Estee Lauder Beats Profit Expectations, But Sales Come Up Short

Estee Lauder Cos. reported fiscal first-quarter earnings that fell to $294 million, or 79 cents a share, from $309 million, or 82 cents a share, in the same period a year ago. Excluding non-recurring items, such as one-time restructuring charges related to its Leading Beauty Forward initiative, adjusted earnings per share came to 84 cents, beating the FactSet consensus of 80 cents. Revenue increased 1% to $2.87 billion from $2.84 billion, but was just shy of the FactSet consensus of $2.89 billion, as skin care and makeup sales missed expectations. Looking ahead, the company expects fiscal second-quarter adjusted EPS of $1.10 to $1.15, below the FactSet consensus of $1.31, and sees revenue growth of 3% to 4%, while the FactSet consensus implies growth of 6%. "Our small to mid-sized brands were strong contributors to sales as were the travel retail channel and many developed and emerging markets. As expected, this growth was partially offset by continued macro challenges, a decline in retail traffic in U.S. mid-tier department stores, the results of the slowdown in the Middle East, continued softness in Hong Kong, and difficult comparisons with the prior year in the United States and France," said Chief Executive Fabrizio Freda. The stock, which was still inactive in premarket trade, has lost 2% year to date, while the S&P 500 has gained 3.3%.