* Q1 profit to "significantly" exceed company's prior view
* Cites growth in Asia, early holiday shipments
* Says to raise FY profit view later this month
* Shares jump 5.5 percent
(Adds company's August forecast, analysts' comments, byline;
updates stock activity)
By Jessica Wohl
CHICAGO, Oct 16 Cosmetics maker Estee Lauder
Cos Inc (EL.N) expects to post a much higher-than-expected
quarterly profit and raise its fiscal-year forecast later this
month, after sales topped expectations, sending its shares up
more than 5 percent.
The company, best known for its eponymous line and brands
such as Clinique, said it still had a cautious view on consumer
Estee Lauder derives much of its sales from department
store makeup counters, which have been pressured by a drop in
spending as consumers cut back on nonessential purchases.
In August, the company forecast a weaker-than-expected 2010
profit as it dealt with slack demand for makeup, perfume and
skincare items during the lengthy recession. [ID:nN13265204]
Estee Lauder cited tight cost controls, new products,
growth in Asia, increased traffic in its travel retail business
and improved currency translation for its upbeat forecast on
Friday. It said sales in the first quarter, which ended on
Sept. 30, also got a boost from from earlier holiday shipments,
which it had expected to land in the second quarter.
The company said first-quarter earnings before
restructuring charges should be "significantly higher than
In August, Estee Lauder forecast first-quarter earnings of
23 cents to 30 cents per share. Analysts on average expect a
profit of 25 cents, according to Thomson Reuters I/B/E/S.
2010 FORECAST TO BE RAISED
While Estee Lauder said it remained cautious about the
economy and consumer spending throughout the year, it plans to
increase its fiscal-year profit forecast when it reports
first-quarter results on Oct. 30.
In August, the company forecast fiscal-year earnings of
$1.55 to $1.70 per share. Analysts are calling for a profit of
Sanford Bernstein analyst Ali Dibadj said he expected the
2010 forecast to be raised "materially," perhaps closer to
$1.70 to $1.85 per share.
The increase in the fiscal 2010 outlook may only stem from
the first-quarter upside, BMO Capital Markets analyst Connie
Maneaty said in a note to clients.
Estee Lauder said it spent less than planned in the first
quarter due to the global economic downturn and the potential
impact of the H1N1 flu. It expects to speed up investment
spending above first-quarter levels during the remainder of
"Investment spending may limit the potential earnings" in
the rest of the year, said Maneaty, who has a "market perform"
rating on Estee Lauder.
"We like the change underway at Estee Lauder," she wrote,
"but we believe it is fully reflected in the stock price and
Shares of Estee Lauder rose 5.5 percent to $41.26 in
(Reporting by Jessica Wohl; Editing by Lisa Von Ahn)