May 6, 2015
Estee Lauder to focus on young consumers
May 6, 2015
Estee Lauder Cos Inc said it would focus on younger consumers to turn around its legacy brands, Clinique and Estee Lauder, and spend on launching new products and improving its distribution to boost revenue growth.
Shares of the company, which reported better-than-expected quarterly profit and sales, rose as much as 7.5 percent to a record high of $89.84 on Tuesday.
Estee reported strong sales in its newer brands such as Smashbox and Sephora in the third quarter, but the benefit was partially offset by weakness in some of its "heritage" brands.
The company, which also makes M.A.C and Bobbi Brown cosmetics, said it would launch its new face-contouring skincare line, New Dimension, in July. To connect with younger consumers, the company has hired teenage model Kendall Jenner as the new face of its Estee Lauder brand.
Chief Executive Fabrizio Freda told Reuters that Estee would launch more makeup and skincare products, mainly in foundations, lips and face-contouring product categories.
The company raised its full-year sales growth forecast to 3-4 percent from 2-3 percent on a constant-currency basis.
Estee said it expected a strong dollar to hurt full-year sales by 5 percent, instead of 4 percent anticipated earlier. The dollar has surged about 20 percent against a basket of major currencies in the past year, making sales denominated in other currencies less valuable in dollar terms.
Net earnings attributable to Estee jumped nearly 28 percent to $272.1 million, or 71 cents per share, in the quarter ended March 31, helped by cost cuts and higher demand in the United States.
Sales in the Americas, which accounts for a little less than half of Estee's total sales, rose 8 percent, while sales in the UK, France, Australia and emerging markets including China rose in double-digit percentage terms on a constant-currency basis.
Analysts expect the company to benefit when China takes steps from June to boost consumer spending, including reducing import tariffs on some consumer goods. Excluding items, Estee earned 72 cents per share.
Sales rose 1.2 percent to $2.58 billion.
Analysts on average had expected earnings of 51 cents per share and revenue of $2.54 billion, according to Thomson Reuters I/B/E/S.
Estee's shares were up 4.3 percent at $87.12 in afternoon trading on the New York Stock Exchange.
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