Esté e Lauder Offers Downbeat View
August 19 2016 - 9:30AM
Dow Jones News
Esté e Lauder Cos. gave a disappointing outlook for its new
business year as the cosmetics company pushes through restructuring
plans, grapples with falling foot traffic at many department stores
and faces weakness in certain foreign markets.
The full-year view follows quarterly earnings and revenue
results that fell short of expectations. Shares fell 3.3% in
premarket trading.
For the year ending in June 2017, the company expects to report
$3.38 to $3.44 in per-share profit, excluding restructuring
charges. The range is short of the $3.53 analysts have projected.
Sales will rise 6% to 7%, the company said, translating to roughly
$12 billion and below the $12.8 billion average analyst
estimate.
The New York makeup company, which owns higher-end lines
including Bobbi Brown, Smashbox and Clinique, set out in May a
range of measures it would implement over the next five years to
boost profitability. Among the moves, Esté e Lauder said it would
cut about 2.5% of its global workforce, strengthen its digital
business and invest more to grow its makeup brands.
The company has acknowledged shifting consumer preferences in
cosmetics and is struggling with a strong U.S. dollar's effect on
pricing in international markets and tourist spending, and it said
Friday that social and political instability in countries such as
France and in some emerging markets has been an additional
headwind.
Meanwhile, Esté e Lauder is feeling the heat from a shifting
retail landscape. Department stores—where many Esté e Lauder
counters are found—and other retailers across the spectrum have
reported sliding sales as shoppers increasingly opt to buy online
and spend less time in stores. Last week, Macy's Inc. said it would
shut 100 more stores, or 15% of its store base, while Nordstrom
Inc. posted its first quarterly sales decline in seven years.
In its latest quarter ended in June, the company said total
sales rose 4.8% from a year earlier, to $2.65 billion. Analysts
were looking for a bigger increase to $2.81 billion. A 10% jump in
makeup sales paced the increase and offset a 2% decline in its
fragrance category.
Over all, Esté e Lauder reported a profit of $93.5 million, or
25 cents a share, down from $153 million, or 40 cents a share, a
year earlier. Excluding restructuring charges and other items,
earnings edged up to 43 cents from 40 cents. Analysts predicted an
adjusted 48 cents a share.
For the current quarter ending in September, the company said it
expects to report 73 cents to 77 cents in adjusted profit per
share, well below the $1.02 average analyst estimate.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
August 19, 2016 09:15 ET (13:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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