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Sep 30, 2023
Estee Lauder Q1 2024 Earnings Report
Net sales and diluted EPS declined due to pressures in Asia travel retail and a slower recovery in mainland China, but profitability exceeded expectations.
Key Takeaways
The Estée Lauder Companies reported a 10% decrease in net sales and a significant decline in diluted EPS for the first quarter of fiscal 2024. The results were impacted by challenges in Asia travel retail and a slower recovery of prestige beauty in mainland China, although organic sales grew in the United States and other markets. The company is lowering its full-year outlook due to these headwinds but is accelerating its profit recovery plan.
Net sales decreased by 10%, with organic net sales declining by 11%.
Diluted EPS decreased to $0.09, with adjusted diluted EPS declining to $0.11.
The company is lowering its fiscal 2024 outlook due to slower growth in Asia travel retail and mainland China.
A profit recovery plan is being accelerated and expanded to benefit fiscal years 2025 and 2026.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
The company anticipates progressively improving performance in the second half of fiscal 2024 and plans to strategically invest in consumer-facing activities. They are lowering their outlook to reflect the slower pace of recovery in net sales and margins due to incremental external headwinds.
Positive Outlook
- A return to net sales growth in the second half of fiscal 2024 is expected.
- Full-year gross margin expansion is primarily driven by strategic price increases, discount reductions, and lower obsolescence charges.
- Progressive operating margin improvement is expected throughout the second half of fiscal 2024.
- The company will continue to strategically invest in consumer-facing activities to support recovery and share gains.
- Completion of the first manufacturing facility in Asia, located in Japan, to support the regionalization of the supply chain in the Asia/Pacific region.
Challenges Ahead
- Reported net sales are forecasted to decrease between 11% and 9% for the second quarter of fiscal 2024.
- Organic net sales are forecasted to decrease between 10% and 8% for the second quarter of fiscal 2024.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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