Estee Lauder Expects Strong Annual Profit on Robust Fragrance and China Sales
Estee Lauder's Financial Performance and Strategic Initiatives
Annual Profit Forecast and Market Drivers
Aug 19 (Reuters) - Estee Lauder forecast annual profit above Wall Street estimates on Wednesday, betting on sustained demand for premium fragrances and strong performance in key market China, as gains from its CEO's turnaround strategy continue to build.
Stock Performance and Quarterly Sales
Shares of Clinique and M.A.C owner, whose merger talks with Jean Paul Gaultier-owner Puig collapsed in May, rose nearly 8% in premarket trading after it also topped quarterly sales expectations.
Consumer Trends and Product Demand
Affluent and Younger Customer Spending
Resilient spending by affluent and younger customers, especially on trendy items, has helped boost demand for the cosmetics maker's luxury fragrances and skincare products such as Le Labo and Balmain Beauty.
CEO Strategy and Innovation
To sustain that momentum, Estee has accelerated premium product launches, streamlined supply chain and ramped up investments in innovation and marketing under CEO Stephane de La Faverie's "Beauty Reimagined" strategy.
Luxury Fragrance Growth
Its luxury fragrance brands Le Labo and Tom Ford drove 10% growth in net sales during the fourth quarter. Le Labo's classic collection, which sells 50 milliliter perfumes for $250, benefited from increased distribution channels and targeted shopper expansion.
Financial Adjustments and Global Impacts
Tariffs, Refunds, and Cost Management
Estee also said it has recorded a $38 million benefit in cost of sales from refunds received during the fourth quarter of fiscal 2026, which partially offset the full-year gross impact of incremental tariffs of $102 million, primarily recorded in cost of sales.
Geopolitical Disruptions
The refunds helped the company to counter disruptions stemming from the Middle East conflict, which had a dilutive impact to fiscal 2026 net earnings per share.
Outlook and Analyst Expectations
Fiscal 2027 Earnings Guidance
Estee expects fiscal 2027 adjusted earnings per share in the range of $3.10 to $3.35, with its midpoint above analysts' estimates of $3.18, according to data compiled by LSEG.
Quarterly Sales Results
Its fourth-quarter sales of $3.63 billion were also ahead of the estimate of $3.54 billion.
(Reporting by Anuja Bharat Mistry in Bengaluru and Arriana McLymore in New York City; Editing by Shilpi Majumdar)
