Headwinds in China and Asia travel retail impact Estée Lauder's Q1

Estée Lauder’s first quarter net sales of 3.36 billion dollars, decreased by 4 percent, while organic net sales decreased 5 percent.

For the second quarter reported and organic net sales are forecasted to decrease between 8 percent and 6 percent, reported diluted net earnings per share are projected to be between 2 cents and 19 cents and adjusted diluted net earnings per share are expected to decrease between 77 percent and 60 percent and range between 20 cents and 35 cents.

Commenting on the first quarter update, Fabrizio Freda, president and CEO, Estée Lauder said: “Our first quarter results are largely aligned with our outlook on an adjusted basis, despite the fact that the expected headwinds in China and Asia travel retail were greater than anticipated.”

The company attributed the decline to worsened consumer sentiment in China that drove further softening in overall prestige beauty in mainland China and low conversion rates in Asia travel retail and Hong Kong SAR.

In addition, the company said, lower replenishment orders in Asia travel retail, including inventory pressure given the further retail market deceleration, impacted organic net sales. Partially offsetting these declines was growth in several markets, including Japan and the company’s priority emerging markets.

The company reported a net loss of 156 million dollars and diluted net loss per common share of 43 cents. Adjusted net income was 52 million dollars and adjusted diluted net earnings per common share increased to 14 cents and rose 7 percent in constant currency.

The company added that reported operating loss was 121 million dollars, while in constant currency, adjusted operating income increased 23 percent to 133 million dollars.

Estée Lauder declared a quarterly dividend of 35 cents per share, payable in cash on December 16, 2024 to stockholders of record at the close of business on November 29, 2024.

For full-year fiscal 2025, the company does not expect the recently-announced economic stimulus measures in China to benefit its second quarter performance and forecasts continued net sales decline in Hong Kong SAR.