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Estee Lauder's (EL) Q4 Loss Wider Than Estimates, Sales Down
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The Estee Lauder Companies Inc. (EL - Free Report) reported fourth-quarter fiscal 2020 results, with the top and the bottom line deteriorating year over year. Moreover, the company’s loss was wider than the Zacks Consensus Estimate and sales missed the same. Results were majorly hurt by coronavirus-led hurdles.
Nevertheless, the company undertook several efforts to preserve its financial flexibility amid the coronavirus pandemic. These include curbing advertising and promotional activities, travel, consulting and meetings among others. Also, it reduced capital investments amid the crisis.
Quarter in Detail
The company posted adjusted loss of 53 cents per share, which was wider than Zacks Consensus Estimate of a loss of 19 cents. Notably, the company posted adjusted net earnings of 64 cents per share in the year-ago quarter. On a constant-currency (cc) basis, adjusted loss came in at 50 cents per share.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
Estee Lauder’s net sales of $2,430 million missed the Zacks Consensus Estimate of $2,462.5 million. Sales declined 32% year over year (down 31% at cc). The downside was caused by retail store closures due to the coronavirus pandemic. Nevertheless, the decline was partially offset by strong online sales.
Gross profit came in at $1,663 million, down 40%. Also, gross margin contracted 830 basis points (bps) to 68.4%.
The company reported operating loss of $543 million against operating income of $216 million reported in the year-ago quarter.
Product-Based Segment Results
Skin Care’s sales inched up 1% year over year (up 3% at cc) to $1,612 million. Makeup revenues plunged 62% year over year (down 61% at cc) to $545 million. In the Fragrance category, revenues fell 57% year over year (down 56% at cc) to $171 million. Hair Care sales totaled $98 million, down 35% year on year (also at cc).
Regional Results
Sales in the Americas declined 54% year over year (also at cc) to $516 million. Revenues in Europe, the Middle East & Africa region declined 40% (down 39% at cc) to $981 million. Nevertheless, in the Asia-Pacific region sales increased 12% (up 16% at cc) to $933 million.
Other Financial Updates
The company concluded the quarter with cash and cash equivalents of $5,022 million, long-term debt of $4,914 million and shareholders’ equity of $3,962 million.
Net cash flow used for operating activities for year ended Jun 30, 2020 came in at $2,280 million.
In a separate press release, the company declared quarterly dividend of 48 cents per share payable on Sep 15 to shareholders of record as on Aug 31.
Store Reopening Update
In Asia/Pacific, almost all retail stores have reopened which were temporarily shut due to coronavirus-induced restrictions. In Europe, the Middle East & Africa retail stores began reopening since June. At the end of June, nearly 15% of the stores were shut. Further, stores began reopening in the Americas with nearly 20% of the stores remaining shut at the end of June.
Other Updates
In the wake of the coronavirus outbreak, the company has initiated a two year Post-COVID Business Acceleration Program. The program aims to reduce Estee Lauder’s retail footprint, especially in Europe, the Middle East & Africa and in North America regions alongside increasing its investments in the digital space. This program bodes well in the current environment wherein customers are increasingly shopping online. Through this plan management expects to shut 10%-15% of its freestanding stores worldwide along with various low performing department store counters. The plan which is expected to start during the first quarter of fiscal 2021 will provide annual benefits in the range of $300-$400 million, before taxes and once fully operational.
Guidance
Given the uncertainty related to the pandemic, management is not providing any guidance for fiscal 2021.
For the first quarter of fiscal 2021, the company projects revenues to decline in the band of 12-13% that includes a contribution of nearly 2.5% from Dr. Jart+ acquisition. Also adverse currency impact is expected to be 1% to the sales. Excluding these, management expects net sales to decrease 14%-15% in the quarter. Further, adjusted earnings are anticipated between 80 cents and 85 cents in the fiscal first quarter.
Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 3.1% so far this year against the industry’s decline of 25%.
TreeHouse Foods (THS - Free Report) , with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7.7%.
Helen of Troy (HELE - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 6.5%.
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Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Estee Lauder's (EL) Q4 Loss Wider Than Estimates, Sales Down
The Estee Lauder Companies Inc. (EL - Free Report) reported fourth-quarter fiscal 2020 results, with the top and the bottom line deteriorating year over year. Moreover, the company’s loss was wider than the Zacks Consensus Estimate and sales missed the same. Results were majorly hurt by coronavirus-led hurdles.
Nevertheless, the company undertook several efforts to preserve its financial flexibility amid the coronavirus pandemic. These include curbing advertising and promotional activities, travel, consulting and meetings among others. Also, it reduced capital investments amid the crisis.
Quarter in Detail
The company posted adjusted loss of 53 cents per share, which was wider than Zacks Consensus Estimate of a loss of 19 cents. Notably, the company posted adjusted net earnings of 64 cents per share in the year-ago quarter. On a constant-currency (cc) basis, adjusted loss came in at 50 cents per share.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
The Estee Lauder Companies Inc. price-consensus-eps-surprise-chart | The Estee Lauder Companies Inc. Quote
Estee Lauder’s net sales of $2,430 million missed the Zacks Consensus Estimate of $2,462.5 million. Sales declined 32% year over year (down 31% at cc). The downside was caused by retail store closures due to the coronavirus pandemic. Nevertheless, the decline was partially offset by strong online sales.
Gross profit came in at $1,663 million, down 40%. Also, gross margin contracted 830 basis points (bps) to 68.4%.
The company reported operating loss of $543 million against operating income of $216 million reported in the year-ago quarter.
Product-Based Segment Results
Skin Care’s sales inched up 1% year over year (up 3% at cc) to $1,612 million. Makeup revenues plunged 62% year over year (down 61% at cc) to $545 million. In the Fragrance category, revenues fell 57% year over year (down 56% at cc) to $171 million. Hair Care sales totaled $98 million, down 35% year on year (also at cc).
Regional Results
Sales in the Americas declined 54% year over year (also at cc) to $516 million. Revenues in Europe, the Middle East & Africa region declined 40% (down 39% at cc) to $981 million. Nevertheless, in the Asia-Pacific region sales increased 12% (up 16% at cc) to $933 million.
Other Financial Updates
The company concluded the quarter with cash and cash equivalents of $5,022 million, long-term debt of $4,914 million and shareholders’ equity of $3,962 million.
Net cash flow used for operating activities for year ended Jun 30, 2020 came in at $2,280 million.
In a separate press release, the company declared quarterly dividend of 48 cents per share payable on Sep 15 to shareholders of record as on Aug 31.
Store Reopening Update
In Asia/Pacific, almost all retail stores have reopened which were temporarily shut due to coronavirus-induced restrictions. In Europe, the Middle East & Africa retail stores began reopening since June. At the end of June, nearly 15% of the stores were shut. Further, stores began reopening in the Americas with nearly 20% of the stores remaining shut at the end of June.
Other Updates
In the wake of the coronavirus outbreak, the company has initiated a two year Post-COVID Business Acceleration Program. The program aims to reduce Estee Lauder’s retail footprint, especially in Europe, the Middle East & Africa and in North America regions alongside increasing its investments in the digital space. This program bodes well in the current environment wherein customers are increasingly shopping online. Through this plan management expects to shut 10%-15% of its freestanding stores worldwide along with various low performing department store counters. The plan which is expected to start during the first quarter of fiscal 2021 will provide annual benefits in the range of $300-$400 million, before taxes and once fully operational.
Guidance
Given the uncertainty related to the pandemic, management is not providing any guidance for fiscal 2021.
For the first quarter of fiscal 2021, the company projects revenues to decline in the band of 12-13% that includes a contribution of nearly 2.5% from Dr. Jart+ acquisition. Also adverse currency impact is expected to be 1% to the sales. Excluding these, management expects net sales to decrease 14%-15% in the quarter. Further, adjusted earnings are anticipated between 80 cents and 85 cents in the fiscal first quarter.
Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 3.1% so far this year against the industry’s decline of 25%.
3 Stocks to Consider
Nu Skin (NUS - Free Report) , with a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5.6%.You can see the complete list of today’s Zacks #1 Rank stocks here.
TreeHouse Foods (THS - Free Report) , with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7.7%.
Helen of Troy (HELE - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 6.5%.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>