Beauty Industry

Estee Lauder 3Q Earnings Jump 58 Percent

Estee Lauder 3Q Income Grew 58 Pct, Benefiting From Large Charge in Prior Year-Quarter

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By: Jamie Matusow

Editor-in-Chief

Cosmetics maker Estee Lauder Cos. said Thursday third-quarter earnings jumped 58 percent from last year, when the company incurred a hefty special charge associated with a cost-savings initiative. Net income increased to $93.9 percent, or 45 cents per share, from $59.5 percent, or 28 cents per share, a year ago. The prior-year quarter included a special charge of $51.6 million, or 15 cents per share, associated with Estee Lauder’s cost cuts. Third-quarter earnings from continuing operations rose 48 percent to $93.8 million, or 45 cents per share, from $63.2 million or 29 cents per share. Net sales grew 7 percent to $1.69 billion, from $1.58 billion in the prior year, driven by sales increases in Europe and Asia. Excluding the impact of foreign currency translation, net sales rose 5 percent. Analysts surveyed by Thomson Financial, who typically consider continuing operations, forecast earnings of 46 cents per share on sales of $1.69 billion. Estee Lauder said the company’s skin care, makeup and fragrance categories were adversely impacted by fewer department store doors in the U.S. during the current-year quarter, due to the merger of Federated Department Stores Inc. and The May Department Stores Co. President and Chief Executive William P. Lauder said more than half of sales and operating income was generated outside the United States from a mix of established and emerging markets. Sales in the Americas fell 2 percent, while sales in Europe, the Middle East and Africa jumped 19 percent and revenue in Asia grew 14 percent. The New York-based company also attributed sales weakness in the Americas to lower sales in core brands, which are facing competitive pressures and retailer consolidation.

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