Estée Lauder Tops Estimate; Cuts FY Outlook - Update

(RTTNews) - Beauty and personal care products maker Estée Lauder Companies Inc (EL), Tuesday reported a 24 percent decline in first-quarter profit, hurt by lower sales in America and Asia, as well as a strong U.S. dollar. Nonetheless, both earnings and revenue for the quarter came in ahead of Wall Street estimates.

The company provided a weak outlook for the second quarter and cut its expectations for the full year. Estée Lauder shares dropped more than 4 percent in morning trade on the New York Stock Exchange, following the announcement of results.

Estée Lauder remains cautious of slower growth in Hong Kong and from Chinese travelers, unfavorable foreign exchange due to the strength of the U.S. dollar, the impact of lower volume of luxury gift giving in China, and a softer retail environment in some channels in the U.S.

Adding to its woes are the recent political instability in Hong Kong and global uncertainties in business, including increased sanctions in Russia.

Estée Lauder, based in New York, posted quarterly net earnings of $228 million or $0.59 per share, compared with $300.7 million or $0.76 per share last year. On average, 21 analysts polled by Thomson Reuters expected earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter slid to $2.63 billion from $2.68 billion a year ago. Eighteen analysts had a consensus sales estimate of $2.62 billion for the quarter.

The company said that orders for the quarter were somewhat pruned as some retailers accelerated orders in the sequential fourth quarter.

Among regions, sales in America slid 7 percent, due mainly to lower sales from heritage brands, driven by the impact of the accelerated orders and a difficult comparison with the prior-year period product launches.

Sales in Asia-Pacific fell 1 percent, while Europe, the Middle East and Africa increased 6 percent.

At its key skin-care segment, sales slipped 6.8 percent, while makeup sales inched up 2 percent and fragrance sales climbed 2.7 percent. Haircare sales rose 3 percent.

For the second quarter, Estée Lauder projects earnings of $1.01 to $1.05 per share on sales growth of 3 to 4 percent in constant currency. Analysts currently expect earnings of $1.23 per share for the quarter.

For full year 2015, Estée Lauder estimates adjusted earnings of $3.03 to $3.11 per share on sales growth of 2 to 3 percent in constant currency. Earlier, earnings were estimated in the range of $3.10 to $3.20 per share on sales growth of 3 to 4 percent.

Analysts currently expect earnings of $3.00 per share for the year.

Estée Lauder stock is trading at $72.73, down $3.23 or 4.25%, on a volume of 2.3 million shares. In the past year, the shares traded in the range of $63.63 - $77.66.