Estee Lauder Companies Inc.
) posted first-quarter fiscal 2014 earnings of 76 cents per share
(excluding restructuring charges). The earnings exceeded the
Zacks Consensus Estimate of 74 cents by 2.7% and management's
guidance of a range of 67 cents to 71 cents. However, earnings
were down 3.7% from 79 cents reported in the prior year quarter
due to lower operating income.
Quarter in Detail
Net sales climbed 6% to $2.67 billion on the back of higher
sales in most of the geographic regions and major product
categories. However, quarterly sales lagged the Zacks Consensus
Estimate of $2.69 billion.
In the quarter under review, the Hair Care category was
strongest with 10% growth. Fragrance product line followed with
6% growth over the year-ago quarter. Makeup and Skin Care
followed next with 4% and 5% growth, respectively. Other
products, with less than 1% of total revenue, declined 23%.
While gross margin inflated 80 basis points (bps) to 79.7% in
the first quarter of fiscal 2014 owing to higher sales, higher
selling, general & administrative expenses led to operating
income margin contraction of 210 bps to 16.8%.
Sales in the Americas rose 2.0% to $1.2 billion. Sales increased
on the back of growth in the company's makeup artist, hair care
and designer fragrances brands. Operating income declined 9% to
$156.0 million due to higher marketing spend to back new
, the Middle East & Africa:
Double-digit growth in travel retail drove overall sales for this
segment. Sales grew 7% on a constant currency basis to $891.2
million. Operating income declined 8% to $180.8 million on the
back of a strong travel retail business.
Sales in the region improved 7% to $581.4 million, backed by
double digit sales growth in China, Hongkong and Taiwan. However,
weakness in Korea partially offset the sales growth. Operating
Income increased 1% to $113.9 million due to China, Taiwan and
Hong Kong, being partially offset by lower operating results in
Japan and Vietnam.
Other Financial Update
As of Jun 30, 2013, the company held $1.32 billion cash and
cash equivalents compared to $1.49 billion as of Jun 30, 2013.
Long-term debt remained flat at $1.32 billion compared to the end
of the previous quarter.
EL has announced a dividend of 20 cents per share payable on
Dec 16, 2013 to stockholders of record at the close of business
on Nov 29, 2013.
Following better than expected results in the first quarter,
for fiscal 2014, EL raised it earnings per share outlook to the
range of $2.80 to $2.87 compared to the previously announced
range of $2.74 to $2.87. EL, however, maintained its sales
guidance of 6%-8% in constant currency.
For the second quarter of fiscal 2014, earnings per share
excluding restructuring charges are projected in the range of 99
cents to $1.04. Net sales are expected to increase between 3%-5%
in constant currency, negatively impacted by foreign currency
translation of 1%. Estee Lauder expects to augment its
advertising spend to back its new product launches.
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
NU Skin Enterprises Inc.
Reckitt Benckiser Group Plc
) carrying a Zacks Rank #1 (Strong Buy) and
Elizabeth Arden Inc.
) carrying a Zacks Rank #2 (Buy).
ESTEE LAUDER (EL): Free Stock Analysis Report
NU SKIN ENTERP (NUS): Free Stock Analysis
RECKITT BENCKSR (RBGLY): Get Free Report
ELIZABETH ARDEN (RDEN): Free Stock Analysis
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