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UPDATE 2-Estee Lauder posts surprise revenue growth, beats profit on strong China demand

· 02/05/2021 07:06
UPDATE 2-Estee Lauder posts surprise revenue growth, beats profit on strong China demand

Adds details on cost-cutting, shares, CEO comment

- Estee Lauder Cos Inc EL.N on Friday reported a surprise rise in second-quarter sales and handily beat profit estimates, as the M.A.C brand owner benefited from a strong demand for its premium skin-care products and fragrances in China.

Shares of the New York-based company, whose skin-care segment posted a 28% growth on higher demand for its La Mer and Clinique labels, were up 5% in premarket trade. The stock gained 29% in 2020.

A sustained strong demand for skin-care products, including serums and moisturizers, from customers keeping up their self-care routine has helped Estee Lauder offset the impact of weak demand for traditional make-up items such as foundation and lipsticks.

"The powerful engines of skin care, fragrance, Asia/Pacific, travel retail in Asia, and global online fueled our performance despite the increasing complexity of the pandemic," Chief Executive Fabrizio Freda said.

Sales in its Asia-Pacific market rose 35% in the second quarter, boosted by a robust demand during Tmall's Singles' Day shopping event in China, helping Estee Lauder post its first growth in overall revenue since the onset of the pandemic.

The Clinique brand owner has been controlling its advertising and promotional costs, while focusing on its e-commerce business to combat the pandemic's fallout on its brick-and-mortar stores.

Estee Lauder also said it planned to resume its share buyback program during the second half of the fiscal year.

Net sales rose to $4.85 billion from $4.62 billion a year earlier, beating a Refinitiv IBES estimate of $4.49 billion.

Excluding items, Estee Lauder earned $2.61 per share, much higher than analysts' estimate of $1.69.

The company, however, forecast third-quarter net sales to grow between 13% and 14% as makeup sales drag, while analysts on average estimate net sales to rise about 15.3% to $3.86 billion, according to IBES data from Refinitiv.

(Reporting by Aditi Sebastian and Praveen Paramasivam in Bengaluru; Editing by Vinay Dwivedi)

((aditi.sebastian@thomsonreuters.com;; within U.S. +1 646 223 8780, outside U.S. +91 806 182 2780;))