Estée Lauder raised its annual profit forecast and beat Wall Street targets for third-quarter sales as demand for the MAC lipstick maker's higher-priced skincare and fragrances rebounded in the US and Asia Pacific markets.
The results hint at a recovery in demand for beauty and cosmetic products in the US after a long bout of inflation had pressured sales of luxury items in the world's biggest economy.
A pick-up in China demand after several quarters of weakness also underscored customer willingness to splurge on 'affordable luxuries' such as fragrances and make-up products.
The company's third-quarter organic net sales in the Americas grew 1%, with a 3% rise in the Asia Pacific region.
Last month, European rival L’Oréal beat sales expectations and eased concerns about waning demand in the US and China – the two biggest beauty markets.
In an effort to spur demand, Estée has launched newly innovated products like MAC's Maxima Silky Matte Lipstick and Estée Lauder Re-Nutriv in the North American market.
It has also released key products like The Ordinary, MAC's skincare brand Hyper Real and Tom Ford's Café Rose fragrance in markets including China and India to boost sales growth.
Quarterly Highlights
Estée now expects full-year 2024 adjusted profit per share between $2.14 and $2.24, compared with its prior forecast of $2.08 to $2.23.
Net sales rose 5% to $3.94 billion (€3.69 billion), compared with estimates of $3.91 billion (€3.66 billion), according to LSEG data.
However, Estée expects full-year 2024 sales to fall 1% to 2%, compared with its previous forecast of a 1% decrease to a 1% increase.
The Clinique skincare maker said Mainland China net sales grew in the low single digits, but the region faces persistent weakness in the overall prestige beauty space due to subdued consumer confidence and softness during holiday and other key shopping periods.
Fabrizio Freda, president and chief executive officer stated, “With our third quarter results and fourth quarter outlook, we are confident that the second half of fiscal 2024 will prove to be an inflection point for our company performance.
“We expect accelerating momentum in organic sales growth in the fourth quarter, and for operating margin in the second half of fiscal 2024 to not only be stronger than the first half but also to expand from the year-ago period.”
News by Reuters, additional reporting by ESM.
