Key Takeaways
- Estee Lauder ended its fiscal 2024 with mixed results as it faced a drop in demand in China and North America while skin care product sales jumped.
- The beauty products maker posted a surprise quarterly loss, but adjusted earnings and revenue exceeded forecasts.
- Estee Lauder said CEO Fabrizio Freda will be retiring at the end of fiscal 2025.
Estee Lauder (EL) shares edged higher in intraday trading Monday after the beauty products maker ended a tough fiscal 2024 by posting mostly better-than-expected results on increased demand for its skin care products.
In addition, the firm said Chief Executive Officer (CEO) Fabrizio Freda had informed the board that he will be retiring at the end of fiscal 2025. It added that the board was “well advanced” in its succession planning process.
Estee Lauder Posts Surprise Loss But Revenue, Adjusted EPS Beat
The company behind its eponymous brand, Clinique, Aramis, and more reported a fiscal 2024 fourth-quarter net loss of $284 million, while the average of analysts surveyed by Visible Alpha was for a profit of $142.7 million. However, adjusted earnings per share (EPS) were $0.64, with revenue rising 7% year-over-year to $3.87 billion, and both exceeded forecasts. The boost in revenue came even with a slowdown in some key markets, including China and North America.
Organic net sales gained 8%, lifted by a sales of skin care items, which jumped 13% to $2.04 billion. The company said those were driven by its global travel retail business. Sales gains also came from markets in Europe, the Middle East, and Africa, which had a 32% increase to $1.65 billion.
Organic sales in The Americas slid 5% to $1.01 billion, “with declines in department stores which offset growth in other distribution channels, a strong competitive environment and the overall slowdown in growth in prestige beauty in North America.” Organic sales in the Asia/Pacific region dropped 4% to $1.21 billion, “primarily driven by the decline in mainland China.”
CEO Sees ‘Continued Declines in the Prestige Beauty Segment in China’
Freda explained that “we achieved our organic sales outlook and exceeded expectations for profitability, closing a difficult year.” Estee Lauder also noted full-year revenue fell 2% because of the tumble in China and Asia travel retail. Freda added, “We anticipate continued declines in the prestige beauty segment in China, mainly reflecting persistent weak sentiment among Chinese consumers.”
Shares of Estee Lauder edged higher to $95.25 as of 11:35 a.m. ET Monday but have lost about 35% of their value this year.