Estee Lauder’s revenue slides 9% in Q1 as COVID-19 hits makeup sales

Written by: Wajeeh Khan
November 2, 2020
  • Estee Lauder tops analysts' estimates for profit and sales in the first quarter.
  • The U.S. company raises its quarterly dividend by 10% to 41 pence per share.
  • Estee Lauder forecasts up to £1.24 of adjusted per-share earnings in Q2.

The Estee Lauder Companies Inc. (NYSE: EL) published its financial results for the fiscal first quarter on Monday that topped analysts’ estimates for profit and sales. The company said that demand for makeup took a hit in recent months due to the ongoing Coronavirus pandemic. But skincare sales helped offset this decline in Q1.

On a year to date basis, shares of the company are more than 6% up in the stock market. Estee Lauder has recovered more than 50% since March. Here’s what you need to know about the capital markets.

Estee Lauder’s Q1 financial results versus analysts’ estimates

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Despite robust performance in the first quarter, Estee Lauder gave downbeat guidance for earnings in Q2 on Monday. But the U.S. company raised its quarterly dividend by 10% to 41 pence per share.

Estee Lauder said that its net income in the quarter that concluded on 30th September printed at £404.54 million that translates to £1.10 per share. In the comparable quarter of last year, its net income was reported at a higher £460.23 million or £1.25 per share.

Adjusted for one-time items, the owner of prominent brands like MAC Cosmetics earned £1.11 per share in the recent quarter versus a lower 69.61 pence per share expected, as per FactSet.

In terms of sales, the New York-based company registered a 9% annualised decline in Q1 to £2.75 billion. FactSet Consensus for sales in the first quarter stood at £2.68 billion. Estee Lauder said in August that it will cut up to 2,000 jobs to cushion the economic blow from the COVID-19 crisis.

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Other prominent figures in Estee Lauder’s earnings report

Estee Lauder said that it generated £1.58 billion of sales from skincare that marks a 10% year over year growth. Sales from makeup tanked 32% in the recent quarter to £756.48 million. At £314.04 million, fragrance sales were also 12% lower than last year while haircare sales remained almost unchanged at £105.20 million.

FactSet Consensus for sales from these four segments stood at £1.46 billion, £960 million, £315.82 million, and £96.45 million, respectively. For the fiscal second quarter, Estee Lauder now forecasts up to £1.24 per share of adjusted earnings. According to FactSet, analysts are expecting a higher £1.34 of adjusted EPS in the current quarter.

At the time of writing, Estee Lauder is valued at £61.37 billion and has a price to earnings ratio of 117.83.