Estee Lauder forecasts weak annual profit on slow recovery in Asia travel retail
Estee Lauder projected annual net sales and profit below estimates on Friday (Aug 18), signaling a slower-than-expected recovery in its travel retail business, mainly in Asia, and easing demand in the US, sending its shares down about 5 per cent in premarket trade.
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 Estee, which makes about 30 per cent 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 per cent.
Estee Lauder’s Americas region reported flat net sales compared to a year ago, while Asia-Pacific reported a 29 per cent increase in sales.
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European luxury rival LVMH last month also flagged cooling demand for high-end products in the US, after the initial post-pandemic euphoria.
Estee expects full-year 2024 sales to rise between 5 per cent and 7 per cent, compared with analysts’ estimate of an 8.8 per cent increase, according to Refinitiv data.
The company expects annual adjusted profit per share to be between US$3.50 and US$3.75, compared with analysts’ expectation of US$4.83.
However, on an adjusted basis, Estee earned a profit of 7 cents per share, compared to an estimated loss of 4 cents per share. REUTERS
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