At a 10-Year Low, Is It Finally Time to Buy This Former Blue Chip Dividend Stock?

Core Viewpoint - Estée Lauder's stock has significantly declined, reaching a 10-year low after poor first-quarter fiscal 2025 results, with a year-to-date drop of 56% and an 82.8% decrease from its all-time high [1] Company Performance - Estée Lauder operates in four categories: skin care, makeup, fragrance, and hair care, with several well-known brands [2] - The company experienced its best performance in fiscal 2022, achieving record sales and a 17.9% operating margin, but reliance on a single customer in China for 13% of consolidated net sales raised concerns [3] - Asia/Pacific, which accounted for 31% of total sales in fiscal 2022, has shifted from a strength to a weakness in fiscal 2023 and 2024, with North America also reporting poor performance [4] Financial Data - Total revenue decreased from $17.74 billion in fiscal 2022 to $15.61 billion in fiscal 2024, while total operating income fell from $3.17 billion to $970 million in the same period [5] - Operating margins have also declined, from 17.9% in fiscal 2022 to 6.2% in fiscal 2024 [5] Market Challenges - The company has faced challenges due to overexpansion and a complex business model, which has made it difficult to forecast customer demand accurately [7] - Profitability has significantly declined despite sales not dropping as sharply, indicating a miscalculation in demand expectations [8] Turnaround Potential - Estée Lauder is viewed as a potential turnaround opportunity in the cosmetic industry, despite recent struggles and management missteps [10][11] - The appointment of a new CEO and the reduction of the quarterly dividend from $0.66 to $0.35 per share indicate efforts to regain financial flexibility [12] - If the company can refine its marketing and distribution strategies and respond to an uptick in consumer demand, it may return to growth [13]