By Anuja Bharat Mistry (Reuters) -Estee Lauder beat Wall Street estimates for first-quarter sales and profit on Thursday on strong demand for its Le Labo and Tom Ford fragrances and an uptick in China demand, in fresh signs the beauty company’s turnaround push is starting to work. In the midst of a turnaround under CEO […]
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Estee Lauder beats quarterly estimates on robust growth in fragrance business
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By Anuja Bharat Mistry
(Reuters) -Estee Lauder beat Wall Street estimates for first-quarter sales and profit on Thursday on strong demand for its Le Labo and Tom Ford fragrances and an uptick in China demand, in fresh signs the beauty company’s turnaround push is starting to work.
In the midst of a turnaround under CEO Stephane de La Faverie, Estee Lauder has been ramping up luxury launches, streamlining its supply chain and boosting innovation and marketing efforts, which has helped the cosmetics maker revive sliding sales.
The company, which warned of a $100 million tariff hit in August, has been shifting production closer to key markets as part of its plans to navigate the ever-shifting trade policies that have crippled the broader retail industry.
The Clinique, M.A.C, and Jo Malone London owner saw quarterly organic net sales rise 3%, after falling 5% a year ago.
“We are seeing improvement in consumer sentiment in China, though it remains subdued and has yet to fully recover from historical lows,” the CEO said in a conference call.
Estee said it expects stronger performance in the first half, with favorable comparisons in Asia Pacific and China.
Last week, L’Oreal also saw improvement in China, while luxury brands including LVMH and Hermes tentatively indicated a revival in China.
Estee Lauder’s fragrance category saw quarterly organic sales growth of 13%, while sales were up 9% in its China and Asia Pacific regions.
“With the worst of China’s luxury slump likely in the rearview mirror, the company saw a rebound from very poor prior-year comps, but (it) is poised for a longer-term return to growth,” said Sky Canaves, analyst with eMarketer.
The company, which maintained its annual forecasts, continued to see sales slow down in the Americas.
Shares of Estee fell about 2% in morning trading amid broader market declines.
The company posted quarterly sales of $3.48 billion, compared with analysts’ estimate of $3.38 billion, according to data compiled by LSEG.
Its adjusted profit of 32 cents per share for the quarter ended September 30 largely beat an estimate of 18 cents per share.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai)