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The Estee Lauder Companies (EL) Beats on Earnings in Q1
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The Estee Lauder Companies Inc. (EL - Free Report) reported impressive first-quarter fiscal 2022 results, with the top and the bottom line increasing year over year. Sales and earnings surpassed the Zacks Consensus Estimate. The company recorded net sales growth in every region and product category during the quarter. It is also benefiting from impressive online business, as more consumers are shifting to online shopping amid the pandemic.
Quarter in Detail
The company posted adjusted earnings of $1.89 per share, which surpassed the Zacks Consensus Estimate of $1.67 cents. The bottom line surged 31% year over year. On a constant-currency (cc) basis, adjusted earnings increased 29%.
Net sales of $4,392 million surpassed the Zacks Consensus Estimate of $4,235.9 million. The metric increased 23% (up 21% at cc) from $3,562 million reported in the year-ago quarter. Management highlighted that net sales improved across all regions and product category, on the back of a rebound in brick-and-mortar retail stores, mainly in western markets. Further, organic net sales increased 18%.
Gross profit came in at $3,335 million, up 22% year over year. Gross margin declined to 75.9% from 76.8% reported in the year-ago quarter.
The company reported an operating income of $935 million, up from $705 million reported in the year-ago quarter.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
Skin Care’s sales were up 20% year over year (up 18% at cc) to $2,449 million. Makeup revenues jumped 20% year over year (up 18% at cc) to $1,174 million. In the Fragrance category, revenues surged 50% year over year (up 48% at cc) to $609 million. Hair Care sales totaled $148 million, up 9% (up 8% at cc).
Regional Results
Sales in the Americas surged 37% year over year (up 36% at cc) to $1,194 million. Revenues in Europe, the Middle East & Africa region increased 22% (up 21% at cc) to $1,873 million. Lastly, in the Asia-Pacific region sales increased 15% (up 11% at cc) to $1,326 million.
Other Updates
The company exited the quarter with cash and cash equivalents of $3,995 million, long-term debt of $5,267 million and total equity of $6,115 million.
Net cash flow used by operating activities for three months ended Sep 30, 2021, came in at $81 million. The company returned $749 million in cash to shareholders through dividend payouts and share repurchases during this time.
In a separate press release, the company declared quarterly dividend of 60 cents per share on Class A and Class B shares, up from 53 cents announced in the previous quarter. The dividend will be paid out on Dec 15, 2021 to shareholders of record as on Nov 30.
Image Source: Zacks Investment Research
COVID-19 Update
While most brick-and-mortar retail stores that sell The Estee Lauder Companies’ products (company and customer operated) remained operational during much of the first quarter, there were intermittent shutdowns in the rest of the world.
Many retail stores were temporarily shut at some point in the quarter across Continental Europe, much of Latin America and most of the Asia/Pacific region owing to resurgence of COVID-19 cases. In places where stores were open globally, traffic was lower than pre-pandemic levels.
The company notified that international passenger traffic remained restricted worldwide. Passenger traffic in Europe, the Middle East & Africa and The Americas improved, although it was significantly below the pre-pandemic pandemic levels. Spike in coronavirus cases in Asia/Pacific led to increased travel restrictions through most of the first quarter.
The company has been facing adverse impacts stemming from pandemic-led global transportation delays owing to port congestion, labor and container shortages as well as shipment delays. These have been leading to higher level of transportation and logistics costs, which are likely to negatively impact cost of sales and operating expenses for the rest of the fiscal 2022. That said, management is on track to counter such headwinds via strategic price rise, product mix, timing of shipments and use of air freight among other efforts.
The company’s online business remained solid driven by growth in areas where pandemic-induced restrictions were in place. Online sales were approximately double compared with pre-COVID level of first quarter fiscal 2020. While the demand for makeup improved significantly year over year, it continues to remain below per-pandemic levels owing to reduced makeup usage occasions and ongoing mask wearing. The company’s skin care, fragrance and hair care categories have improved from pre-pandemic levels.
Guidance
For fiscal 2022, the company now projects reported net sales to increase in the band of 12-15% year over year. Earlier, the metric was expected to grow in the band of 13-16% year over year. Organic net sales are still anticipated to grow between 9% and 12% for fiscal 2022. Adjusted earnings are now anticipated in the band of $7.23 to $7.38 per share, reflecting an increaseof 11-14% at cc in fiscal 2022. Earlier, the metric was projected to increase 9-12% at cc.
For second-quarter fiscal 2022, the company projects reported net sales to increase in the band of 11-13% year over year. Organic net sales are anticipated to grow between 8% and 10% in the quarter. Adjusted earnings are anticipated in the range of $2.51-$2.61 per share, indicating flat to down 4% on cc basis.
Shares of this Zacks Rank #3 (Hold) company have gained 22.1% so far this year against the industry’s decline of 5.4%.
Image: Bigstock
The Estee Lauder Companies (EL) Beats on Earnings in Q1
The Estee Lauder Companies Inc. (EL - Free Report) reported impressive first-quarter fiscal 2022 results, with the top and the bottom line increasing year over year. Sales and earnings surpassed the Zacks Consensus Estimate. The company recorded net sales growth in every region and product category during the quarter. It is also benefiting from impressive online business, as more consumers are shifting to online shopping amid the pandemic.
Quarter in Detail
The company posted adjusted earnings of $1.89 per share, which surpassed the Zacks Consensus Estimate of $1.67 cents. The bottom line surged 31% year over year. On a constant-currency (cc) basis, adjusted earnings increased 29%.
Net sales of $4,392 million surpassed the Zacks Consensus Estimate of $4,235.9 million. The metric increased 23% (up 21% at cc) from $3,562 million reported in the year-ago quarter. Management highlighted that net sales improved across all regions and product category, on the back of a rebound in brick-and-mortar retail stores, mainly in western markets. Further, organic net sales increased 18%.
Gross profit came in at $3,335 million, up 22% year over year. Gross margin declined to 75.9% from 76.8% reported in the year-ago quarter.
The company reported an operating income of $935 million, up from $705 million reported in the year-ago quarter.
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
Product-Based Segment Results
Skin Care’s sales were up 20% year over year (up 18% at cc) to $2,449 million. Makeup revenues jumped 20% year over year (up 18% at cc) to $1,174 million. In the Fragrance category, revenues surged 50% year over year (up 48% at cc) to $609 million. Hair Care sales totaled $148 million, up 9% (up 8% at cc).
Regional Results
Sales in the Americas surged 37% year over year (up 36% at cc) to $1,194 million. Revenues in Europe, the Middle East & Africa region increased 22% (up 21% at cc) to $1,873 million. Lastly, in the Asia-Pacific region sales increased 15% (up 11% at cc) to $1,326 million.
Other Updates
The company exited the quarter with cash and cash equivalents of $3,995 million, long-term debt of $5,267 million and total equity of $6,115 million.
Net cash flow used by operating activities for three months ended Sep 30, 2021, came in at $81 million. The company returned $749 million in cash to shareholders through dividend payouts and share repurchases during this time.
In a separate press release, the company declared quarterly dividend of 60 cents per share on Class A and Class B shares, up from 53 cents announced in the previous quarter. The dividend will be paid out on Dec 15, 2021 to shareholders of record as on Nov 30.
COVID-19 Update
While most brick-and-mortar retail stores that sell The Estee Lauder Companies’ products (company and customer operated) remained operational during much of the first quarter, there were intermittent shutdowns in the rest of the world.
Many retail stores were temporarily shut at some point in the quarter across Continental Europe, much of Latin America and most of the Asia/Pacific region owing to resurgence of COVID-19 cases. In places where stores were open globally, traffic was lower than pre-pandemic levels.
The company notified that international passenger traffic remained restricted worldwide. Passenger traffic in Europe, the Middle East & Africa and The Americas improved, although it was significantly below the pre-pandemic pandemic levels. Spike in coronavirus cases in Asia/Pacific led to increased travel restrictions through most of the first quarter.
The company has been facing adverse impacts stemming from pandemic-led global transportation delays owing to port congestion, labor and container shortages as well as shipment delays. These have been leading to higher level of transportation and logistics costs, which are likely to negatively impact cost of sales and operating expenses for the rest of the fiscal 2022. That said, management is on track to counter such headwinds via strategic price rise, product mix, timing of shipments and use of air freight among other efforts.
The company’s online business remained solid driven by growth in areas where pandemic-induced restrictions were in place. Online sales were approximately double compared with pre-COVID level of first quarter fiscal 2020. While the demand for makeup improved significantly year over year, it continues to remain below per-pandemic levels owing to reduced makeup usage occasions and ongoing mask wearing. The company’s skin care, fragrance and hair care categories have improved from pre-pandemic levels.
Guidance
For fiscal 2022, the company now projects reported net sales to increase in the band of 12-15% year over year. Earlier, the metric was expected to grow in the band of 13-16% year over year. Organic net sales are still anticipated to grow between 9% and 12% for fiscal 2022. Adjusted earnings are now anticipated in the band of $7.23 to $7.38 per share, reflecting an increaseof 11-14% at cc in fiscal 2022. Earlier, the metric was projected to increase 9-12% at cc.
For second-quarter fiscal 2022, the company projects reported net sales to increase in the band of 11-13% year over year. Organic net sales are anticipated to grow between 8% and 10% in the quarter. Adjusted earnings are anticipated in the range of $2.51-$2.61 per share, indicating flat to down 4% on cc basis.
Shares of this Zacks Rank #3 (Hold) company have gained 22.1% so far this year against the industry’s decline of 5.4%.
Top 3 Picks
Inter Parfums, Inc. (IPAR - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 25.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
e.l.f. Beauty (ELF - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 48.9%, on average.
Helen of Troy (HELE - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 19.8%, on average.