results
in Southern Europe and Korea due to the ongoing macroeconomic
headwinds. The quarterly sales however, missed the Zacks Consensus
Estimate of $2.33 billion.
The Hair Care product line was the strongest in the last
quarter, growing 6% from the year-ago quarter. This was followed by
Makeup and then Fragrance, which grew 5% and 1%, respectively. Skin
Care product remained flat compared to prior-year quarter. Other
products, with less than 1% of total revenue, declined 24%.
The gross margin expanded 160 basis points (bps) to 80.7% in the
third quarter of fiscal 2013 owing to strong sales and cost
control. Despite higher selling, general & administrative
expenses, operating income margin increased 130 bps to 10.7% due to
much higher restructuring charges.
Segment Details
Americas: Sales in the
Americas rose 1.0% to $988.1 million. The sales increased on the
back of the growth in the Company’s makeup artist brands and Aveda
as well as a favorable year-over-year comparison due to a sales
return in the prior year. On a constant currency basis, sales
increased 2% in the region.
Europe, the Middle East &
Africa: Overall sales in the region went up 3.0% both on a
reported and constant currency basis to $847.9 million on the back
of a double-digit growth in travel retail. Growth would have been
stronger if not for the softness in Switzerland, France, Spain and
the Balkans. However, the company witnessed sales growth in most of
the other markets.
Asia/Pacific: Sales in the region improved 1.0%
to $455.8 million, mainly owing to the increased demand for skin
care products in Australia, Hongkong and Thailand. However,
weakness in Korea partially offset the sales growth. On a constant
currency basis, sales increased 3% in the region.
Other Financial Update
As of Mar 31, 2013, the company held $1.44 billion cash and cash
equivalents compared to $1.32 billion as of Dec 31, 2012. Long-term
debt remained flat at $1.33 billion compared to the end of the
previous quarter.
The company has announced a dividend of 18 cents per share on
the Company’s Class A and Class B Common Stock payable on May 31,
2013 to stockholders of record at the close of business on Feb 28,
2013.
Guidance
For fiscal 2013, earnings per share excluding restructuring
charges are projected in the range of $2.56 to $2.61 compared to
$2.51 to $2.0 as expected previously. Net sales are expected to
increase between 6% in constant currency.
Recommendation
Headquartered in New York, Estee Lauder engages in the
manufacture and sale of skin care, makeup, fragrance and hair care
products and carries a Zacks Rank #3 (Hold). Avon Products
Inc (AVP) has a Zacks Rank #2 (Buy), and is another
stock worth considering.
AVON PRODS INC (AVP): Free Stock Analysis Report
ESTEE LAUDER (EL): Free Stock Analysis Report
FLOWERS FOODS (FLO): Free Stock Analysis Report
GREEN MTN COFFE (GMCR): Free Stock Analysis Report
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