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Estee Lauder posts lower 2nd-qtr net profit
Thursday January 26, 6:40 am ET
NEW YORK (Reuters) - Cosmetics maker Estee Lauder Cos. Inc. (NYSE:EL - News) posted a 41 percent drop in quarterly profit on Thursday, weighed down by a charge from the sale of its Stila business.
The company, whose brands include Aveda, Clinique and Origins, also said results in the current quarter would fall short of last year's levels due to charges, marketing costs and store closings.
Profit fell to $81.7 million, or 38 cents per share, in the fiscal second quarter ended December 31, from $138.3 million, or 60 cents per share, a year earlier.
Earnings from continuing operations increased to $150.4 million, or 70 cents per share, from $139.7 million, or 61 cents per share.
While international operations were solid in the quarter, sales in the United States "reflected a mixed retail environment," President and Chief Executive William Lauder said in a statement.
New York-based Estee Lauder said sales climbed 2.7 percent to $1.78 billion. Excluding the impact of foreign currency translation, sales rose 5 percent.
Estee Lauder said in October that it would sell its hip Stila cosmetics brand and take other actions. The company has felt pressure as its largest customer, Federated Department Stores Inc. (NYSE:FD - News), closes stores following its acquisition of May Department Stores, a move that cuts the number of outlets where its cosmetics and fragrances are sold.
The company forecast sales growth of about 4 percent for the second half of the fiscal year. Hair care and fragrance are expected to be the strongest categories, followed by makeup and skin care.
Estee Lauder expects to earn 64 cents to 71 cents from continuing operations in the second half of the year, including about 26 cents per share in charges related to its savings plan. For the full year, it forecast a profit of $1.61 to $1.68 per share from continuing operations.
While fiscal third-quarter profitability should fall short of last year's results, fourth-quarter profit from continuing operations should be substantially higher than last year, the company said.
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