By
Reuters
Published
Nov 2, 2016
Reading time
2 minutes
Download
Download the article
Print
Text size

Estee Lauder sales lag estimates on lower department store sales

By
Reuters
Published
Nov 2, 2016

Cosmetics maker Estee Lauder Cos Inc reported lower-than-expected quarterly sales on Wednesday as fewer shoppers visited department stores in the United States.

Shares of the maker of Clinique skin care and Smashbox make-up products fell as much as 5.9 percent to $81.17, their lowest in more than nine months.


Some of Estee Lauder's flagship brands include Clinique and M.A.C., as well as the Estee Lauder label. - Estée Lauder Companies



Estee Lauder, like its peers in the cosmetics industry, has struggled to boost sales in the United States as customers increasingly spend more on big-ticket items such as cars and smartphones than on personal products.

Sales at department stores, which account for a large share of cosmetics sales, have also slowed in the last few quarters as shoppers increasingly opt to buy online.

New York-based Estee Lauder's sales in the Americas region, which make up more than 40 percent of the company's total sales, fell 2.8 percent to $1.23 billion in the first quarter ended Sept. 30, hurt by the continued slump in mall traffic and lower tourist spending in its MAC stores.

"We are cautious of the decline in retail traffic, primarily related to mid-tier department stores, as well as certain tourist-driven doors in the United States," Estee Lauder said in a statement.

A drop in tourists from mainland China visiting Hong Kong and weak consumer spending in the Middle East also weighed on total sales in the quarter, the company said.

The company does not expect either market to improve in the year ending June 2017, Chief Executive Fabrizio Freda said on a call with analysts.

Estee Lauder said it expects net sales to grow 3-4 percent for the quarter ending Dec. 31, implying sales of $3.22 billion-$3.25 billion. It also forecast adjusted profit of $1.10-$1.15 per share for the same period.

The company also expects to incur charges of about $30 million-$40 million in the current quarter, related to exiting some markets and laying off workers.

Estee Lauder's net sales rose 1 pct to $2.87 billion in the first quarter ended Sept. 30, the slowest growth in more than a year, missing analysts' estimate of $2.90 billion, according to Thomson Reuters I/B/E/S.

Net earnings attributable to Estee Lauder fell to $294 million, or 79 cents per share, from $309 million, or 82 cents per share, a year earlier.

Excluding restructuring and other charges, the company earned 84 cents per share, beating the average analyst estimate of 80 cents per share.

Up to Tuesday's close, Estee Lauder's shares had fallen 2 percent this year.
 

© Thomson Reuters 2024 All rights reserved.