Estee Lauder results show better underlying trend

By Simon Pitman

- Last updated on GMT

Related tags Stock market Stock Estée lauder

Financial markets responded positively to Estee Lauder results, which beat expectations as Asian markets and premium cosmetics showed their mettle.

The company’s share price rose by 5.75 cents, or 13 percent to reach $36.88 on the New York Stock Exchange at close of trading yesterday, although this figure is still well below the €54.75 52 week high set last summer.

The stock market performance came despite a 10 percent dip in sales during its third quarter and a 70 per cent dip in net profits, the latter being largely attributable to heavy restructuring recharges.

Quarterly sales beat expectations

Net sales for the period came in at $1.70bn, whereas analysts polled by Reuters Thomson had on average expected that the quarterly income would be around $1.65bn.

The results were driven by better than expected sales in the premium cosmetics category, largely attributable to strong Clinique sales worldwide, as well as a continued strong performance in the Asia-Pacific market.

Sales in this region grew by 3.8 per cent in reported terms to reach $308.5m, with every country posting positive results, with the exception of Japan, which has been hard hit by economic woes.

Asia Pacific markets continue to grow

Underlining the positive results in the Asia Pacific region were double digit sales increases in Korea, China, Australia and Hong Kong.

The financial markets were also further encouraged by the fact that an ambitious restructuring plan, which has already pledged to shed 6 percent of the company’s workforce, is likely to put the company in a stronger position for the future.

Estee Lauder is the latest in a string of US cosmetic and personal care players to have beaten market expectations, adding to both Revlon and Bare Escentuals, which reported sliding sales and profits this week, but beat analysts’ predictions.

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