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DJ Estee Lauder Plans to Reallocate Resources to E-Commerce From Unproductive Stores

· 02/05/2021 07:24

By Dave Sebastian

Estee Lauder Cos. said it plans to reallocate resources from unproductive brick-and-mortar stores as it acknowledged the acceleration of e-commerce during the Covid-19 pandemic.

The cosmetics company on Friday said it sees continued recovery from the pandemic in fiscal years 2021 and 2022, and it plans to resume share buybacks in the second half of the fiscal year as it posted a surprise sales gain for the second quarter.

The company said it plans to return to its long-term targets of 6% to 8% sales growth, half a percentage point of operating-margin expansion and double-digit per-share earnings growth after the recovery period.

Estee Lauder said it plans to increase manufacturing capabilities, expand fulfillment capabilities for the online business and invest in growth in Asia Pacific for fiscal 2021.

For the third quarter, the company expects earnings of 99 cents a share to $1.11 a share, or between $1.10 a share and $1.20 a share when excluding restructuring and other charges. It sees third-quarter sales rising 13% to 14% from the same period last year, or up 10% to 11% excluding the effect of currency.

The company didn't provide specific full-year guidance due to the recent surge in Covid-19 infections and the pandemic's uncertainty, it said. Estee Lauder said it would continue cutting costs but expects certain expenses such as in-store and office costs to return in coming months. It also plans to spend money on recovery efforts, such as for advertising, online strategy and supply chain, the company said.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

February 05, 2021 07:24 ET (12:24 GMT)

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