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The Estée Lauder Companies beat Wall Street estimates for first-quarter sales and profit on Thursday on strong demand for its Le Labo and Tom Ford fragrances and an uptick in China demand, in fresh signs the beauty company’s turnaround push is starting to work.
Shares of the company, which maintained its annual forecasts, rose about 6 percent in premarket trading.
In the midst of a turnaround under CEO Stephane de La Faverie, Estée Lauder has resorted to ramping up luxury launches, streamlining its supply chain and boosting innovation and marketing efforts, helping the cosmetics maker revive sliding sales.
It warned in August of a $100 million tariff hit and has been shifting production closer to key markets and reducing inventory and promotions to mitigate the rising costs that have crippled the broader retail industry.
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The Clinique, MAC Cosmetics, and Jo Malone London owner saw organic net sales turn positive after facing persistent declines for over a year.
Estée Lauder’s quarterly organic net sales rose 3 percent, after falling 5 percent a year ago.
Last week, L’Oreal also saw improvement in China, while luxury brands including LVMH and Hermès tentatively indicated a revival in China.
Estée Lauder’s fragrance category saw organic sales growth of 13 percent, while sales were up 9 percent in its China and Asia Pacific regions.
The company posted quarterly sales of $3.48 billion, compared with analysts’ estimate of $3.38 billion, according to data compiled by LSEG.
Its adjusted profit of 32 cents per share for the quarter ended September 30 largely beat an estimate of 18 cents per share.
By Anuja Bharat Mistry
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Estée Lauder Companies’ Makeover Begins
In order to reverse its sales decline, the company is reportedly considering selling off poorer-performing, lower-margin brands and cutting other costs. Investors want to see the fat trimmed, and more room created for future growth.
