Earnings Season Overview - The second quarter earnings season has been successful with more beats and raises than misses, particularly led by the Mag 7 stocks [1] - Nvidia's upcoming report is highly anticipated [1] Retail Sector Focus - This week's focus is on major retailers to assess price increases, inflation, tariff impacts, and consumer behavior [2][3] - Key retailers to watch include Walmart (WMT) and Target (TGT), along with home improvement retailers like Home Depot (HD) and Lowe's (LOW) [3] Home Improvement Retailers (Home Depot & Lowe's) - Home Depot (HD) has a strong earnings surprise track record with only one miss in the last five years [4] - Home Depot's earnings have declined in the last couple of years due to housing market conditions and tariffs, with a projected earnings decline of 1.4% to 4%, but a rebound is expected next year [5][6] - Lowe's (LOW) also has a great earnings surprise track record with earnings expected to decline but then recover, projecting a 2.4% to 4% gain this year and another in 2027 [7][8] - Both Home Depot and Lowe's shares haven't significantly declined as a turnaround is expected and priced in [9] General Retailers (Walmart & Target) - Walmart (WMT) has been performing strongly, with shares attempting to break out, and earnings looking better than Home Depot and Lowe's [9][10] - Walmart's valuation is at 38 times earnings, with a strong earnings surprise track record [10] - Target (TGT) is struggling with declining earnings, trading near 5-year lows, and a 15.6% decline expected for this year [12][13] - Both Walmart and Target are being watched for pricing strategies and consumer buying behavior, considering factors like back-to-school shopping and groceries [11][12][14] Specialty Retailer (Estee Lauder) - Estee Lauder (EL) has a strong earnings track record with mostly beats, but earnings have declined, especially due to the struggling Chinese consumer [15] - Estee Lauder's earnings are expected to improve in the next couple of years, but a 42% decline is expected this year [16] - Estee Lauder's forward PE is not cheap at 42 times, even with the share price decline [16] - Tariffs are impacting beauty products, with E.L.F beauty raising prices, and Estee Lauder's response is being monitored [18]

In the meantime, it's time for a power check where we walk you through some of the big stock stories catching our collective eyes. And today, it's three companies reporting their earnings this week. They are internet security company PaloAlto, cosmetics firm Estee Lauder, and river cruise company Vikings.Now, PaloAlto Network's numbers come out Tuesday, Viking Holdings later in the week, and Estee Lauder as well. Joining us now to talk about how you should be trading these names if at all going into the pri ...

Core Insights - Estée Lauder Companies is set to report earnings on August 20, 2025, with a consensus expectation of earnings per share at $0.09 and sales of $3.4 billion, a decline from $0.64 per share and $3.87 billion in the same quarter last year [4] Historical Stock Performance - Over the past five years, Estée Lauder's stock has shown a pattern of negative one-day returns post-earnings, with 70% of instances resulting in a decline, a median drop of -7.3%, and the largest single-day drop being -20.9% [3][7] - In the last five years, there have been 20 recorded earnings data points, with only 6 positive one-day returns, indicating a 30% occurrence rate of positive returns, which drops to 9.1% in the last three years [7] Financial Performance - The company has a market capitalization of $33 billion and generated $15 billion in revenue over the last twelve months, with $1.3 billion in operating profits, but reported a net loss of $871 million during the same period [5] Trading Strategies - Traders may consider pre-earnings positioning based on historical odds and evaluate immediate post-earnings reactions to inform medium-term trading decisions [6][8] - A lower-risk approach involves assessing the correlation between short-term and medium-term returns around earnings, allowing traders to structure trades based on the strongest correlations observed [8]

Core Viewpoint - Foreign beauty companies are focusing on profit recovery and operational efficiency through a series of transformation and restructuring plans from 2023 to 2024, with the common goal of restoring profits as they navigate a challenging market environment [1][4]. Summary by Sections Performance Results - Shiseido's sales in the first half of 2025 fell by 7.6% to 469.83 billion yen, but its core operating profit increased by 21.3% to 23.37 billion yen. L'Oréal's sales reached 22.473 billion euros, a 3% increase, while its operating profit was approximately 4.74 billion euros, up 3.1%, but lower than the previous year's growth of 8%. Estée Lauder's net sales dropped by 10% to 3.55 billion USD, with net profit declining by 52% to 159 million USD, although it turned a profit compared to the previous quarter [2][5]. Measures Taken - The companies have focused on three main strategies: 1. **Cost Control and Operational Efficiency**: Estée Lauder's restructuring plan includes layoffs affecting 1,800 to 3,000 employees, with further cuts of 5,800 to 7,000 jobs planned. L'Oréal has reduced advertising and promotional expenses to 7 billion euros and administrative costs to 4.2 billion euros, reflecting a commitment to cost control [6]. 2. **High-Margin Product Strategy**: Estée Lauder is expanding its high-end fragrance offerings, while L'Oréal has noted stronger growth in high-end brands compared to mid-range brands in the Chinese market [7]. 3. **Innovation and New Revenue Streams**: L'Oréal is implementing a "multi-polar model" to drive growth through technology, local supply chains, and forward-looking investments [8][9]. Market Transition - The shift towards profit recovery indicates a transition from growth-focused strategies to prioritizing profitability due to intensified market competition and shrinking profit margins. Companies like Estée Lauder have initiated profit recovery plans, emphasizing cost structure improvements and reduced high-risk innovations [11][12]. Future Goals - Shiseido aims to restore profitability by 2026, while Estée Lauder targets a return to double-digit profit margins by 2027. L'Oréal remains confident in maintaining high profit margins [14][15]. The companies are also adjusting their strategies to reduce reliance on the Chinese market, which has been a significant source of pressure due to declining sales [16].

Core Insights - Foreign beauty companies are focusing on "profit first" strategies, with significant changes being implemented as they approach the 2025 mid-year report [2][8] - Companies like Shiseido, L'Oréal, and Estée Lauder are experiencing varying degrees of sales and profit fluctuations, indicating a collective shift towards profit recovery [2][10] Financial Performance - Shiseido's sales fell by 7.6% to 469.83 billion yen in the first half of 2025, but core operating profit rose by 21.3% to 23.37 billion yen [2] - L'Oréal reported a 3% increase in sales to 22.473 billion euros, with operating profit growing by 3.1% to approximately 4.74 billion euros, although both figures were lower than the previous year's growth rates [2] - Estée Lauder's net sales dropped by 10% to 3.55 billion USD in the first three months of the year, with net profit down by 52% to 159 million USD, although it managed to turn a profit compared to the previous quarter [2] Strategic Initiatives - Companies are implementing cost control and operational efficiency measures, with Estée Lauder announcing significant layoffs as part of its restructuring plan [3][6] - L'Oréal has focused on strict management of operating expenses, resulting in a record operating profit margin of 21.1% in the first half of 2025 [4] - Shiseido's action plan aims to restore profits through cost reductions and improved operational efficiency, targeting a core operating profit margin increase from 4.97% to 7% by 2026 [8][10] Product Strategy - Estée Lauder is expanding its high-margin product offerings, including a new perfume line in collaboration with luxury brand Balmain [6] - L'Oréal's CEO noted that high-end brands are experiencing stronger growth compared to mid-range brands, indicating a strategic shift towards premium products [6] Innovation and Technology - Companies are leveraging technology and innovation to drive growth, with L'Oréal adopting a "multi-polar model" and investing in local supply chains [7] - All three major beauty companies are embracing AI for various applications, including virtual try-ons and data insights [7] Market Challenges - The shift towards profit recovery reflects the increasing market competition and pressure on profit margins faced by these companies [8][12] - L'Oréal's sales in the Chinese market have shown signs of recovery, but overall performance remains challenged by declining consumer sentiment and competition [11][12] - Estée Lauder has faced multiple quarters of declining sales in the Asia-Pacific region, prompting a strategic pivot to reduce reliance on the Chinese market [12]

Core Insights - Estee Lauder (EL) is anticipated to report a year-over-year decline in earnings and revenues for the quarter ended June 2025, with earnings expected at $0.08 per share, reflecting an 87.5% decrease, and revenues projected at $3.4 billion, down 12.2% from the previous year [1][3][18]. Earnings Estimates and Revisions - The consensus EPS estimate has been revised 3.45% higher in the last 30 days, indicating a reassessment by analysts [4][19]. - The Most Accurate Estimate is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +53.86%, suggesting a strong likelihood of beating the consensus EPS estimate [12][19]. Historical Performance - Estee Lauder has consistently beaten consensus EPS estimates in the last four quarters, with a notable surprise of +124.14% in the last reported quarter [13][14]. Market Expectations - The upcoming earnings report is set to be released on August 20, and the stock may experience significant movement based on whether the actual results exceed or fall short of expectations [2][19]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) indicates a favorable outlook for Estee Lauder's performance in the upcoming earnings report [12][19].

Group 1 - Estee Lauder (EL) has reached a key level of support and recently crossed above the 20-day moving average, indicating a short-term bullish trend [1][2] - Over the past four weeks, EL shares have increased by 6.5%, and the company holds a Zacks Rank 3 (Hold), suggesting potential for continued growth [4] - Positive earnings estimate revisions have been noted, with no estimates lowered in the past two months and four raised estimates for the current fiscal year, leading to an increase in the consensus estimate [4] Group 2 - The 20-day simple moving average is a popular trading tool that helps smooth out short-term price trends and indicates trend reversals [2] - Investors are encouraged to consider adding EL to their watchlist due to the significant technical indicator and positive earnings estimate revisions [5]

Core Insights - The Estee Lauder Companies Inc. is expected to report declines in both net sales and earnings for the fourth quarter of fiscal 2025, with net sales estimated at $3.4 billion, reflecting a 12.2% decrease year-over-year [1][9] - The earnings consensus for the fourth quarter has risen by 2 cents to 8 cents per share, indicating an 87.5% decline compared to the previous year [2][9] - The company is facing challenges due to weak consumer sentiment in Mainland China and a downturn in global travel retail, impacting the prestige beauty sector [3][4] Sales and Earnings Expectations - The anticipated organic net sales decline for the fourth quarter is projected at 13.4%, following a 28% drop in Asia travel retail during the third quarter [4] - Retailer destocking across various regions, including Asia-Pacific and North America, is expected to further pressure sales despite gradual improvements in retail trends outside of travel retail [4] Operating Expenses and Profitability - The Estee Lauder Companies has experienced a significant increase in operating expenses, which rose by 580 basis points as a percentage of sales in the fiscal third quarter, primarily due to investments aimed at growth [5] - Any potential deleverage in operating expenses may negatively impact profit margins [5] Strategic Initiatives - The company is implementing a Profit Recovery and Growth Plan focused on margin expansion, targeted investments, and process simplification to enhance agility [6] - An expanded presence in high-growth digital channels and positioning in emerging markets are seen as positive factors that may support performance in the fourth quarter [6] Earnings Prediction - The company's earnings model suggests a likelihood of an earnings beat, supported by a positive Earnings ESP of +36.11% and a Zacks Rank of 3 (Hold) [7]

Core Viewpoint - The article discusses the launch of Estée Lauder's new eye cream, the "Micro-Sculpting Eye Cream," which aims to bridge the gap between cosmetic and medical beauty, addressing long-standing consumer pain points in eye care and leading the trend of dual beauty integration [3][4][28]. Market Context - The eye care market in China is experiencing rapid growth and intense competition, with increasing consumer demand for youthful appearance, particularly among younger demographics and men [23][24]. - The market for eye care products is evolving from basic moisturizing tools to "precise anti-aging solutions," driven by the integration of medical aesthetics and daily care [23][24]. Product Launch and Features - Estée Lauder's new eye cream is positioned as a "clinic-level anti-aging" product that simulates three major cosmetic procedures: Botox, Thermage, and hyaluronic acid fillers [16][27]. - The cream incorporates advanced technologies, including a blend of peptides and hyaluronic acid, to achieve effects similar to those of medical procedures without the associated side effects [16][19][20]. Consumer Insights - The demand for eye area rejuvenation is increasing, with consumers prioritizing safety, long-lasting effects, and comprehensive anti-aging solutions [6][12]. - The product aims to empower consumers to take proactive steps in their daily skincare routines, moving away from reliance on medical procedures [27][28]. Scientific Backing - Clinical trials presented at a leading dermatology conference demonstrated the effectiveness of the new eye cream in improving the appearance of the eye area, with significant percentages of participants reporting visible improvements [21][20]. - The product's formulation is supported by over 40 years of research and development in nighttime repair and eye care, establishing a strong scientific foundation for its claims [24][27]. Competitive Positioning - Despite competition from domestic brands and white-label products, Estée Lauder maintains a leading position in the eye care market, evidenced by its top sales figures in online platforms [23][24]. - The brand's long-standing commitment to research and innovation has allowed it to stay at the forefront of the eye care segment, continuously adapting to market trends and consumer needs [24][27].

Core Insights - The beauty industry is experiencing an unprecedented surge in celebrity endorsements, with over a hundred announcements in the first half of 2025, indicating a shift towards a "short and quick" marketing strategy [1][4][34] - The reliance on celebrity endorsements has intensified, with brands struggling to define their identity while depending heavily on star power for sales [1][34] Group 1: Trends in Celebrity Endorsements - The endorsement landscape has become fragmented, with brands seeking to reach broader audiences by employing multiple types of endorsements such as "ambassadors" and "friends" [3][4] - A significant portion of endorsements (approximately 21%) are categorized as "ambassadors" and "friends," while 24% belong to niche endorsements [4] - The trend of celebrities endorsing multiple brands has become common, leading to frequent "overlap" where one celebrity represents various products across different categories [18][28] Group 2: Impact of Endorsements on Product Launches - Nearly 90% of celebrity endorsements are closely tied to new product launches, serving as a key promotional strategy for brands [15][34] - The beauty industry is witnessing a rise in endorsements for niche categories like fragrances, with brands like Jo Malone and Mugler actively engaging younger celebrities to enhance their market presence [22][28] Group 3: Market Dynamics and Brand Strategies - The beauty sector is under pressure to deliver quick results, leading to a focus on celebrity endorsements as a rapid solution for driving sales and traffic [35][37] - The internal pressure for performance metrics has resulted in brands increasingly relying on celebrity endorsements as a primary strategy for achieving sales targets [37][38] - The current market environment has made it more cost-effective for brands to secure endorsements in the first half of the year, as prices for celebrities have decreased due to oversupply and market fluctuations [43][44] Group 4: Evolution of Endorsement Strategies - The nature of endorsements has shifted from long-term brand-building partnerships to short-term sales-driven campaigns, with contracts often lasting only 3-6 months [47][50] - Brands are now prioritizing celebrities based on their ability to drive sales rather than their alignment with brand values, marking a significant change in endorsement criteria [47][50] - The rise of athlete endorsements is notable, as brands seek to leverage the authenticity and positive image associated with sports figures [28][31] Group 5: Future Directions for Brands - To build lasting consumer relationships, brands must move beyond reliance on celebrity endorsements and focus on creating emotional connections and community engagement [58][61] - Strategies such as IP collaborations, content production, and enhanced customer relationship management are essential for fostering long-term brand loyalty [58][59] - The shift from a "celebrity-centric" approach to a "community-centric" model may provide a more sustainable path for brands to connect with consumers [61]