Shares of Estee Lauder (NYSE: EL) rocketed on Monday, after the cosmetics company reported better-than-expected fourth quarter earnings and issued strong guidance thanks in part to robust demand for its skin care brands such as Clinique and La Mer.
Estee Lauder delivered positive results despite concerns of sluggish demand due to the ongoing U.S and China trade war, as well as Hong Kong protests. Higher sales in its Asia Pacific business driven by increased Chinese consumer spending offset lower U.S sales.
As of 2:37 p.m. ET, the stock was up $22.32, or 12.46% to trade at $201.49 a share.
EL Earnings & Outlook
Net income for the quarter ended June 30 fell to $157 million or $0.43 per share from $186 million or $0.49 per share. Adjusted for items such as stock-based compensation, earnings per share increased to $0.64 from $0.61 a year ago.
Revenue rose 9% to $3.59 billion. Analysts surveyed by Refinitiv had expected adjusted earnings of $0.53 per share on sales of $3.53billion.
Adjusted earnings per share for fiscal 2019 rose to $4.82 from $2.95 last year. Full year revenue increased to $14.86 billion from $13.68 billion a year ago.
For fiscal 2019, skin care revenue rose 17% to $6.55 billion topping Wall Street estimate of $6.49 billion. Makeup sales grew 4% to $5.86 billion matching expectations. Fragrance sales fell 1% to $1.8 billion from $1.83 billion last year, while haircare sales increased 2% to $584 million from $570 million a year ago.
Looking ahead, Estee Lauder expects adjusted EPS of between $1.56 to $1.59 in the current quarter. The company also expects first quarter sales to grow 9% to 10%. Wall Street predicts it will post first quarter revenue of $3.75 billion, indicating a 6.5% rise.
For fiscal 2020, the company expects adjusted EPS of between $5.90 and $5.98. Full year revenue is expected to rise 7% to 8%. Analysts expect a 6.4% growth.
Estee Lauder CEO Comments
Estee Lauder President and Chief Executive Fabrizio Freda said, “Fiscal 2019 was an outstanding year for our Company. We achieved strong net sales gains across our business, fueled by investments in our strategic priorities, including improved data analytics that helped power our innovation and digital marketing. Our winning strategy led to continued share gains in global prestige beauty.”
“With savings from our Leading Beauty Forward initiative and cost discipline throughout the organization, we grew profit far ahead of our net sales growth, while also investing in our strategic priorities,” added Freda.
Estee Lauder Inc. Profile
Estée Lauder is a leading global manufacturer of skin care (41% of fiscal 2018 sales), makeup (41%), fragrance (13%), and hair care (4%) products. In addition to its namesake brand, its portfolio includes Clinique, Origins, MAC, Bobbi Brown, La Mer, and Aveda.
The firm also licenses fragrances and cosmetics sold under designer brand names, like Tommy Hilfiger, Michael Kors, and Tom Ford. In fiscal 2018, Estée Lauder generated 41% of sales and over two thirds of its operating income in Europe, the Middle East, and Africa and 37% of sales in the Americas. – Warrior Trading News
