The Estée Lauder Cos. has once again lowered its outlook due to a slower than expected recovery in Asia.

Net sales for the full year are forecast to decrease between 10 percent and 12 percent, compared to the prior year. It previously forecast a 5 percent to 7 percent drop. Adjusted diluted earnings per common share are expected to fall between 50 percent and 51 percent, compared with the previous forecast for a 27 percent to 29 percent decline.

“As the shape of recovery from the pandemic for Asia travel retail comes into better focus, it is proving to be both far more volatile than we expected and more gradual relative to what we experienced in other regions. We are, therefore, lowering our organic sales and EPS outlook for fiscal 2023 to reflect significantly greater headwinds in our fourth quarter than we expected in February,” said Fabrizio Freda, president and chief executive officer. “While we work through the serious but we believe temporary headwinds facing Asia travel retail, we are encouraged by the strong momentum in the rest of our business.”

While Lauder saw recovery in many markets globally, its Asia travel retail business continued to be pressured by the slower than anticipated recovery from the COVID-19 pandemic. In Hainan, while traffic into the island exceeded prior year levels, conversion of travelers to consumers in prestige beauty lagged. In Korea, the shipments to duty free retailers were pressured owing to the transition to post-COVID regulations as traveling consumers gradually return.

Overall net sales came in at $3.75 billion for its third quarter ended March 31, a decline of 12 percent from $4.25 billion in the prior-year period, but beating Wall Street estimates of around $3.72 billion. Organic net sales fell 8 percent, primarily driven by Asia travel retail in Hainan and Korea.

Skin care net sales declined 17 percent, primarily reflecting the slower than anticipated recovery of Asia travel retail from the COVID-19 pandemic; makeup net sales were virtually flat; fragrance net sales grew double digits, and hair care net sales increased 3 percent.

On a geographical basis, net sales rose 6 percent in the Americas, but declined 24 percent in Europe, Middle East and Africa. Net sales grew 7 percent in Asia/Pacific, driven by the ongoing recovery from eased COVID-related restrictions compared to the prior-year period, led by Hong Kong, Australia, Japan and mainland China. This was somewhat offset by the slower than anticipated recovery of Dr.Jart+ travel retail in Korea from the COVID-19 pandemic.

The company reported net earnings of $156 million, compared with net earnings of $558 million in the prior-year period. Adjusted diluted net earnings per common share declined 75 percent to $.47.

Last week the group completed its acquisition of Tom Ford, appointed Guillaume Jesel president and chief executive officer of the brand, while Peter Hawkings has been tapped as creative director. The deal valued the brand at $2.8 billion.

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