Estée Lauder profit surges as skin care, makeup sales rise

NEW YORK, United States - Estée Lauder reported an 84 percent rise in fourth-quarter profit, helped by strong sales of its skin care and makeup products and improved operating margins, sending its shares up as much as 5 percent.

The beauty products maker's sales rose 7 percent while retailers such as Macy's Inc and Wal-Mart warned of weak consumer spending.

"Estée Lauder has not been swayed by slowing global economic growth or competitive pressures, as evidenced by its continued top-line growth and margin expansion," Morningstar Inc analyst Erin Lash wrote in a note.

Chief Executive Fabrizio Freda said the overall U.S. prestige beauty industry, to which the company belongs, rose 2.5 percent in the quarter.

"Despite (the slower overall growth), we still expect to grow at double the rate of global prestige beauty," Freda said on a post-earnings conference call.

The maker of Estée Lauder, Clinique and MAC lines of beauty products said it expects net sales to rise 5 to 7 percent in constant currency terms in the current quarter.

The company forecast a lower-than-expected profit for the quarter, reflecting continued weakness in some southern European countries, South Korea and the United States and increased advertising spending to support its product launches.

The company, which is also known for its La Mer and Bobbi Brown brands, forecast a profit of 67 cents to 71 cents per share for the first quarter, missing Wall Street expectations of 90 cents per share, according to Thomson Reuters I/B/E/S.

Fourth-quarter net income rose to $94.0 million, or 24 cents per share, in the quarter ended June 30, from $51.2 million, or 13 cents per share, a year earlier.

Operating margins almost doubled to 6 percent.

Sales rose to $2.41 billion. Sales in the skin care business rose 9 percent to $1.06 billion while makeup sales rose 4 percent to $948.0 million.

Luxury brands La Mer, Jo Malone and Tom Ford together rose about 20 percent, Freda said.

New York-based Estée Lauder's shares, which had risen 9 percent in the year to Wednesday's close, were up 4 percent at $68.01 on the New York Stock Exchange on Thursday.

The Dow Jones Industrial average .DJI was down 1.37 percent.