Estee Lauder Companies Inc. ( EL - Analyst Report ) posted second quarter fiscal 2013 earnings of $1.16 per share (excluding restructuring charges), which climbed 14.9% from $1.01 in the prior-year quarter. The results were ahead of the management’s guidance range of 97 cents to $1.03. The reported earnings also exceeded the Zacks Consensus Estimate of $1.04 by 14.8%.

Profits during the quarter were aided by solid performance in the U.S. and emerging markets.

Quarter in Detail

Net sales, excluding foreign currency translation, climbed 7% to $2.9 billion. The increase was within the company’s guidance of 6%-7%. The strong sales were driven primarily by the Asia/Pacific region, followed by the EMEA and Americas. The quarterly sales were in-line with the Zacks Consensus Estimate.

The Skin Care product line was the strongest in the last quarter, growing 10% from the year-ago quarter. This was followed by Hair Care, Makeup and then fragrance, which grew 9%, 7% and 4%, respectively. Other products, with make up less than 1% of revenue, declined. Currency was a slight positive for the quarter.

The gross margin expanded 70 basis points (bps) to 80.6% in the second quarter of fiscal 2013 owing to strong sales and cost control. Despite higher selling, general & administrative expenses, operating income margin increased 50 bps to 22.3% due to much higher restructuring charges.

Segment Details

Americas: Sales in the Americas rose 6.0% to $1.1 billion. The sales increased on the heels of successful product innovations, particularly in the U.S. Almost all the product segments experienced sales growth except fragrance in the region. Strong results in the makeup artist brands and certain heritage and hair care brands also boosted sales during the quarter.

Europe, the Middle East & Africa: Overall sales in the region went up 6.0% to $1.1 billion. Growth would have been stronger if not for the softness in Russia, Spain and Italy. However, the company generated sales growth in most of the other markets. On a constant currency basis, sales increased 7% in the region.

Asia/Pacific: Sales in the region improved 11.0% to $687.6 million, mainly owing to increased demand for skin care products in China, Hongkong and Thailand. However, weakness in Korea partially offset the sales growth. On a constant currency basis, sales increased 9% in the region.

Other Financial Update

As of December 31, 2012, the company held $1.32 billion cash and cash equivalents compared to $999.1 million as of Sep 30, 2012. Long term debt remained at $1.33 billion compared to $1.07 billion at the end of the previous quarter.

The company has announced a dividend of 18 cents per share on the Company’s Class A and Class B Common Stock on payable on March 15, 2013 to stockholders of record at the close of business on February 28, 2013.

Guidance

For the third quarter of fiscal 2013, earnings per share excluding restructuring charges are projected in the range of 28 cents to 32 cents per share. Net sales are expected to increase between 3% and 4% in constant currency.

For fiscal 2013, the company reiterated its earnings guidance (excluding restructuring charges and early debt extinguishment) to between $2.51 to $2.. Net sales in constant currency are expected to increase between 6% and 7% as compared to 6% and 8%, forecasted previously.

Recommendation

Headquartered in New York, Estee Lauder engages in the manufacture and sale of skin care, makeup, fragrance, and hair care products. Other peer companies like The Female Health Company ( FHCO - Snapshot Report ) and Inter Parfums Inc. ( IPAR - Snapshot Report ) – Zacks Rank #1 (Strong Buy), and Helen of Troy Limited ( HELE - Snapshot Report ) – Zacks Rank #2 (Buy) are currently doing well and are worth considering.