Estée Lauder is having its worst day ever: it's down 20% after a weak forecast
Estee Lauder complained about the "difficult and precarious situation" with sales in the US / Photo: TY Lim / Shutterstock.com
Shares of American cosmetics manufacturer Estée Lauder collapsed in trading on Thursday, February 5. At the moment, the company's capitalization collapsed by a quarter. This decline is the worst in its history, notes Reuters. Investors reacted to the signal of sluggish demand in the U.S. market, which continues to hamper business recovery and does not meet Wall Street expectations, the agency explains.
As reported by the company
Estée Lauder expects its adjusted earnings per share for the current fiscal year, which ends June 30, to be between $2.05 and $2.25, compared with the Wall Street consensus forecast of $2.16, Reuters reports. Net sales growth is expected to be in the range of 3% to 5% - with the average also falling short of market estimates of 4.3%. The company confirmed the figures already announced in October on losses from duties. introduced by Donald Trump: it will lose about $100 million in annual profits due to trade restrictions.
Estée Lauder expects a 50 basis point margin decline in the current quarter.
What's going on
The owner of Clinique, M.A.C, Jo Malone and Le Labo brands has stepped up new product launches, introduced premium price categories and strengthened marketing as part of new CEO Stephane de la Faverie's strategy to revitalize demand in key markets, Reuters recalls. These efforts have yielded results in China and Europe, but in the U.S. the company continues to face weakening consumer activity, the agency writes.
"We are dealing with a difficult and volatile situation in the U.S.," de la Faveri told Reuters. He also noted a slowdown in consumer spending in Latin America after a strong start to the year.
What the analysts are saying
"The core region [for the company] remains the markets in the Americas, where sales improved sequentially to zero. However, share gains in the U.S. market have not translated into increased orders from retailers," Evercore ISI analyst Robert Ottenstein explained to Reuters.
That said, the company's quarterly results, which were as good as Wall Street forecasts, reflect "improving momentum in global luxury goods markets and the first signs of a turning point in China," TD Cowen analyst Oliver Chen pointed out, his note cited by Barron's.
The market's negative reaction to the publication of the report and forecast was predictable, as "expectations on the part of investors were very high", said Barron's Filippo Falorni from Citi. Rupesh Parikh from Oppenheimer agrees with him: he emphasized that for the stock to rise, the company should have significantly beaten EPS expectations, but that did not happen.
According to MarketWatch, the consensus forecast of 27 analysts monitoring the dynamics of Estee Lauder securities suggests a 6.7% drop in its quotations from Wednesday's closing price on the horizon of a year. 16 analysts recommend to keep these shares in the portfolio (rating Hold), ten - advise to buy them, and only one - suggests selling.
This article was AI-translated and verified by a human editor
