Estée Lauder Reports Strong Sales Fueled by Asian Shoppers
20 August 2019 - 5:08AM
Dow Jones News
By Kimberly Chin
Estée Lauder Cos. projected strong growth in 2020 after the
company reported sales increases in Asia and higher demand for its
premium skin care brands, sending shares of the company to an
all-time high.
The New York-based cosmetics company said it expects sales to
rise between 7% and 8% in fiscal 2020, hitting the top end of its
projected long-term sales growth of 6% to 8%.
The projections came after the company reported robust demand
across all of its emerging markets, led by China. In fiscal 2019,
sales from the Asia-Pacific region rose 23% and sales from Europe
and the Middle East increased 20% from a year earlier.
Shares rose 12% to $201.02 on Monday. The stock has climbed more
than 50% year to date.
Executives said they are confident that a growing middle class,
especially in emerging markets, as well as hyperlocal marketing
initiatives will drive sales higher next year. "We are benefiting
more from the momentum of those markets, and we are less exposed to
some of the slower growth channels in particular than we have been
historically, " said Chief Financial Officer Tracey Travis in a
call with analysts.
About half of Estée Lauder's sales come from North America,
which had negative sales growth in 2019, compared with other
regions which experienced percentage growth in the double digits.
The company said that broader retail trends in the U.S., such as
increased competition, slowing beauty sales overall and less foot
traffic at stores, have damped growth.
Ms. Travis also said the closure of stores in 2019 from
department-store operator Bon-Ton Stores Inc. has added to
challenges in its U.S. business, knocking off at least one
percentage point of growth in North America.
Chief Executive Fabrizio Freda told analysts he expects the U.S.
business to stabilize next year and eventually return to growth in
the long term, particularly through Estée Lauder's marketing
efforts and new product launches.
Overall net sales climbed 8.6% for the year, compared with
fiscal 2018.
Fourth-quarter sales were up 8.9% to $3.59 billion. Excluding
currency fluctuations and restructuring-related charges, sales rose
12%. Analysts polled by FactSet estimated quarterly sales of $3.53
billion.
Profit in the three-month period ended June 30 fell to $157
million, or 43 cents a share, largely due to higher expenses and
restructuring costs. Excluding certain items, Estée Lauder made 64
cents a share, topping analysts' estimates of 53 cents a share.
The company said it spent more on marketing in the quarter,
which helped drive some of its sales growth but also pushed
expenses up 5.9%.
Estée Lauder said its multiyear restructuring initiative, which
began in May 2016 to help the company cut costs, streamline
operations and exit underperforming businesses, will likely be
completed in fiscal 2021.
The company now expects the effort to cost between $950 million
and $990 million before taxes, but yield cost savings between $425
million and $475 million before taxes. This compares with its
previous guidance of $900 million and $950 million in costs and
between $350 million and $450 million in savings.
Next year, the company projects per-share earnings to come
between $5.62 and $5.74. Excluding restructuring charges and other
items, the company expects earnings between $5.90 and $5.98 a share
for the year.
In the current quarter, the company expects sales growth of 9%
to 10%, and earnings of $1.48 and $1.52 a share. Excluding special
items, Estée Lauder forecasts earnings of $1.56 to $1.59 a
share.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
August 19, 2019 14:53 ET (18:53 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Estee Lauder Companies (NYSE:EL)
Historical Stock Chart
From Apr 2024 to May 2024
Estee Lauder Companies (NYSE:EL)
Historical Stock Chart
From May 2023 to May 2024