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Dec 31, 2023
Estee Lauder Q2 2024 Earnings Report
Net sales decreased and diluted EPS declined due to challenges in Asia travel retail and softness in mainland China, but exceeded adjusted diluted EPS outlook and revised FY24 outlook to narrow net sales range and lower adjusted diluted EPS for tax, while reaffirming operating profitability.
Key Takeaways
The Estée Lauder Companies reported a 7% decrease in net sales to $4.28 billion and a decline in diluted EPS to $0.87 for the second quarter of fiscal 2024. Organic net sales fell by 8%, primarily due to challenges in Asia travel retail and ongoing softness in mainland China. However, the company exceeded its adjusted diluted EPS outlook and is expanding its Profit Recovery Plan with a restructuring program.
Delivered organic net sales, as expected, and exceeded adjusted diluted EPS outlook.
Revising FY24 outlook to narrow net sales range and lower adjusted diluted EPS for tax, while reaffirming operating profitability.
Further expands its Profit Recovery Plan with the announcement of a restructuring program.
Made progress in reducing inventory in the trade of Asia travel retail, improving working capital, realizing higher levels of net pricing, and managing expenses with discipline.
Estee Lauder
Estee Lauder
Estee Lauder Revenue by Segment
Estee Lauder Revenue by Geographic Location
Revenue by Segment
Skin Care Revenue
CapyFin.comMakeup Revenue
CapyFin.comFragrance Revenue
CapyFin.comHair Care Revenue
CapyFin.comOther Revenue
CapyFin.comRevenue by Geographic Location
The Americas Revenue
CapyFin.comEMEA Revenue
CapyFin.comAsia/Pacific Revenue
CapyFin.com Forward Guidance
The Company is forecasting reported net sales to increase between 3% and 5% and organic net sales are forecasted to increase between 4% to 6% for the third quarter of fiscal year 2024. Reported diluted net earnings per common share are projected to be between $.35 and $.46.
Positive Outlook
- A return to double-digit organic net sales growth in the second half of fiscal 2024.
- Following meaningful progress made during the first half of fiscal 2024, continued reduction of retailer inventory in Asia travel retail to achieve retailers’ target levels by the end of the fiscal 2024 third quarter.
- Clinique doubling down in Active Derma with new campaigns starting in the United States and the United Kingdom in the second half of fiscal 2024.
- Stronger operating margin in the second half of fiscal 2024 compared to the first half, leveraging the return to organic net sales growth.
- Improvements in the Company’s inventory balance and days to sell for fiscal year 2024.
Challenges Ahead
- An unfavorable impact from foreign currency translation of 1%.
- A 1% headwind due to the potential risks of further business disruptions in Israel and other parts of the Middle East.
- Assumes an incremental in-period charge in cost of goods sold.
- The potential risks of further business disruptions in Israel and other parts of the Middle East are expected to have a dilutive impact to net earnings per share of $.03.
- The net impact from the increase in the Company’s net interest expense and the decrease in its effective tax rate compared to the elevated rate in the prior-year period is expected to dilute net earnings per share by $.02.
Revenue & Expenses
Visualization of income flow from segment revenue to net income