On November 1, 2023, The Estee Lauder Companies Inc (EL, Financial) released its earnings report for the first quarter of Fiscal 2024. The company reported a 10% decline in net sales, amounting to $3.52 billion, compared to $3.93 billion in the prior year. The decrease was primarily driven by pressures in the company's Asia travel retail business and a slower-than-expected recovery of overall prestige beauty in mainland China. However, these challenges were partially offset by organic net sales growth in the United States and several markets in Asia/Pacific and Europe, the Middle East & Africa (EMEA).
Financial Performance
The company's net earnings for the quarter were $31 million, a significant decrease from $489 million in the prior year. The diluted net earnings per common share were $.09, compared to $1.35 reported in the prior year. Adjusted diluted net earnings per common share declined to $.11, decreasing to $.12 in constant currency. The cybersecurity incident disclosed in July 2023 was dilutive to fiscal 2024 first quarter earnings per common share by $.08.
Product Category Performance
EL's Skin Care net sales decreased by 21%, primarily due to pressures in the company's Asia travel retail business and a slower-than-expected recovery of overall prestige beauty in mainland China. Makeup net sales increased by 1%, reflecting high-single-digit growth in The Americas and in Asia/Pacific. Fragrance net sales rose by 5%, reflecting increases from Le Labo and TOM FORD, owing to double-digit growth in The Americas and Asia/Pacific. Hair Care net sales decreased by 7%, driven by Aveda and Bumble and bumble primarily due to softness in North America.
Outlook for Fiscal 2024
The company is lowering its outlook for fiscal 2024 due to incremental external headwinds, including slower growth in overall prestige beauty in Asia travel retail and in mainland China. Despite these challenges, EL anticipates progressively improving performance in the second half of fiscal 2024. The company also plans to strategically invest in consumer-facing activities, where appropriate, to support recovery, share gains, and long-term profitable growth.
Profit Recovery Plan for Fiscal 2025 and 2026
Given the slower-than-expected pace of recovery, EL has accelerated and expanded its profit recovery plan to preserve the company's expectation to progressively rebuild its profit margins in fiscal years 2025 and 2026. The company expects to drive $800 million to $1 billion of incremental operating profit through the initiatives under this plan.
Explore the complete 8-K earnings release (here) from The Estee Lauder Companies Inc for further details.
