Estee Lauder raises outlook on strong profits

By Simon Pitman

- Last updated on GMT

Profits are up at Estee Lauder, prompting the company to increase
its full-year outlook, driven by strong sales growth in all
categories together with the benefits of cost saving initiatives.

The company reported that for its second quarter, sales rose 12 per cent to reach $1.99bn, boosted by a weak dollar currency. Excluding the impact of foreign currency, net sales rose 9 per cent.

Net earnings from continuing operations were up 38.6 per cent, to reach $208.5m, compared to $150.4m for the corresponding quarter in 2005.

The results prompted the company to up its sales and earnings potential for the fiscal 2007, with net sales expected to increase 6 - 7 per cent, or $6.87bn - $6.891bn.

In light of the most recent results, Thomson Financial said that having polled a number of analysts, it believed revenues should come in at around $6.87bn for the 2007 financial year.

"Our strong earnings and cash flow give us the opportunity to accelerate and increase our investments in our business, enabling us to grow for the long term,"​ said William Lauder, company CEO.

"Taking a shorter term perspective, the solid first half and our confidence in our business for the balance of the fiscal year permits to raise our full year earnings."

In its skin care segment, the company reported a strong start for launches that included Estee Lauder's Advanced Night Repair treatment, as well as Repairwear Lift and All About Eyes Rich, from Clinique.

Makeup saw strong sales from existing product lines that included Estee Lauder's Double Wear Foundation and Pure Color Eyeshadow, while strong new launches included Resilience Lift Extreme Ultra Firming Makeup.

On the fragrance front, sales jumped significantly, especially when compared to the 11 per cent fall in sales in the same period in 2005. Strong launches included DKNY Red Delicious and Estee Lauder's Pure White Linen, while the company also highlighted disappointing sales from True Star and True Star Men.

On the hair care front the company highlighted the continued strength of the Aveda and Bumble and bumble brands, with Aveda's Be Curly Shampoo and Conditioner proving particularly popular.

On a geographical basis, the biggest climb in sales came in the Asia Pacific region, where the company achieved a quarterly turnover of $285.4m on a reported basis, up 15.9 per cent on the previous year. This figure was boosted by strong double digit growth in China, Singapore, Hong Kong, Australia and Taiwan.

Europe, the Middle East & Africa saw reported sales jump 15.6 per cent to reach $761.7m, where the UK led the way. In the Americas, sales were up 7.4 per cent at $944.0, where strong growth in Canada, Mexico and Latin America was countered by falling sales of core brands in the US.

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