(AP) – Aug 14, 2009
NEW YORK — Shares of Estee Lauder Cos. followed the broader markets lower Friday after the cosmetics company posted a fiscal fourth-quarter loss because of hefty restructuring charges and unfavorable exchange rates.
On Thursday, Estee Lauder, which is currently restructuring its business, said it swung to a loss of $17.9 million because of big restructuring charges.
Estee Lauder's restructuring plan includes cutting 2,000 jobs, or 6 percent of the work force, and maintaining a hiring freeze. The company has been hurt by softening consumer spending and deterioration in airline travel because the company sells its products in airports.
Revenue declined 16 percent to $1.68 billion because of unfavorable foreign currency translation and waning consumer discretionary spending.
Deutsche Bank analyst Bill Schmitz Jr., who rates the stock "Hold," said the company is doing what it can to manage expectations.
"The problem with the stock is that much of this is already priced in and newly named Chief Executive Fabrizio Freda has, in short-time, attained rock star status with investors," Schmitz said.
Shares of the company are up 22.1 percent so far this year. In afternoon trading, shares declined $1.73, or 4.6 percent, to $36.08.
Elsewhere on Friday, stocks fell sharply Friday, following news that the Reuters/University of Michigan index of consumer sentiment fell short of expectations for the first part of August. That may indicate consumer spending — which accounts for two-thirds of all U.S. economic activity — will remain tough amid layoffs.
(SOURCE: AP)
