The Estée Lauder Cos.has cut its full year forecast as troubles in its China business continue, combined with the potential risks of further business disruptions in Israel and other parts of the Middle East.
Net sales are forecasted to range between a decrease of 2 percent and an increase of 1 percent versus the prior year, after previously anticipating a rise of between 5 percent and 7 percent.
Adjusted diluted net earnings per common share are expected to decrease between 33 percent and 25 percent.
Fabrizio Freda, president and chief executive officer, said, “While we had a better-than-expected first quarter, we are lowering our fiscal 2024 outlook given incremental external headwinds, namely from the slower growth in overall prestige beauty in Asia travel retail and in mainland China, which is currently confirmed in the pre-sale phase of the 11.11 Shopping Festival, and the risks of business disruption in Israel and other parts of the Middle East.”
The company, whose brands include Clinique, MAC, Tom Ford and Jo Malone, reported net sales of $3.52 billion for its first quarter ended Sept. 30, a decline of 10 percent from $3.93 billion in the prior year. Organic net sales fell 11 per cent, driven by pressures in the company’s Asia travel retail business.
Net earnings were $31 million, compared with $489 million in the prior year. Adjusted diluted net earnings per common share declined to $0.11 decreasing to $0.12 in constant currency. The cybersecurity incident disclosed in July 2023 was dilutive to fiscal 2024 first quarter earnings per common share by $0.08.