We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Estee Lauder Companies (EL) Ups DECIEM Stake, Boosts Skincare
Read MoreHide Full Article
The Estee Lauder Companies Inc. (EL - Free Report) has been focused on strengthening its skincare business, which has been performing well for quite some time now. Incidentally, the cosmetics giant concluded the first phase of raising its ownership stake in DECIEM Beauty Group Inc. ("DECIEM"). Consequently, The Estee Lauder Companies now has nearly 76% ownership in DECIEM compared with 29% earlier. Further, The Estée Lauder Companies agreed to buy the remaining stake after three years.
We note that DECIEM — a Canada-based company — is the force behind fast-growing skincare brands like The Ordinary and NIOD. Well, DECIEM’s hero products, innovation along with digital- and consumer-first high-touch approach have been yielding results. DECIEM’s functional beauty brand and products are mainly sold via DECIEM-owned and online retailer websites as well as specialty-multi stores and its freestanding stores across the United States, the U.K. and Canada.
We believe that the increased ownership in DECIEM is likely to augment The Estee Lauder’s skincare business, thereby fueling the latter’s growth.
The Estee Lauder Companies’ Skincare Category Strong
The company’s skincare portfolio has been performing well for a while now. During the third quarter of fiscal 2021, brands like Estee Lauder, Clinique and La Mer witnessed significant growth. Notably, Estee Lauder delivered solid double-digit growth on the back of improvement in travel retail and Mainland China. La Mer also increased double digits, driven by growth in the Asia-Pacific; Europe, the Middle East & Africa; and The Americas regions. Further, Clinique increased double digits in every region on the back of solid demand for its hero products. The skincare category is also benefiting from Origins and the acquisition of Dr. Jart. During the quarter, the skincare category’s sales were up 31% year over year (up 28% at cc) to $2,259 million.
What’s More
Talking of the third quarter, the top and bottom lines increased year over year. Further, earnings surpassed the Zacks Consensus Estimate. Apart from strength in the skincare and fragrance categories, improving trends in the usage of makeup products (as pandemic-led restrictions are easing) aided the company’s growth. Also, sales increased in all regions, led by double-digit growth in the Asia-Pacific, where growth in Mainland China accelerated. Additionally, the company’s online and travel retail businesses were strong. With regard to online, sales of Brand.com, third-party platforms and Retail.com surged double digits. Further, sales of Pure-Play retailers increased triple digits in the quarter. Also, EMEA online sales increased almost triple digits, while Latin America's growth was solid as well.
On its last earnings call, management said that in fiscal 2021, it projects net sales to increase in a band of 11-12%. Excluding the impact of currency, management expects net sales to improve 9-10% in the quarter. Further, adjusted earnings are anticipated to increase in the range of 45-47% at cc in fiscal 2021. Its fiscal fourth-quarter sales are anticipated to increase 44-50% at cc. This reflects the recovery in several parts of the world and a favorable year-over-year comparison.
Certainly, the investment in DECIEM is likely to step up The Estee Lauder Companies’ growth prospects. Shares of this Zacks Rank #3 (Hold) company have rallied 23.7% in the past six months compared with the industry’s growth of 22.7%.
United Natural (UNFI - Free Report) has a Zacks Rank #2 (Buy) and its bottom line outpaced the Zacks Consensus Estimate by 13.6% in the trailing four quarters, on average.
Nu Skin (NUS - Free Report) has a Zacks Rank #2 and its bottom line outpaced the Zacks Consensus Estimate by 18.8% in the trailing four quarters, on average.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
The Estee Lauder Companies (EL) Ups DECIEM Stake, Boosts Skincare
The Estee Lauder Companies Inc. (EL - Free Report) has been focused on strengthening its skincare business, which has been performing well for quite some time now. Incidentally, the cosmetics giant concluded the first phase of raising its ownership stake in DECIEM Beauty Group Inc. ("DECIEM"). Consequently, The Estee Lauder Companies now has nearly 76% ownership in DECIEM compared with 29% earlier. Further, The Estée Lauder Companies agreed to buy the remaining stake after three years.
We note that DECIEM — a Canada-based company — is the force behind fast-growing skincare brands like The Ordinary and NIOD. Well, DECIEM’s hero products, innovation along with digital- and consumer-first high-touch approach have been yielding results. DECIEM’s functional beauty brand and products are mainly sold via DECIEM-owned and online retailer websites as well as specialty-multi stores and its freestanding stores across the United States, the U.K. and Canada.
We believe that the increased ownership in DECIEM is likely to augment The Estee Lauder’s skincare business, thereby fueling the latter’s growth.
The Estee Lauder Companies’ Skincare Category Strong
The company’s skincare portfolio has been performing well for a while now. During the third quarter of fiscal 2021, brands like Estee Lauder, Clinique and La Mer witnessed significant growth. Notably, Estee Lauder delivered solid double-digit growth on the back of improvement in travel retail and Mainland China. La Mer also increased double digits, driven by growth in the Asia-Pacific; Europe, the Middle East & Africa; and The Americas regions. Further, Clinique increased double digits in every region on the back of solid demand for its hero products. The skincare category is also benefiting from Origins and the acquisition of Dr. Jart. During the quarter, the skincare category’s sales were up 31% year over year (up 28% at cc) to $2,259 million.
What’s More
Talking of the third quarter, the top and bottom lines increased year over year. Further, earnings surpassed the Zacks Consensus Estimate. Apart from strength in the skincare and fragrance categories, improving trends in the usage of makeup products (as pandemic-led restrictions are easing) aided the company’s growth. Also, sales increased in all regions, led by double-digit growth in the Asia-Pacific, where growth in Mainland China accelerated. Additionally, the company’s online and travel retail businesses were strong. With regard to online, sales of Brand.com, third-party platforms and Retail.com surged double digits. Further, sales of Pure-Play retailers increased triple digits in the quarter. Also, EMEA online sales increased almost triple digits, while Latin America's growth was solid as well.
On its last earnings call, management said that in fiscal 2021, it projects net sales to increase in a band of 11-12%. Excluding the impact of currency, management expects net sales to improve 9-10% in the quarter. Further, adjusted earnings are anticipated to increase in the range of 45-47% at cc in fiscal 2021. Its fiscal fourth-quarter sales are anticipated to increase 44-50% at cc. This reflects the recovery in several parts of the world and a favorable year-over-year comparison.
Certainly, the investment in DECIEM is likely to step up The Estee Lauder Companies’ growth prospects. Shares of this Zacks Rank #3 (Hold) company have rallied 23.7% in the past six months compared with the industry’s growth of 22.7%.
Solid Consumer Staple Stocks
Medifast (MED - Free Report) , which currently carries a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 12.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Natural (UNFI - Free Report) has a Zacks Rank #2 (Buy) and its bottom line outpaced the Zacks Consensus Estimate by 13.6% in the trailing four quarters, on average.
Nu Skin (NUS - Free Report) has a Zacks Rank #2 and its bottom line outpaced the Zacks Consensus Estimate by 18.8% in the trailing four quarters, on average.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>