UPDATE: Estee Lauder Swings To 4Q Loss; Sees 1Q Above Views
13 August 2009 - 11:07PM
Dow Jones News
Estee Lauder Cos. (EL) swung to a fiscal fourth-quarter loss as
the company absorbed restructuring charges and faced declining
sales of its high-end fragrances and consumers cut spending on
beauty products.
The company projected results for the current quarter above
analysts' estimates amid continued efforts to cut costs. Fiscal
first-quarter earnings are seen at 23 cents to 30 cents a share on
net sales falling 5% to 9%. Analysts were looking for a 16-cent
profit and revenue falling 10% to $1.72 billion.
For the year, Estee Lauder expects earnings excluding
restructuring charges of $1.55 to $1.70 a share with revenue up as
much as 3%. Analysts polled by Thomson Reuters were expecting
earnings of $1.70 on 1% sales growth to $7.39 billion.
The beauty products industry has suffered as consumers continue
to curb spending. New Chief Executive Fabrizio Freda, a former
Procter & Gamble Co. (PG) veteran who joined the cosmetics
giant last month, has taken on the challenge of reducing Estee
Lauder's dependence on faltering U.S. department stores. Estee
Lauder early this year said it would slash 6% of its work
force.
For the quarter ended June 30, the company posted a loss of
$17.9 million, or 9 cents a share, compared with a year-earlier
profit of $120.2 million, or 61 cents a share. Excluding
restructuring charges, the latest quarter's earnings would have
been 20 cents a share.
Net sales tumbled approximately 16% to $1.68 billion, with 6
percentage points due to currency changes.
Analysts expected a 20-cent profit and revenue of $1.72
billion.
Gross margin fell to 74.6% from 75.6% amid the sales
declines.
The sales slump was most acute for fragrances, which reported a
35% drop, pushing the segment into the red. The much larger
skin-care and makeup businesses reported drops of 13% and 12%,
respectively, with profit falling sharply.
Shares recently fell 0.05% to $37.62 premarket. The stock has
soared 90% from a March low.
-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200;
anjali.cordeiro@dowjones.com
(Mike Barris contributed to this report.)