Core Insights - Estee Lauder's total revenue for the quarter ending September 2024 was $3.36 billion, reflecting a decline of 4.5% year-over-year [4] - The company's international operations are crucial for its financial health and growth trajectory, with significant contributions from regions like Asia/Pacific and Europe, the Middle East & Africa [2][3] Revenue Breakdown - Asia/Pacific contributed $944 million, accounting for 28.09% of total revenue, which was a surprise decline of -3.01% compared to analyst expectations of $973.3 million [5] - Europe, the Middle East & Africa generated $1.23 billion, representing 36.60% of total revenue, also falling short of expectations by -2.55% [6] Future Revenue Projections - Analysts project total revenue for the current fiscal quarter to reach $3.99 billion, a decline of 6.7% from the same quarter last year, with Asia/Pacific expected to contribute $1.41 billion (35.2%) and Europe, the Middle East & Africa $1.68 billion (42%) [7] - For the full year, total revenue is anticipated to be $14.97 billion, down 4.1% from the previous year, with contributions from Asia/Pacific and Europe, the Middle East & Africa expected to be $4.84 billion (32.4%) and $6.33 billion (42.3%) respectively [8] Market Context - The dependency on global markets presents both opportunities and risks for Estee Lauder, making the monitoring of international revenue trends essential for predicting future performance [9] - In the current geopolitical climate, analysts are closely observing these trends to adjust earnings predictions, which are influenced by the company's performance in its home market as well [10]

Core Viewpoint - Estée Lauder has faced significant challenges in 2024, with a stock decline of over 50% while the S&P 500 has risen by 20%, attributed to falling sales and profits [1][5]. Financial Performance - In Q1'25, Estée Lauder reported revenue of $3.4 billion, matching consensus estimates, but this represented a 5% year-over-year decline on an organic basis [2][3]. - The company experienced declines across various product categories: Skin Care sales fell by 8%, Hair Care by 6%, Makeup by 2%, and Fragrance by 1% [3]. - Geographically, sales in EMEA decreased by 4%, Americas by 1%, and Asia Pacific by 11%, with the decline in Asia Pacific largely due to weak demand in mainland China [3]. Profitability Metrics - The adjusted operating margin for Q1'25 was reported at 4.3%, reflecting a 120 basis points increase year-over-year [4]. - Adjusted earnings per share (EPS) stood at $0.14, up from $0.11 in the prior-year quarter [4]. Future Outlook - Estée Lauder has withdrawn its 2025 outlook, which previously anticipated a sales decline of 1% to 2% compared to 2024 and adjusted EPS in the range of $2.75 to $2.95 [4]. - Current forecasts suggest a top line of approximately $15 billion, indicating a 4% year-over-year decline, with adjusted EPS expected to drop to $1.86 in fiscal 2025 [4]. Stock Performance and Valuation - Following the Q1 results, Estée Lauder's stock declined by 25%, primarily due to concerns over the situation in China and its impact on earnings [5]. - The stock's valuation is estimated at $80 per share, suggesting a 20% upside from its current level of $66, based on a projected P/E ratio of 43x [5][6]. - The stock has seen a dramatic decline of 75% from $255 in early January 2021 to around $65 now, contrasting with a 55% increase in the S&P 500 during the same period [7].

These four poorly performing tickers are hinting at broader, bigger-picture problems that investors will want to altogether avoid.Generally speaking, when you buy a stock doesn't really matter if it's a good company and you are investing with a long-term mindset. But that doesn't mean it doesn't help your overall returns to buy a stock when it's trading at a discount. Doing so helps you get more bang for your investment buck.However, not all discounted stocks are necessarily worth buying. There's always mor ...

Core Insights - Estée Lauder has reported weak quarterly earnings, leading to a significant decline in its stock price, which has dropped 23% following the announcement of disappointing results for Q1 of fiscal year 2025 [1] - The company is facing demand pressures, particularly in China, prompting a reduction in its quarterly dividend payment [1] Group 1: Financial Performance - The Asia Pacific region, crucial for Estée Lauder, has seen a decline in revenue, with Q1 revenue dropping 11% year over year to $944 million [2] - Over the past four years, Q1 revenue in Asia Pacific has decreased from $1.33 billion to $944 million, indicating a troubling trend for the company [3] - Estée Lauder's operating earnings have fallen 57% from all-time highs, contributing to an 82% decline in stock value over the last few years [4] Group 2: Dividend Changes - The management has decided to cut the dividend payout from $0.66 to $0.35, nearly halving the previous amount, which reflects the company's current struggles [5] - The new dividend yield is approximately 2% based on the reduced payout ratio, which is concerning for investors [5] Group 3: Investor Sentiment - Investors typically react negatively to dividend cuts, especially in the context of a struggling business, signaling a lack of confidence in a quick recovery [6] - Despite the challenges, Estée Lauder possesses strong brands like Tom Ford Beauty and Clinique, which could support a potential recovery if the Chinese market improves [7]

Company Overview - Estée Lauder shares fell over 20% after the company withdrew its full-year earnings forecast, citing weak demand for luxury fragrance and cosmetic products [1] - The company's stock reached its lowest level in a decade at $68.03, down 22% [1] Financial Performance - Estée Lauder expects second-quarter profit per share to be between 20 cents and 35 cents, significantly below analysts' estimates of $1.06 [2] - The company anticipates net sales to decline between 6% and 8%, contrasting with Wall Street's estimate of a 0.2% growth to $4.3 billion [3] Leadership Changes - Estée Lauder appointed Stephane de la Faverie as the new CEO, effective January 1, as part of a leadership overhaul [3][9] - The company is also bringing in a new chief financial officer following the retirement announcement of longtime CFO Tracey Travis [9] Market Conditions - The beauty and luxury goods sectors are facing challenges due to reduced spending by Chinese consumers, impacted by a hiring slump, lower wages, and a weak housing market [4][6] - Estée Lauder's first-quarter sales in the Asia Pacific region fell 11%, compared to a 3% decline in the previous quarter [7] Industry Context - Other luxury brands, such as LVMH, have also reported disappointing sales, with a 5% decline in their fashion and leather goods unit, particularly in the Chinese market [8] - The company remains "cautiously optimistic" about medium- to long-term growth opportunities due to potential stimulus in China, although it does not expect immediate benefits for its second-quarter performance [6]

Core Insights - The Estee Lauder Companies Inc. (EL) experienced a significant decline in share price, dropping 24% in pre-market trading following the release of its first-quarter fiscal 2025 results, which showed a year-over-year decline in revenue and missed consensus estimates [1][2] - The company has withdrawn its fiscal 2025 outlook due to ongoing challenges in China and travel retail, indicating a cautious approach moving forward [1][4] Financial Performance - Adjusted earnings per share (EPS) were reported at 14 cents, surpassing the Zacks Consensus Estimate of 9 cents, and increased from 11 cents in the same quarter last year [2] - Quarterly net sales totaled $3,361 million, falling short of the Zacks Consensus Estimate of $3,370.9 million, representing a 4% decline year over year [2] - Organic net sales decreased by 5%, primarily due to weakened consumer sentiment in China and reduced conversion rates in Asia travel retail [3] Segment Performance - Skin Care sales decreased by 7% year over year to $1,529 million, attributed to negative consumer sentiment in China [5] - Makeup revenues fell by 2% to $1,038 million, with declines in M·A·C and Too Faced, partially offset by growth in Clinique [5] - Fragrance revenues were $630 million, down 1% from the previous year, impacted by challenges in global travel retail [6] - Hair Care sales totaled $139 million, a 6% decline year over year, reflecting softness in Aveda [6] Regional Performance - Sales in the Americas decreased by 2% to $1,187 million [7] - Revenues in the EMEA region also fell by 2% to $1,230 million [7] - The Asia-Pacific region saw a significant decline of 11%, with sales at $944 million [7] Margin and Financial Health - Gross profit was reported at $2,433 million, down 1% year over year, with a gross margin of 72.4%, an increase from 69.6% in the prior year [8] - Adjusted operating income rose by 33% to $144 million from $108 million in the previous year [8] - The company ended the quarter with cash and cash equivalents of $2,350 million, long-term debt of $7,311 million, and total equity of $5,084 million [10] Dividend and Future Outlook - The company is reducing its dividend to establish a more appropriate payout ratio, aiming for greater financial flexibility to support growth [11] - For the second quarter of fiscal 2025, reported and organic net sales are projected to decline by 6-8%, with adjusted EPS expected to drop by 60-77%, ranging from 20 cents to 35 cents [13] - Management remains cautiously optimistic about medium-to-long-term growth opportunities in China but does not expect immediate positive impacts from new economic stimulus measures [12]

Financial Data and Key Metrics Changes - For Q1 2025, organic sales decreased by 5%, primarily due to declines in mainland China, global travel retail, and Hong Kong SAR [8][34] - Adjusted gross margin expanded by over 300 basis points, and adjusted EPS was $0.14, exceeding the previous year's $0.11 [10][49] - Operating income increased by 33% to $144 million, with an operating margin expansion of 120 basis points to 4.3% [48] Business Line Data and Key Metrics Changes - Organic net sales in skin care declined by 8%, while makeup decreased by 2%, driven by declines from M·A·C and Too Faced [41][42] - Fragrance organic net sales decreased by 1%, with strong performance from luxury brands like Le Labo and Jo Malone [43][25] - The Americas saw a 1% decrease in organic net sales, with North America experiencing modest growth in retail sales [39] Market Data and Key Metrics Changes - Organic net sales in Asia Pacific decreased by 11%, mainly due to weakened consumer sentiment in mainland China [35] - EMEA region saw a 4% decline in organic net sales, largely impacted by challenges in Asia travel retail [36] - North America experienced a slowdown in prestige beauty retail sales growth, dropping from high single-digit growth to mid-single-digit growth [13] Company Strategy and Development Direction - The company is focused on a strategic reset aimed at restoring sustainable long-term organic sales growth through the Profit Recovery and Growth Plan (PRGP) [17][18] - Key priorities include enhancing skin care offerings, capitalizing on high-end fragrance growth, and leveraging winning channels [19] - The company plans to continue investing in innovation and expanding consumer reach despite current market challenges [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged greater macro headwinds for fiscal year 2025 than previously expected, particularly in China and Asia travel retail [11][14] - The company has withdrawn its fiscal year 2025 outlook due to ongoing uncertainties and is only providing guidance for Q2 [14][55] - Management remains cautiously optimistic about medium-to-long-term stabilization in China due to new economic stimulus measures [12] Other Important Information - The company announced a reduction in dividends to a more appropriate payout ratio to create financial flexibility for future growth initiatives [15][54] - A leadership transition is underway, with new appointments expected to bring fresh perspectives and strategies to navigate current challenges [30][32] Q&A Session All Questions and Answers Question: Internal reaction to worsening external circumstances - Management is evaluating additional actions related to the PRGP and has identified cost savings to offset volume pressure [70] Question: Market share expectations and regional contributions to organic growth - Management expects continued pressure from China and travel retail, with overall deceleration in other markets [78] Question: Timing and message behind the dividend cut - The dividend reduction is a proactive measure to protect cash for future investments and is not indicative of long-term growth outlook [94] Question: Qualities and skill sets sought in new leadership - New leadership should focus on brand building, agility, and understanding global market dynamics to navigate future challenges [102] Question: Opportunities to reduce CapEx and inventory health - CapEx has already been reduced, and inventory levels are healthier compared to last year, with ongoing focus on agility in planning [110] Question: Retail inventory levels in Asia Travel Retail - Inventory levels in trade have decreased, but progress is slower than expected due to market volatility [113]

The Estee Lauder Companies Inc. (NYSE:EL) Q1 2025 Earnings Conference Call October 31, 2024 9:30 AM ET Company Participants Rainey Mancini - SVP of IR Fabrizio Freda - President and CEO Tracey Travis - EVP and CFO Conference Call Participants Dara Mohsenian - Morgan Stanley Steve Powers - Deutsche Bank Lauren Lieberman - Barclays Bryan Spillane - Bank of America Merrill Lynch Rupesh Parikh - Oppenheimer Bonnie Herzog - Goldman Sachs Olivia Tong - Raymond James Operator Good morning and welcome to The Estee ...

Key TakeawaysEstée Lauder shares plunged 20% Thursday after it said sales sank because of softness in China and the Asia travel markets, and that it was cutting its dividend and withdrawing its full-year outlook.The luxury beauty products maker reported fiscal 2025 first-quarter revenue was down 4% year-over-year, and organic sales fell 5%.On Wednesday, Estée Lauder named Stephane de La Faverie its new CEO. Estée Lauder (EL) shares tanked 20% Thursday after the luxury beauty products maker warned about soft ...

The cosmetics giant is facing serious challenges in China.Shares of Estée Lauder (EL -20.83%) were taking a dive today as the cosmetics giant continued to struggle with weakness in China as the company also cut its dividend and pulled its guidance for the fiscal year, reflecting a lack of visibility into the China situation and a need to reinvest in the business.The stock was down 19.3% on the news as of 12:38 p.m. ET. Estée Lauder's challenges continueEstée Lauder, which owns brands like Aveda, Clinique, L ...