Estée Lauder has projected full-year net sales and profit below market expectations, signalling a slower-than-expected recovery in its travel retail business, mainly in Asia, and easing demand in the United States.
Major companies across the globe have taken a cautious stance regarding their bets on a rebound in China, as the world's second-largest economy struggles to revive demand and battles rising youth unemployment rates and a high cost of living.
Analysts have said the drop in consumer demand in China and a slow recovery in Asia travel retail – sales made at airports or travel destinations like Korea and China's Hainan – could impact luxury companies like Estée, which makes about 30% of its annual revenue from the Asia Pacific region.
"Asia travel retail pressured results, particularly in skin care, and we continued to experience softness in North America," CEO Fabrizio Freda said in a statement.
Sales in the company's skincare segment fell 14% in full-year 2023. Estée Lauder's Americas region reported flat net sales compared to a year ago.
Outlook
The cosmetics maker expects full-year 2024 sales to rise between 5% and 7%, compared with analysts' estimate of an 8.8% increase, according to Refinitiv IBES data.
The MAC brand owner expects full-year 2024 adjusted profit per share to be between $3.50 and $3.75, compared with analysts' expectation of $4.83.
Freda added, "For fiscal year 2024, we expect to return to organic sales growth and deliver sequentially improving margin throughout the year, leveraging the strong equity and desirability of our brands. [...]
"In this new fiscal year, we also intend to set the stage for a stronger fiscal year 2025 acceleration, with a very robust innovation pipeline planned across the two years and progressive margin rebuilding plans."
The company's net sales rose to $3.61 billion in the fourth quarter, from $3.56 billion a year earlier. Analysts had expected revenue of $3.47 billion.
Article by Reuters, additional reporting by ESM
