Estée Lauder delivers Q3 sales and earnings growth

For the third quarter, The Estée Lauder Companies reported net sales of 3.94 billion dollars, an increase of 5 percent with organic net sales increase of 6 percent due to double-digit growth in Europe, the Middle East & Africa (EMEA), driven by stronger sales in Asia travel retail.

The company’s third quarter net earnings rose to 330 million dollars and diluted net earnings per common share to 91 cents. Adjusted diluted net earnings per common share for the third quarter increased to 97 cents.

Commenting on the trading results, Fabrizio Freda, the company’s president and CEO said: “For the third quarter of fiscal 2024, we delivered our organic sales outlook, exceeded expectations for profitability and continued to improve working capital.”

Highlights of Estée Lauder’s Q3 performance

The company said in a release that skin Care net sales increased 9 percent, due to growth in every geographic region and double-digit growth in EMEA was driven by stronger sales in Asia travel retail. Makeup net sales increased 4 percent, benefiting from growth in the company’s travel retail business as well as strong double-digit growth in Latin America and Korea.

Fragrance net sales grew 1 percent, while net sales from luxury brands increased mid-single digits, reflecting growth across all geographic regions, partially offset by a decline from Estée Lauder. Hair Care net sales decreased 4 percent, driven by Aveda reflecting softness in the company’s North America salon channel.

Geographically, net sales increased 1 percent, frew double digits in Latin America and remained flat in North America. Europe, the Middle East & Africa net sales increased 12 percent, due to the travel retail business, reflecting double-digit growth in skin care and makeup. Asia/Pacific net sales increased 3 percent led by Hong Kong SAR, mainland China and Japan, reflecting growth in skin care and fragrance.

For the nine months, the company’s net sales of 11.74 billion dollars, decreased 5 percent, while organic net sales also decreased 5 percent, driven by Asia travel retail and mainland China. Net earnings for nine months dropped to 674 million dollars and diluted net earnings per common share were 1.87 dollars.

Estée Lauder projects profit recovery plan to generate incremental profit

For the fourth quarter, the company added, reported net sales are forecasted to increase between 5 percent and 9 percent versus the prior-year period. Organic net sales are forecasted to increase between 6 percent and 10 percent.

The company expects reported diluted net earnings per common share to be between 11 cents and 22 cents, excluding restructuring and other charges and adjustments, diluted net earnings per common share to be between 18 cents and 28 cents, while adjusted diluted net earnings per common share are expected to increase over 100 percent and range between 19 cents and 29 cents on a constant currency basis.

For the full year reported net sales are forecasted to decrease between 3 percent and 2 percent versus the prior-year period, while organic net sales are forecasted to decrease between 2 percent and 1 percent.

Reported diluted net earnings per common share are projected to be between 1.96 dollars and 2.09 dollars. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between 2.14 dollars and 2.24 dollars and adjusted diluted net earnings per common share are expected to decrease between 36 percent and 33 percent on a constant currency basis.

“We have also made progress across all work streams for the profit recovery plan, setting the stage to deliver its 1.1 to 1.4 billion dollars of incremental operating profit in fiscal years 2025 and 2026 while also generating funds to reinvest into our brands and consumer-facing initiatives to accelerate sustainable sales and profit growth as a faster and leaner organisation,” added Freda.

The company will pay a quarterly dividend of 66 cents per share on June 17, 2024 to stockholders of record at the close of business on May 31, 2024.