* Estée Lauder still sees FY sales up 6-7 pct
* Sees FY EPS $2.51-$2.59 vs prior forecast $2.47-$2.56
* Shares up 6 percent in afternoon trading
By Phil Wahba
Feb 5 Estée Lauder Cos Inc on Tuesday
raised its full-year profit forecast, pointing to a surge in
luxury sales and strong demand in the United States and China
that is counteracting weaker markets like southern Europe and
Sales in the quarter ended on Dec. 31 rose 7.1 percent to
$2.93 billion, with gains in every region, including Europe,
where sales in France and Switzerland returned to growth.
That appeared to reassure investors after Estée Lauder in
November scaled back its full-year sales forecast because of a
weak European market and as revenue grew a modest 2.9 percent in
the first quarter.
The gains were most pronounced in its high-end products.
"The affluent consumer is spending freely," Estée Lauder
Chief Executive Fabrizio Freda told analysts on a conference
call. For instance, sales in its luxury brands like Jo Malone,
Tom Ford and La Mer were up at least 20 percent.
The company's shares rose 5.8 percent to $64.60 in afternoon
In Asia - still the company's smallest regional market but
the cornerstone of its international expansion - sales were up
11 percent, with China and Hong Kong leading the way. In China,
where it has more quickly expanded than other Western brands,
sales rose 28 percent at its stores.
"We believe Estée Lauder continues gaining share of a still
growing, but slowing prestige beauty category," Stifel Nicolaus
& Co analyst Mark Astrachan wrote in a research note.
Growth should continue in the United States, where sales to
department stores such as Saks Inc and Neiman Marcus
were strong, as well as in several key emerging markets and on
the company's e-commerce sites, Freda said in a statement.
Business was almost as good at department stores like Kohl's
Corp that cater to middle-income consumers, as shoppers
move up from "mass" brands to middle brands, known as "prestige"
in industry parlance.
"It is solid because we are moving consumers from mass to
prestige," Freda told Reuters.
The company, known for its namesake brand as well as lines
including Clinique and MAC, still anticipates sales growth this
year of 6 percent to 7 percent in local currency terms, although
it expects third-quarter sales to increase 3 percent to 4
Skin care showed the largest gains as the company got a
boost from the launch of products such as a La Mer moisturizer.
Fragrances, often a laggard for the company, benefited from new
products from designer Tom Ford.
Estée Lauder reported fiscal second-quarter net income of
$447.5 million, or $1.13 a share, up from $396.7 million, or
$1.00 a share, a year earlier.
The company now expects a profit of $2.51 to $2.59 per share
for the year, up from an earlier range of $2.47 to $2.56.
Smaller rival Revlon Inc said its quarterly sales
rose 14 percent in the United States, driven by increased demand
for its Revlon and SinfulColors color cosmetics and ColorSilk
hair color, and offsetting weakness in Europe.
Shares of Revlon rose more than 15 percent.