Estée Lauder Cos Inc has cut its full-year sales forecast, as the cosmetics maker grapples with industry-wide supply chain problems and takes a hit from the resurgence of COVID-19 cases in its key markets.
The company's shares were down 2.2% in premarket trade, as renewed restrictions due to the Delta variant in some Eastern markets as well as in parts of Europe and Latin America dampened demand for the M.A.C brand owner's lipsticks and foundations in the first quarter.
Estée said its makeup category was the only segment yet to reach 2019 levels and added that traffic at its stores that were open also had not breached pre-pandemic levels.
Supply Chain Crunch
Adding to Estée's woes, a global supply chain crunch resulting from port congestions and a shortage of labor has led to delays in transportation, and is expected to add to its expenses through the rest of fiscal 2022.
However, the La Mer beauty products maker said it would increase prices, use air freight and less congested ports in its effort to offset the impact.
The Clinique cosmetics maker now expects net sales to rise between 12% and 15% in fiscal 2022, down from its prior estimate of a 13% to 16% increase.
Still, Estée's first-quarter revenue and profit beat Wall Street expectations, boosted by strength in its La Mer and Clinique skin care brands as shoppers kept up their nighttime routines even as restrictions eased.
The New York-based company's net sales rose to $4.39 billion in the first quarter, from $3.56 billion a year earlier. Analysts on average had expected sales of $4.25 billion, according to IBES data from Refinitiv.
On an adjusted basis, the company earned $1.89 per share, beating estimates of $1.70.
In August, Estée Lauder's reported net sales growth of 13%, to $16.22 billion, for its financial year ended 30 June 2020. This growth was driven by the gradual reopening and recovery in brick-and-mortar retail across all markets, it added.