Estée Lauder posts decline in Q1 sales and earnings

The Estée Lauder Companies Inc. reported net sales of 3.52 billion dollars for its first quarter, a decline of 10 percent, while organic net sales declined 11 percent.

The company reported net earnings of 31 million dollars compared with 489 million dollars in the prior year and diluted net earnings per common share was 9 cents compared with 1.35 dollars. Adjusted diluted net earnings per common share declined to 11 cents, decreasing to 12 cents in constant currency.

Commenting on the results, Fabrizio Freda, president and CEO of Estée Lauder said in a statement: “While we had a better-than-expected first quarter, we are lowering our fiscal 2024 outlook given incremental external headwinds, namely from the slower growth in overall prestige beauty in Asia travel retail and in mainland China and the risks of business disruption in Israel and other parts of the Middle East.”

Estée Lauder results negatively impacted by challenging environment

The company said that the negative result was driven by pressures in the company’s Asia travel retail business, as well as incremental headwinds from a slower-than-expected recovery of overall prestige beauty in mainland China.

These challenges were partially offset by organic net sales growth in the United States, many markets in Asia/Pacific, led by Hong Kong SAR and Japan, as well as in nearly all markets in Europe, the Middle East & Africa (EMEA), led by the United Kingdom and Germany. organic net sales in fragrance and makeup grew, partially offsetting the decline in Skin Care.

Estée Lauder expects recovery plan to benefit 2025 onward

“We are accelerating and expanding our profit recovery plan, to benefit fiscal years 2025 and 2026, to realise our ambitions to rebuild profitability despite the external headwinds’ increased pressure on the business in fiscal 2024,” Freda added.

Reported net sales for the second quarter are forecasted to decrease between 11 percent and 9 percent versus the prior-year period and organic net sales are forecasted to decrease between 10 percent to 8 percent.

Reported diluted net earnings per common share are projected to be between 47 cents and 57 cents, while adjusted diluted net earnings per common share are expected to decrease between 66 percent and 60 percent on a constant currency basis.

For the full year, reported net sales are forecasted to range between a decrease of 2 percent and an increase of 1 percent versus the prior year. Organic net sales are forecasted to range between a decrease of 1 percent and an increase of 2 percent.

Reported diluted net earnings per common share for the year ahead are projected to be between 2.08 dollars and 2.35 dollars.