Estée Lauder's sales and earnings decline

The Estée Lauder Companies reported full year net sales of 15.61 billion dollars, a decrease of 2 percent versus the prior year, while organic net sales decreased 2 percent. The company’s reported net earnings declined to 0.39 billion dollars.

The company said that the fourth quarter net sales of 3.87 billion dollars, a 7 percent increase, despite the slowdown in key areas of the company’s business, primarily mainland China, Asia travel retail and North America. Organic net sales increased 8 percent. Net loss was 284 million dollars and diluted net loss per common share was 79 cents.

The company added that its CEO Fabrizio Freda has announced his intention to retire at the end of fiscal year 2025.

“For fiscal 2025, we anticipate continued declines in the prestige beauty segment in China, mainly reflecting persistent weak sentiment among Chinese consumers. We intend to drive share gains in a market that continues to hold strong long-term promise. In the rest of our business, we are planning to deliver improved performance across both developed and emerging markets,” said Freda.

“On behalf of the entire Board of Directors and the Lauder family, we wish to extend our sincere gratitude to Fabrizio for over sixteen years of devoted service to the company,” said William P. Lauder, the company’s executive chairman.

Highlights of Estee Lauder’s financial performance

The company’s skin care segment net sales decreased 3 percent, primarily due to ongoing softness in overall prestige beauty in mainland China. Excluding the declines in mainland China and the Company’s global travel retail business, reported and organic net sales increased 3 percent.

Makeup net sales decreased 1 percent, driven by the company’s global travel retail business and a benefit in the prior year as a result of changes to M·A·C’s take-back loyalty program, partially offset by growth overall in the markets of EMEA as well as in Latin America and Asia/Pacific. Reported and organic net sales increased low-single digits in the second half, primarily driven by Estée Lauder and Clinique.

Fragrance net sales increased 2 percent, driven by mid-single-digit growth from the company’s luxury brands, which increased double digits in Asia/Pacific and The Americas, partially offset by a decline from Estée Lauder.

Hair care net sales declined 4 percent, due to Aveda in North America, reflecting softness in the salon channel and the Company’s direct-to-consumer distribution channels.

By geography, net sales increased double digits in Latin America and were flat in North America. European net sales decreased 2 percent, due to the challenges in Asia travel retail, partially offset by net sales growth in many markets across the region and net sales in Asia decreased 3 percent, primarily driven by mainland China, partially offset by double-digit growth in Hong Kong SAR and Japan.

Estee Lauder forecasts sales decline for FY25

For the fiscal year 2025, Estee Lauder expects reported and organic net sales to range between a decrease of 1 percent to an increase of 2 percent versus the prior year.

Reported diluted net earnings per common share are projected to be between 2.52 dollars and 2.76 dollars and adjusted diluted net earnings per common share are expected to increase between 7 percent and 15 percent and range between 2.78 dollars and 2.98 dollars on a constant currency basis.

For the first quarter reported and organic net sales are forecasted to decrease between 5 percent and 3 percent, while reported diluted net earnings per common share are projected to be negative 9 cents to flat. Adjusted diluted net earnings per common share are expected to decrease between 89 percent and 17 percent and range between 01 cents and 09 cents on a constant currency basis.

The company will pay a quarterly dividend of 66 cents per share on September 16, 2024 to stockholders of record at the close of business on August 30, 2024.