Estee Lauder (EL 140.22, +4.28, +3.15%) was little changed in
pre-market action, as cautious guidance offset better than expected results.
The manufacturer of cosmetics, fragrances, and hair care products reported above-consensus fourth quarter earnings of $0.61/share on a 13.9% year/year increase in revenue to $3.29 bln, which was also ahead of expectations.
However, the company issued below-consensus guidance for the upcoming quarter and the fiscal year. Estee Lauder expects first quarter earnings between $1.18/share and $1.22/share while revenue is expected between $3.44 bln and $3.47 bln. For the full year, the company expects earnings between $4.62/share and $4.71/share on revenue between $14.23 bln and $14.37 bln. New accounting standards are expected to negatively impact comparability while dollar strength is expected to weigh on the company's growth. Even with the light guidance, the company expects to grow at a faster pace than the overall industry.
Returning to fourth quarter results, the company saw revenue growth across all product segments and geographies. Skin care revenue grew 28.6% to $1.38 bln with sales growing by double digits in all geographic locations. The company’s travel retail channel, which tallies business serving travelers and duty-free environments such as airports and cruise ship boutiques, and its regional operations in China and in Europe, the Middle East, and Africa were at the forefront of growth. Segment operating income grew 57% to $292 mln thanks to higher net sales, especially of the company’s eponymous brand as well as La Mer.
Makeup revenue grew 3.6% to $1.36 bln while operating income decreased 76.8% to $35 mln. The decline was due to lower operating results from the MAC brand, which reflected investments to support turnaround efforts in North America, stock adjustments in the Middle East, and higher advertising expenditures in Asia and the Pacific.
Fragrance revenue increased 11.3% to $403 mln while operating loss narrowed to $19 mln from $42 mln one year ago. Revenue growth was reported in all geographic regions.
Hair Care revenue grew 7.9% to $151 mln while operating income increased 46.2% to $19 mln. The launch of new Aveda products contributed to overall growth.
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