Estée Lauder sinks after dour 2023 view on slow Asia travel retail
Reuters
Estée Lauder Cos Inc on Wednesday forecasted a bigger drop in full-year sales and profit, disappointing Wall Street; that was expecting better results on rebounding travel retail after Covid-19 restrictions eased globally and in China.
Shares of the company fell about 16 percent in premarket trade after Estée Lauder cited a slower-than-expected recovery in Asia travel retail and major market China for the latest round of cuts to its annual forecasts.
In contrast, European peers LVMH
Barclays
Estée Lauder said while major shopping districts such as Hainan and Korea saw more traffic, the conversion of travellers to consumers in luxury beauty lagged.
Even though China relaxed pandemic-related restrictions, the company saw January 2023 pressured by low retail traffic and retailers destocking due to an increase in Covid-19 cases.
The MAC lipstick maker’s sales had also witnessed an impact in earlier quarters from US retailers tightening inventories of its products, but posted a 6 percent rise in organic net sales in the Americas, signalling steady demand for its Jo MaloneBobbi Brown
The company’s profit remains pressured from a stronger dollar since it has sprawling global operations and converts foreign currencies into the greenback.
Estée Lauder expects full-year 2023 net sales to fall between 10 percent and 12 percent, compared to its prior forecast of a 5 percent and 7 percent decrease.
It also forecasted adjusted profit per share to fall between 50 percent and 51 percent, compared with a decrease between 27 percent and 29 percent it expected earlier.
However, the company beat third-quarter sales expectations but missed profit estimates.
