Estee Lauder Returns to Growth as Online Sales, Asia Pacific Region Drive Results Above Street Views
08:32 AM EST, 02/05/2021 (MT Newswires) -- Estee Lauder (EL) returned to growth in its fiscal second quarter as gains in the Asia Pacific region and faster online sales helped offset fewer in-store customers and store closures from the COVID-19 pandemic, although it guided for lower-than-expected earnings in the current period.
Net sales rose to $4.85 billion from $4.62 billion a year earlier, ahead of the consensus on Capital IQ for $4.49 billion. Non-GAAP earnings were $2.61 a share, or $2.55 in constant currency, up from the year earlier's $2.11. Analysts were looking for a normalized $1.69 a share.
"We are proud to have returned to growth in our second quarter, earlier than we anticipated, demonstrating the enduring success of our multiple engines of growth strategy," said Chief Executive Fabrizio Freda. "We still expect to deliver sequentially improving sales growth each quarter for the remainder of fiscal 2021 as we continue driving recovery."
In the three months through Dec. 31, Estee Lauder's sales from skin care jumped 28% on a reported basis to $2.82 billion while makeup was down 25% to $1.25 billion as consumer preferences continued to shift during the pandemic, with many people still facing limitations on gatherings.
Fragance sales rose 6% to $618 million while hair care fell 5% to $154, million, the New York-based company said on Friday. Sales in Asia Pacific jumped 35% to $1.78 billion while the Americas were down 15% to $1.05 billion. "Online sales growth remained strong in every region as the company and its retailers activated digital strategies to capture consumer demand online," it said.
In the current quarter, Estee Lauder said it sees sales growth of 13% to 14% year-on-year on a reported basis, or 10% to 11% after stripping out the effects of currency. Earnings are pegged between $1.10 and $1.20 on an adjusted basis, while the Street is expecting $1.20 a share in EPS.
The company said it wouldn't provide full-year guidance because of uncertainty around the pandemic. "The company will continue to pursue cost savings, but expects that some expenses will be returning in the coming months including in-store and office costs," Estee Lauder said.
Share repurchases were still suspended in the fiscal second quarter, but the company said they plan to resume it in the second half. Separately, Estee Lauder said it would have a dividend of $0.53 a share on March 15 to investors on record by Feb. 26.
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