Tags: Estee | Lauder | EL | beauty | cosmetics | makeup

Estee Lauder: Building Healthy and Radiant Results

Tuesday, 17 May 2011 01:20 PM

They say beauty is in the eye of the beholder. A lot of folks on Wall Street should be out beholding Estee Lauder (EL) these days.

Thanks to a weak dollar and strong demand, the cosmetics juggernaut reported third-quarter net sales of $2.17 billion, a 16 percent increase over the prior year. Net earnings for the quarter, which ended March 31, came to $124.7 million, up 117 percent from $57.5 million earned last year.

Solid demand for the company's brands — especially its more-expensive product lines — translates into healthy revenue, while a weak dollar benefits exporters such as the New York-based Estee Lauder.

"Our results for the quarter and year to date continue to validate our strategic direction. Our focus on building enduring brand equities and on serving the global demand for prestige, quality products and high-touch services is clearly resonating with consumers," says Estee Lauder President and Chief Executive Officer Fabrizio Freda.

"Our broad and well-differentiated portfolio of brands, product categories and geographies gives us the flexibility to take advantage of opportunities in stronger environments to compensate for challenges that may arise in other areas of the world. This is reflected in our results this quarter across our brands, regions and channels."

With business strong, Freda mentions those words that many an analyst love to hear: We're going to do better than we expected this year. "With our fiscal year drawing to a close, we have the confidence to raise our full-year diluted earnings estimate to $3.55 to $3.65 per share," he said.

Watch for Japan impact

Analysts agree that Estee Lauder is sitting pretty. Nevertheless, the company's earnings don't come without blemishes. The earthquake and tsunamis in Japan, a key market, didn't damage results for the third quarter, but they will in the future.

"At this time, the company estimates the Japan disasters will have a full fiscal-year negative impact on total company sales of about half a percentage point," Estee Lauder says in the earnings statement.

"The company believes negative effects will continue at least for the next six to nine months and will monitor the situation and reassess its estimates should conditions change."

Analysts tracked by Thompson/First Call put the median price target at $104, a small premium to recent trading action.

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They say beauty is in the eye of the beholder. A lot of folks on Wall Street should be out beholding Estee Lauder (EL) these days. Thanks to a weak dollar and strong demand, the cosmetics juggernaut reported third-quarter net sales of $2.17 billion, a 16 percent increase...
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2011-20-17
Tuesday, 17 May 2011 01:20 PM
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