Estée Lauder cuts guidance, citing strong dollar, global turmoil

Ugly times for Estée Lauder.

The skincare and make-up company behind brands including MAC, Clinique and its eponymous brand on Thursday took the scissors to its sales and earnings forecasts for the fiscal 2017 year, citing dollar strength and the uncertainties created by recent geopolitical events.

“Social and political issues, terrorism, currency volatility and economic challenges are affecting consumer behavior in certain countries, such as Hong Kong and some emerging markets,” it said in a statement. “We are also cautious of the decline in retail traffic, primarily related to mid-tier department stores, as well as certain tourist-driven doors in the United States.”

As a result the company said it now expects net sales to grow 4-5 per cent this year, down from the 6-7 per cent growth it was predicting just three months ago. Forecasts for its diluted net earnings per share have also been revised lower to between $3.29 and
$3.33, down from its prior forecast of between $3.38 and $3.44.

The guidance cuts overshadowed Estée Lauder’s slightly better than expected fiscal second quarter results.

Net sales rose 3 per cent for the three months to end of December to $3.21bn, in line with forecasts. However net income fell 4 per cent to $428m or $1.15 per diluted share as the company took a $41m charge related to its ongoing restructuring. Excluding this one-off charge, earnings came in at $1.22 a share, ahead of the $1.17 the market was forecasting.

Estée Lauder shares, down 6 per cent over the past 12 months, fell 1.2 per cent in pre-market trading.