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Estee Lauder Shares Plunge 4% On Very Weak Outlook

Wednesday, November 2, 2016 4:57
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estee-lauder-el-logoCosmetics and fragrances maker Estee Lauder Companies Inc (NYSE:EL) today posted mixed Q1 earnings and offered a much weaker than expected Q2 and full-year forecast, sending investors for the exits in early trading.

The New York City-based company reported fiscal Q1 adjusted EPS of $0.84, beating out Wall Street’s $0.80 view by four cents. Revenue rose 1.1% from last year to $2.87 billion, missing analysts’ estimate of $2.89 billion.

Looking ahead, EL forecast Q2 EPS of $1.10-1.15, which would badly miss Wall Street’s $1.31 estimate. The company noted that currency weakness would hurt earnings by $0.05 in the current quarter. Q2 net sales are expected to rise 3% to 4%, which would also fall well short of analysts’ view for a 6.4% gain.

For the full year 2017, Estee Lauder’s outlook is for EPS of $3.38-3.44 (analysts expect $3.47), with net sales rising between 6% and 7% (analysts see 5.8%). Excluding currency impacts and one-time charges, the EL expects full-year EPS growth of 8% to 10%.

The company commented via press release:

“Throughout the remainder of the fiscal year, we expect our sales growth to progressively accelerate based on a steady flow of new products, momentum and increased targeted consumer reach for our small and mid-sized brands and M•A•C, and increased social media initiatives to drive brand engagement. We intend to continue to execute on our biggest strategic opportunities and further strengthen our multiple engines of growth to increase profitability and gain share. This includes accelerating our focus on leveraging our stronger engines of growth in makeup, fragrances and key international markets.”

Estee Lauder shares plummeted $3.60 (-4.17%) to $82.70 in premarket trading Wednesday. Prior to today’s report, EL had fallen 2% year-to-date, versus a 3.5% gain the benchmark S&P 500 index during the same period.


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