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Estee Lauder (EL) Gains On Online Sales & Profit Recovery Plan
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The Estee Lauder Companies Inc. (EL - Free Report) has a strong online business, which is proving to be a major growth driver. The beauty company has a strong presence in emerging markets, which insulates it from the macroeconomic headwinds in the matured markets. However, the company is bearing the brunt of a challenging macroeconomic environment.
Let’s delve deeper.
What’s Driving Growth?
The Estee Lauder Companies boasts a strong online business. The company is implementing new technology and digital experiences, including online booking for each store appointment, omnichannel loyalty programs and high-touch mobile services. These initiatives and the company’s digital-first mindset have been aiding the Estee Lauder Companies’ online sales. The company is expanding its omnichannel capabilities to aid flexible and convenient shopping options for consumers.
Image Source: Zacks Investment Research
The Zacks Rank #3 (Hold) company generates significant revenues from emerging markets like Thailand, India, Russia and Brazil, which encourages it to make distributional, digital and marketing investments in these countries. The company is well insulated from macroeconomic headwinds in developed nations. Management is building out infrastructure across emerging regions that help in generating consistent growth. The company is expanding its reach across high-growth channels while strategically introducing brands into new countries.
Management is on track to operationalize the Profit Recovery Plan for the fiscal 2025 and 2026 (announced in November 2023). The company recently announced the expansion of the plan to include the restructuring program. The plan is focused on rebuilding stronger and more sustainable profitability alongside supporting sales growth. The program aims to better the gross margin and reduce cost base and overhead expenses while increasing investments in consumer-facing activities.
Hurdles on the Way
The Estee Lauder Companies continues to operate in a challenging macroeconomic environment and geopolitical tensions across certain parts of the world. The company is bearing the brunt of weakness in Asia travel retail and a slower-than-anticipated recovery in prestige beauty across mainland China. In the Asia-Pacific region, organic net sales fell 7%, thanks to persistent challenges in Mainland China. EL’s solid international presence keeps it exposed to unfavorable currency fluctuations.
Focusing on the upsides mentioned above is likely to offer respite amid such hurdles. EL’s stock has gained 3% in the past three months compared with the industry’s 4.7% growth.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 20.2% and 28.8%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6% on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 19.3% from the year-ago reported numbers.
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Estee Lauder (EL) Gains On Online Sales & Profit Recovery Plan
The Estee Lauder Companies Inc. (EL - Free Report) has a strong online business, which is proving to be a major growth driver. The beauty company has a strong presence in emerging markets, which insulates it from the macroeconomic headwinds in the matured markets. However, the company is bearing the brunt of a challenging macroeconomic environment.
Let’s delve deeper.
What’s Driving Growth?
The Estee Lauder Companies boasts a strong online business. The company is implementing new technology and digital experiences, including online booking for each store appointment, omnichannel loyalty programs and high-touch mobile services. These initiatives and the company’s digital-first mindset have been aiding the Estee Lauder Companies’ online sales. The company is expanding its omnichannel capabilities to aid flexible and convenient shopping options for consumers.
Image Source: Zacks Investment Research
The Zacks Rank #3 (Hold) company generates significant revenues from emerging markets like Thailand, India, Russia and Brazil, which encourages it to make distributional, digital and marketing investments in these countries. The company is well insulated from macroeconomic headwinds in developed nations. Management is building out infrastructure across emerging regions that help in generating consistent growth. The company is expanding its reach across high-growth channels while strategically introducing brands into new countries.
Management is on track to operationalize the Profit Recovery Plan for the fiscal 2025 and 2026 (announced in November 2023). The company recently announced the expansion of the plan to include the restructuring program. The plan is focused on rebuilding stronger and more sustainable profitability alongside supporting sales growth. The program aims to better the gross margin and reduce cost base and overhead expenses while increasing investments in consumer-facing activities.
Hurdles on the Way
The Estee Lauder Companies continues to operate in a challenging macroeconomic environment and geopolitical tensions across certain parts of the world. The company is bearing the brunt of weakness in Asia travel retail and a slower-than-anticipated recovery in prestige beauty across mainland China. In the Asia-Pacific region, organic net sales fell 7%, thanks to persistent challenges in Mainland China. EL’s solid international presence keeps it exposed to unfavorable currency fluctuations.
Focusing on the upsides mentioned above is likely to offer respite amid such hurdles. EL’s stock has gained 3% in the past three months compared with the industry’s 4.7% growth.
Better-Ranked Staple Stocks
The Chef’s Warehouse (CHEF - Free Report) , which engages in the distribution of specialty food products, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 20.2% and 28.8%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6% on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 19.3% from the year-ago reported numbers.