Estee Lauder Companies Inc.
) posted fourth quarter fiscal 2012 earnings of 17 cents per
share (excluding restructuring activities equal to 4 cents per
share), which climbed 41.7% from 12 cents in the prior-year
quarter. Profits during the quarter were aided by solid performance
in the U.S. and China and strong sales growth in travel retail. The
reported earnings inched past the Zacks Consensus Estimate of 16
The fiscal 2012 earnings per share came in at $2.27 (excluding
restructuring activities equal to 11 cents per share), which was
22.7% higher than the prior-year earnings of $1.85 per share. The
year-on-year increase was on the back of higher sales across all
The fiscal earnings also surpassed Zacks Consensus Estimate of
$2.26 per share by a penny. Both fiscal year and fourth quarter
earnings exceeded management's guidance.
Net sales for the quarter rose 9% to $2.3 billion from $2.1
billion in the prior-year quarter. The quarterly sales were
slightly ahead of the Zacks Consensus Revenue Estimate of
Net sales for fiscal 2012 increased 10% to $9.7 billion
from $8.8 billion in the prior-year on the back of strong sales in
the skincare category. The quarterly sales matched the Zacks
Consensus Revenue Estimate.
Gross margin went up 100 basis points (bps) to 80.4% in the
fourth quarter of fiscal 2012 from 79.4% in the prior-year quarter.
Operating expense margin also expanded 100 bps to 77.2% in the
quarter from 76.2% in the previous-year quarter, while operating
income margin remained flat at 3.2%.
During fiscal 2012, gross margin went up 150 basis points (bps)
to 79.5% from 78.0% in the prior year. Operating expense margin
expanded 40 bps to 66.0% from 65.6% in the previous year, while
operating income margin inflated 110 bps to 13.5% from 12.4% in the
During fiscal 2012, Skin Care product sales rose 13% to $4.2
billion from $3.7 billion in the prior year. The increase was
driven by new product innovation. Makeup sales climbed 10.0% to
$3.7 billion from $3.4 billion a year ago. Fragrance sales rose 3%
to $1.3 billion and Hair Care product sales went up 7.0% to $462.4
Sales in the Americas rose 8.0% to $4.1 billion; sales surged
12% to $3.6 billion in Europe, the Middle East & Africa,
whereas sales rose 11% to $2.0 billion in the Asia/Pacific
Net cash provided by operating activities was $1.2 billion, 10%
higher than $1.0 billion in the prior-year period. This increase
came on the back of higher net earnings and a net increase in cash
from certain working capital components.
Estee Lauder exited the quarter with cash and cash equivalents
of $1.3 billion compared with $1.2 billion a year ago. Long-term
debt was almost flat with year-ago levels at $1.1 billion.
For the first quarter of fiscal 2013, diluted net earnings per
common share excluding restructuring charges are projected in the
range of 71 cents to 77 cents. Net sales are expected to increase
between 5% and 7% in constant currency.
For fiscal 2013, diluted net earnings per common share excluding
restructuring charges are projected to be $2.44 to $2.56. Net sales
are expected to increase between 6% and 8% in constant
Estee Lauder, which competes with
Procter & Gamble Co.
), holds a Zacks #3 Rank, translating into a short-term Hold
rating. We maintain a long-term Neutral recommendation on Estee
New York-based Estee Lauder Companies is one of the world's
leading manufacturers and marketers of skin care, makeup, fragrance
and hair care products.
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