Key Takeaways
- Estee Lauder reported fiscal third-quarter profit and revenue that beat estimates, but lowered its revenue guidance, warning of ongoing macroeconomic pressures, including in China.
- The beauty products maker projected 2024 sales will be down 2% to 3%, versus its earlier outlook of a 1% drop to a 1% gain.
- Shares fell in intraday trading Wednesday following the earnings release, sending them into negative territory for 2024.
Estee Lauder (EL) shares dropped over 14% in intraday trading Wednesday after the cosmetics company lowered its full-year revenue guidance citing macroeconomic pressures, especially in China.
Macroeconomic Headwinds, China Impact
The maker of Clinique, Aramis, and its eponymous beauty products brands projected full-year sales will decline 2% to 3%, compared to its previous estimate of a drop of 1% to a gain of 1%. The company pointed to “ongoing macroeconomic headwinds,” which included “continued softness in overall prestige beauty in mainland China, and geopolitical volatility in some areas around the world.”
The company has struggled to build back demand in China, which was significantly impacted by extended COVID-19 lockdowns.
However, Estee Lauder boosted and narrowed its outlook for adjusted earnings per share (EPS) to $2.14 to $2.24, up from the earlier forecast of $2.08 to $2.23.
Q3 Results Beat Analysts’ Estimates
The reaction to Estee Lauder’s revenue guidance overshadowed better-than-expected results for the fiscal third quarter of 2024. Diluted EPS came in at 91 cents, more than double the 43 cents reported in the year-ago period and above estimates compiled by Visible Alpha. Revenue rose 4.9% to $3.94 billion, also better than expected.
Skin care sales were up 8% to $2.06 billion, while makeup sales gained 3% to $1.14 billion. Sales were little changed for fragrance at $575 million, and fell 3% for hair care to $143 million.
By region, sales in North America advanced 3% to $1.12 billion, while they jumped 12% to $1.65 billion in the Europe, Middle East, and Africa segment. They were down 1% to $1.18 billion in the Asia/Pacific segment.
Estee Lauder shares were down 14.1% at $126.09 as of 12:45 p.m. ET Wednesday following the release, putting them into negative territory for the year.