August 20, 2018 / 10:57 AM / 3 months ago

Clinique, La Mer skincare boosts Estee quarterly results

(Reuters) - Estee Lauder Cos Inc (EL.N) topped quarterly profit and sales estimates on Monday as customers bought more of its high-margin Clinique and La Mer skincare products at duty free stores, online and beauty-focused retailers.

The company’s strong results were in contrast to rival Revlon Inc (REV.N) and e.l.f Beauty Inc’s (ELF.N) lower-than-expected quarterly sales reported earlier in August due to poor demand across U.S. retailers.

Analysts have said Estee’s more premium products and wide portfolio of cosmetics products helps it offset much of the slowdown in U.S. retail.

Sales at Estee’s skincare products jumped 29 percent in the quarter and beat the analyst average estimate, offsetting a slowdown in sales at its makeup business that posted its slowest growth in nearly two years.

Makeup sales were muted due to weak demand for its M.A.C. cosmetics in the United States where store traffic continues to fall at both department and standalone stores.

Overall, quarterly sales rose 14 percent to $3.3 billion, beating the average analyst estimate of $3.25 billion, according to Thomson Reuters I/B/E/S.

Chief Executive Fabrizio Freda said the proposed Chinese tariffs on cosmetics would be “less onerous” than commodities as its gross margins of 80 percent give it breathing room to take some impact.

“We will do our best to manage tariffs if they happen, without impacting pricing directly,” he said.

Estee expects earnings of $1.18-$1.22 per share, compared with the analysts’ average estimate of $1.32, according to Thomson Reuters I/B/E/S.

The company’s first-quarter sales are expected to rise 4-5 percent, or $3.40 billion-$3.44 billion, but was below the average estimate of $3.50 billion, mainly due to a stronger dollar.

Net income fell 19 percent to $186 million or 49 cents per share in the quarter ended June 30. Excluding items it earned 61 cents per share, beating the average estimate of 56 cents.

Shares of the company rose as much as 6.6 percent and was trading up about 3 percent at $139.98 in afternoon trading.

Reporting by Soundarya J and Jaslein Mahil in Bengaluru; Editing by Arun Koyyur

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