Estée Lauder Companies Inc. (EL) Friday reported a higher second-quarter profit, as sales rose 10 percent, with growth in all of its product categories and geographic regions, particularly in Asia/Pacific. Adjusted earnings matched analysts' expectations, while revenues missed their view. For the full year 2012, the company reduced its earnings forecast, and the third quarter earnings outlook came in below Street view. Currently shares are down about seven percent.
In the second quarter, net earnings attributable to the company increased to $396.7 million or $1.00 per share from $343.9 million or $0.86 per share in the previous year. The company noted that the recent-quarter results included returns and charges associated with restructuring activities of $0.01 per share.
Excluding item, adjusted earnings were $401.1 million or $1.01 per share, compared to $355.8 million or $0.89 per share in 2010. On average, 19 analysts polled by Thomson Reuters estimated earnings of $1.01 per share for the quarter. Analysts' estimates usually exclude special items.
Net sales for the quarter climbed 10 percent to $2.74 billion from $2.49 billion reported a year ago. Analysts estimated revenues of $2.75 billion for the quarter.
Skin Care products sales improved 13 percent and Makeup products sales were up 11 percent from the prior year. Hair Care products sales were $121.4 million, up 9 percent from the previous year. The company said it experienced strong sales gains in every region, including the U.S. Sales increased 21 percent in Asia/Pacific.
Gross margin expanded 150 basis points and operating margin increased 50 basis points, before restructuring charges.
Fabrizio Freda, president and chief executive officer of the company said, "Our sales and profits this holiday season came in higher than planned and demonstrate the vibrancy of our brand portfolio in solid as well as soft economies. Our results were again broad based across brands, regions, categories and channels."
Looking ahead to the third quarter, the company projected earnings in the range of $0.27 to $0.31 per share, and adjusted earnings to be between $0.28 and $0.32 per share. Net sales are anticipated to increase between 4 and 5 percent in constant currency.
Analysts' expect the company to earn $0.41 per share, on revenues of $2.27 billion for the third quarter.
For fiscal 2012, the company now expects earnings to between $2.09 and $2.19 per share. Adjusted earnings are expected to be between $2.16 and $2.23 per share. Earlier adjusted expectation was between $4.25 and $4.45.
The company also increased its local currency sales forecast to 9 to 10 percent, from the previous sales growth forecast of 8 to 10 percent. Market consensus is $2.26 per share.
"Our underlying business continues to grow behind increased advertising and merchandising, despite softness in certain countries and currency headwinds," Freda added.
EL closed Thursday's regular trading at $58.85 on the NYSE. In the pre-market activity, the shares are down 6.58 percent.
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