The Estée Lauder Companies has reported an “outstanding” financial performance for its first quarter ended 30 September 2011. The group generated net sales of US$2.48 billion, an +18% increase compared with the US$2.09 billion reported in the prior-year quarter. Excluding the impact of foreign currency translation, net sales increased +14% from a year ago.
The company reported net earnings for the quarter of US$278.6 million, a +46% increase compared with US$191.1 million last year. Diluted net earnings per common share rose +46% to US$1.40, compared with US$.95 in the prior year.
The fiscal 2012 first quarter results included charges associated with restructuring activities of US$4.1 million (US$2.9 million after tax), equal to US$.01 per diluted common share.
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Fabrizio Freda: “These results reflect the strength of our brands, the appeal of our superior product innovations and the effectiveness of our focused advertising and marketing spending.” |
President and Chief Executive Officer Fabrizio Freda noted: “Our very strong company performance continued to be broad based, highlighted by healthy top line growth across all categories and regions, strong bottom line growth and continued margin expansion. These results reflect the strength of our brands, the appeal of our superior product innovations and the effectiveness of our focused advertising and marketing spending.
“The recent economic uncertainty and financial market volatility have not significantly impacted our business. The strength of our underlying fundamentals, our winning strategy and the increasing efficiency of our business model enabled us to significantly outperform the beauty industry and continue to report exceptional results.”
He added: “As we move forward in this environment, we believe the strategies we have implemented better position us for sustained growth and increased profitability. Based upon our experience to date and our confidence in our business and its potential, we are raising our full year local currency sales forecast to between 8% and 10% and increasing our earnings per share estimate, before restructuring charges, to US$4.25 to US$4.45. At the same time, we plan to leverage the strength of our brand portfolio and formidable creativity to capture share and maximise growth for the long term… Our Board’s decision to increase our dividend and declare a two-for-one stock split reflects our belief in our long-term potential.”
The Lauder group’s strong performance was due to solid overall business, particularly from its largest brands, helped by a weaker US dollar. The company grew double-digits in every region, including the US, its home market. Sales also increased in virtually all product categories within each region. Sales growth was particularly strong in travel retail and emerging markets, along with solid gains in many developed countries.
During the quarter, the company made substantial progress on its previously stated strategic goals, with solid improvement in cost of sales and operating expenses as a percentage of net sales. All product categories and geographic regions benefited from company-wide efforts to reduce or eliminate non-value added costs.
In connection with the long-term strategic plan, as well as certain ongoing initiatives, Lauder realised savings of US$44 million during the quarter. As a percentage of net sales, advertising, merchandising and sampling expenses increased to support the company’s biggest innovations, while all other significant operating expenses were lower. As a result, operating margin increased 310 basis points, before restructuring charges.
