earnings reports

Estee Lauder posts surprise revenue growth on China demand, shares soar


This is AI generated summarization, which may have errors. For context, always refer to the full article.

Estee Lauder posts surprise revenue growth on China demand, shares soar

Photo from Shutterstock

(UPDATED) A sustained strong demand for skin-care products helps Estee Lauder offset the impact of weak demand for traditional makeup items

Estee Lauder on Friday, February 5, reported a surprise rise in quarterly sales and handily beat profit estimates on strong demand for premium skin-care products and fragrances in China, lifting its shares to a record high.

Shares of New York-based Estee, whose skin-care segment grew 28% on higher demand for its La Mer and Clinique labels, were last up 8.8%.

A sustained strong demand for serums and moisturizers from customers keeping up their self-care routine has helped Estee cushion the pandemic-induced impact of weak demand for traditional makeup items such as foundation and lipsticks.

“The powerful engines of skin care, fragrance, Asia-Pacific, travel retail in Asia, and global online fueled our performance despite the increasing complexity of the pandemic,” chief executive Fabrizio Freda said.

Sales in its Asia-Pacific market rose 35% in the quarter, boosted by robust demand during Tmall’s Singles’ Day shopping event in China, helping Estee post its first growth in overall revenue since the onset of the pandemic.

Concerns about tempered sales due to broader and more stringent lockdowns than anticipated and cannibalization of Chinese domestic travel retail by a strong Singles’ Day period proved misplaced, Barclays analyst Lauren Lieberman said.

Estee said it planned to resume its share buyback program during the 2nd half of the fiscal year, as the company’s cost-cutting measures, including controlling its advertising and promotional expenses, paid off.

Excluding items, Estee earned $2.61 per share in the 2nd quarter, far exceeding analysts’ estimate of $1.69.

Net sales rose 5% to $4.85 billion, also beating a Refinitiv IBES estimate of $4.49 billion.

Estee, however, forecast 3rd quarter net sales to grow between 13% and 14%, lower than estimates of 15.3% growth, as its makeup sales drag. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI