Estée Lauder
stock was sliding in premarket trading after the makeup company beat expectations, but issued guidance below expectations.
The forecast for the year ending June 2024 was weaker than anticipated. Estée Lauder (ticker: EL) said adjusted earnings per share will range between $3.50 and $3.75, below consensus estimates for $4.88. Sales will increase between 5% and 7%.
Shares were down 5% to $154 in premarket trading. The stock has shed close to 35% this year.
In the first quarter,
Estée Lauder
is expecting to post an adjusted loss of between 29 and 19 cents per share, worse than projections for earnings of 98 cents per share.
“For fiscal year 2024, we expect to return to organic sales growth and deliver sequentially improving margin throughout the year, leveraging the strong equity and desirability of our brands,” said CEO Fabrizio Freda in a statement. “We are focused on driving momentum in markets that are thriving and re-accelerating growth in North America.”
In the recent fourth quarter Estée Lauder posted net sales of $3.61 billion, rising from a year earlier and beating Wall Street’s call for $3.49 billion. The company’s travel retail business in Asia was behind the sales beat as pandemic-era restrictions loosened up.
Adjusted earnings per share of 7 cents also came in ahead of projections for a four cent loss, according to FactSet estimates.
Stifel analyst Mark Astrachan believes Estée Lauder’s share price performance largely comes down to whether investors view initial guidance as achievable. His sense is that it might be difficult.
“Travel retail is expected to remain pressured as bloated channel inventories are reduced, weighing on overall sales growth,” he wrote in a note to clients Friday. “Additionally, U.S. weakness is notable given volatility in the market in recent years, with significant share loss and no quick fix likely, in our view.”
Astrachan has a Buy rating on the stock.
Write to Emily Dattilo at [email protected] and Sabrina Escobar at [email protected]
Read the full article here
