Estée Lauder Beat Wall Street Estimates in Q4, But Cautioned of Headwinds

The Estée Lauder Cos. surpassed Wall Street estimates on the top and bottom lines in the fourth quarter, but there are headwinds on the horizon.

Lauder reported that net sales in three months ending June 30 were $3.56 billion, down from $3.94 billion in the same period a year earlier, but beating analysts’ estimates of $3.43 billion. Net earnings were $52 million, and diluted earnings per share were 14 cents. On an adjusted basis, earnings per share were 42 cents, surpassing Wall Street estimates of 32 cent.

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Net sales for its fiscal year were $17.74 billion, an increase of 9 percent from $16.22 billion in the prior-year period. Net earnings were $2.39 billion, compared to $2.87 billion.

Fabrizio Freda, president and chief executive officer said, “We delivered excellent results in fiscal 2022, exceeding our expectations in the fourth quarter and achieving record revenue and profitability on an adjusted basis for the year. Our multiple engines of growth strategy proved invaluable amid pandemic and macro complexity, affording us the diversification to seize growth of the moment. The Americas and EMEA prospered, fragrance soared, and makeup realized the promise of its emerging renaissance.”

He highlighted La Mer, MAC and Jo Malone London for delivering strong sales, and added that brick-and-mortar and online sales grew globally, as it capitalized on reopening, and amplified its omni-channel capabilities.

However, Lauder cautioned that it enters the new fiscal year during a volatile period of “record inflation, supply chain disruptions, strengthening U.S. dollar, risk of a slowdown in many markets globally, and with a strong headwind from the August 2022 COVID-19 restrictions in Hainan,” China.

Net sales are forecast to increase between 3 percent and 5 percent versus the prior-year period. Adjusted diluted earnings per share are expected to increase between 5 percent and 7 percent on a constant currency basis. Analysts had been expecting increases of around 7.6 percent for sales and 10.5 percent on earnings per share.

Earlier this month, Lauder emerged as a surprise candidate to acquire Tom Ford International, according to industry sources, although they cautioned that it’s far from a done deal. For now, both parties are remaining quiet publicly.

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