Estee Lauder forecasts weak profit as demand slows in Europe, China

Wed Feb 5, 2014 12:01pm EST

Fabrizio Freda (R), President and CEO, The Estee Lauder Companies, and Karen Buglisi (L), Global Brand President, M.A.C Cosmetics, pose in the M.A.C shop in Paris, February 28, 2013. REUTERS/Philippe Wojazer

Fabrizio Freda (R), President and CEO, The Estee Lauder Companies, and Karen Buglisi (L), Global Brand President, M.A.C Cosmetics, pose in the M.A.C shop in Paris, February 28, 2013.

Credit: Reuters/Philippe Wojazer

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(Reuters) - Beauty products company Estee Lauder Cos Inc (EL.N) forecast current-quarter profit below analysts' estimate, citing weak demand in European countries and South Korea and slowing growth in China.

Estee Lauder shares fell as much as 8 percent in early trading after the company also reported second-quarter sales below estimates.

New York-based Estee Lauder forecast third-quarter sales growth of 10-11 percent, which translates to about $2.52 billion-$2.54 billion.

The company, known for its Estee Lauder, Clinique and MAC brands, said it expects earnings of 52-55 cents per share.

Analysts on average were expecting a profit of 63 cents per share on revenue of $2.50 billion, according to Thomson Reuters I/B/E/S.

"Initial third-quarter guidance appears a bit light," Oppenheimer & Co analyst Joseph Altobello wrote in a note to clients.

Estee Lauder said net income fell to $432.5 million, or $1.09 per share, in the second quarter ended December 31, from $447.5 million, or $1.13 per share, a year earlier.

Excluding certain items, the company earned $1.09 per share, slightly above the average analyst estimate of $1.06.

Total sales rose 3 percent to $3.02 billion, but fell short of the average analyst estimate of $3.05 billion.

Separately, rival Elizabeth Arden Inc (RDEN.O) posted a 13 percent decline in North America sales in its second quarter, hurt by weaker-than-expected holiday retail sales and replenishment orders.

Elizabeth Arden's shares fell 7 percent to $23.85 on the Nasdaq.

Estee Lauder shares were down 5 percent at $65.59 on the New York Stock Exchange.

(Reporting by Maria Ajit Thomas in Bangalore)

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