Estee Lauder Companies Inc.
) posted fourth-quarter fiscal 2013 earnings of 24 cents per
share (excluding restructuring charges), up 41% from 17 cents per
share in the prior-year quarter. The reported earnings also
exceeded the Zacks Consensus Estimate of 22 cents by 9.1%.
Higher operating efficiency from EL's Strategic Modernization
Initiative (SMI) as well as strong sales drove the upside in
For fiscal 2013, earnings per share increased 16% year over
year to $2.64. Earnings also surpassed the Zacks Consensus
Estimate of $2.61.
Quarter in Detail
Net sales, excluding foreign currency translation, climbed 8%
to $2.4 billion. The improvement in sales came on the back of
higher across-the-board sales gains in most of the geographic
regions and major product categories. However, quarterly sales
remained in line with the Zacks Consensus Estimate of $2.41
For fiscal 2013, net sales improved 6% to $10.2 billion. The
results were in line with the Zacks Consensus Estimate.
In the quarter under review, the Hair Care and Skin Care
product line were the strongest with 6% growth over the year-ago
quarter. Makeup and Fragrance followed next with 5% and 3%
growth, respectively. Other products, with less than 1% of total
revenue, declined 32%.
Gross margin contracted 20 basis points (bps) to 80.2% in the
fourth quarter of fiscal 2013 owing to higher cost of sales.
Higher selling, general & administrative expenses led to
operating income margin contraction of 300 bps to 77.2%.
Sales in the Americas rose 5.0% to $992.5 million. Sales
increased on the back of growth in the company's makeup artist
and heritage brands. Operating income improved to $50.8 million
compared to a loss of $59.4 million incurred last year. The
upside was driven by favorable category mix and strong
performance of the flagship brands of EL.
, the Middle East & Africa:
Double-digit growth in travel retail drove overall sales for this
segment. Sales grew 13% on a constant currency basis to $980.6
million. However, sluggish conditions in Russia, Spain and the
Balkans restricted growth to a certain extent. Operating income
improved 5% to $154.4 million on the back of a strong travel
Sales in the region improved 5% to $435.7 million, mainly owing
to the increased demand for skin care products in China, Hongkong
and Thailand. However, weakness in Korea partially offset the
sales growth. EL suffered operating loss of $54.9 million due to
soft results in Korea and Japan.
Other Financial Update
As of Jun 30, 2013, the company held $1.49 billion cash and
cash equivalents compared to $1.44 billion as of Mar 31, 2013.
Long-term debt remained flat at $1.32 billion compared to the end
of the previous quarter.
EL has announced a dividend of 18 cents per share on the
company's Class A and Class B Common Stock payable on Sep 16,
2013 to stockholders of record at the close of business on Aug
For fiscal 2014, EL expects global prestige beauty to increase
a meagre 3%-4%, reflecting continued weakness in certain Southern
European countries and Korea. Earnings per share excluding
restructuring charges are projected in the range of $2.74 to
$2.87. Net sales are expected to increase between 6%-8% in
For the first quarter of fiscal 2014, earnings per share
excluding restructuring charges are projected in the range of 67
cents to 71 cents. Net sales are expected to increase between
5%-7% in constant currency.
Headquartered in New York, Estee Lauder engages in the
manufacture and sale of skin care, makeup, fragrance and hair
care products and carries a Zacks Rank #3 (Hold). Other stocks in
the consumer staples sector worth considering are
Green Mountain Coffee Roasters Inc. (
), Kraft Foods Group Inc. (
Pilgrims Pride Corporation (
While GMCR carry a Zacks Rank #1 (Strong Buy), PPC and KRFT has a
Zacks Rank #2 (Buy).
ESTEE LAUDER (EL): Free Stock Analysis Report
GREEN MTN COFFE (GMCR): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
PILGRIMS PRIDE (PPC): Free Stock Analysis
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