Estée Lauder 3Q Earnings Double Driven By 10% Sales Jump

Strong sales growth overseas and in the U.S., coupled with a stringent cost cutting plan, helped to double Estée Lauder Companies' third quarter profits, according to an article in Crain's New York Business.

Third quarter earnings rose more than 50% to $57.5 million vs. $27.2 million from the previous year. E.P.S. doubled to $.28 compared to $.14 E.P.S. last year. Excluding one-time costs, profit was $.34 per share, beating Wall St. estimates of $.32 per share.

Net revenue jumped 10% to $1.86 billion from $1.70 billion a year earlier, coming under analysts' prediction of $188 million in sales.

Skin care was the best performing product category, with 15.6% growth at $819.8 million, bolstered by strong sales of EL's Advanced Night Repair Synchronized Recovery Complex. Particularly encouraging are the sales numbers for the La Mer skin care line, one of the company's Prestige lines with prices starting at $100, which posted double-digit sales with strength in North America.

President and CEO Fabrizio Freda said in a conference call with analysts, "We believe that consumers are beginning to reconsider luxury products. It certainly bodes well for our entire Prestige portfolio".
The international launch of Pure DKNY and the rollout of Coach Signature fragrances to the U.S. bolstered EL's Fragrance category to an 18.7% sales increase of $222.8 million. Makeup sales rose 2.3%  to $710.8 million on the strength of M*A*C and Bobbi Brown cosmetic brands.

Regionally, the biggest rise was in Asia/Pacific to $371.1 million in sales, an increase of 20.3%. In Europe, the Middle East, and Africa, sales jumped 13.5 to $662 million. Sales in the Americas rose 3.1% to $829.1 million.

In an interview with WWD, Mr. Freda, says the company will continue to invest in marketing spending, and concentrate on brands, opportunites, regions and beauty concerns that are most important to the company,  Mr. Freda also said growth through acquisition isn't off the table:

“We’ve always said [mergers and acquisitions] are part of our strategy,” Freda told WWD, adding the company will pursue opportunities that widen its reach by category, distribution channel and in geographic scope. “Skin care and Asia are our priorities, but we also will look more broadly,” said Freda. (SOURCE: WWD)

For FY2010, EL forecasted sales to grow between 4% and 5% in constant currency. Earnings, excluding one-time items, are projected to be between $2.65 and $2.75 per share.

(Photo: EsteeLauder.com)

Estee Lauder Shares Decline Following 4th-Quarter Loss

Estee Lauder declines following 4th-quarter loss

(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)

Executive Shuffle Complete at Estée Lauder

Estée Lauder Companies Inc. has announced the completion of its senior management succession plan, which will put into motion the company's four-year makeover strategy.

Chief Operating Officer, Fabrizio Freda, 51, will take over as Chief Executive Officer, while current CEO, William P. Lauder, 48, will become Executive Chairman and serve as Chairman of The Estée Lauder Companies’ Board of Directors. Leonard Lauder, the current Chairman of the Board will remain on the board and serve as Chairman Emeritus. Mr. Freda will also join the board.

The appointments will take effect on July 1, 2009 at the start of the company's fiscal year 2010.

It'll be interesting to see how Mr. Freda will maneuver throughout the EL corporate culture. He's a non-Lauder, only the second to take the helm of the ship, and surrounded by Lauder family members either on the board or employed in the company. Will they allow Mr. Freda the freedom to implement new strategies, such as implementing market research strategies he learned during his tenure at Proctor & Gamble? Stay Tuned....