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Estee Lauder Reports Outstanding First Quarter Results But Cuts Estimates

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Estee Lauder news

It pays out to be pretty and it pays out to be Estee Lauder Companies (NYSE: EL) as the company grows ahead of the beauty industry. The company managed to exceed analyst expectations and reported a 19 percent jump in earnings due to higher revenues in international markets. But, despite beating EPS and revenue estimates, the beauty retailer’s stock shed 3.6% after the company cut its full fiscal year outlook.

Q1 earnings results

The 19% jump in earnings resulted in net income of $595 million from $500 million last year. And it’s all due to higher revenues as net sales increased 3.9 billion which is an 11% increase $3.52 billion in the prior-year. This extraordinary result is due to the growth of the skincare segment, travel retail as well as China and other emerging markets. Excluding adjustments, net sales increased 12%.
Total reported operating income was $779 million which is a 19% increase from $652 million in the prior year. Operating income increased 20% excluding the unfavourable impact of currency translation of $4 million, restructuring as well as other charges and adjustments of $25 million which were $36 million in the prior-year period.

The increase in operating profit largely reflected higher net sales and disciplined cost management throughout the business while increasing advertising investment. Net income climbed by 19% to $595 million. Adjusted earnings increased by 19% to $1.67, or grew 20% in constant currency.

As for the balance sheet, cash and cash equivalents amounted to $2.26 billion along with the company’s long-term debt to $2.89 billion. But being cautious, the company lowered its fiscal 2020 earnings guidance and guided second-quarter earnings below the Street’s due to the riots in Hong Kong. And there’s the impact of a strong dollar will knock off another 5 cents per share of its profit per share.

The beauty industry – unlimited opportunities

Depending on the segment, the company is facing intense competition in each field. Skincare percentage change was by far the largest with an increase of 24%. With pollution, both women and men are clearly putting more emphasis on the health of their skin, a trend the company used well. Skincare has definitely overtaken makeup and is showing no signs of slowing down.

As for makeup, there was a slight improvement of a 3% increase due to the Estee Lauder brand itself but also M•A•C, Tom Ford Beauty, and the prestigious La Mer. But, fragrance despite growth of Jo Malone London was diminished by decreases of other designer fragrances, falling 2%. Haircare decreased 5% due to lower net sales of Bumble and Bumble, with other segments dropping as much as 29% so there’s definitely a need for restructuring.

Geography-wise, the American segment fell 6% but Europe, Africa and the Middle East went up 17% triggered by double digit gains in travel retail and online. Moreover, revenue from the whole Asia/Pacific region went up 24% with growth in nearly every market in the region and more than half is growing double digits but on constant currency basis. And the Asia-Pacific market is expected to reach $126.8 billion by 2020, being the second largest cosmetic market after Europe.

Competitors

Lancôme, now owned by L’Oréal (OTC: LRLCY), the world’s largest beauty company, is among Forbes’ world’s most valuable brands and it is among the world’s seven largest beauty manufacturers. It is also a proof that not any skincare but luxury skincare is driving profits in the beauty industry. This year in fact, L’Oréal had its best sales growth in over 10 years which pushed its stock to its new high in back in February this year. And the company’s CEO didn’t’ stop there as he further went ahead to note that beauty products are proving to be resilient against the worsening macroeconomy. L’Oréal is taking advantage of the industry’s strength by “fuelling growth” through investing across media, digital channels, and e-commerce to reach more consumers but unlike Estee Lauder, it isn’t leveraging its presence in the luxury segment and transitioning away from the more ordinary cosmetics markets. So unlike Estee Lauder, it has many other competitors to think about like The Unilever Group (NYSE:UL), Johnson and Johnson (NYSE: JNJ), The Procter and Gamble company (NYSE:PG), etc. But the company is making serious moves in the Chinese market as it last week acquired two perfumes, boosting its fragrance division by almost 1/6 its last year size to attract Chinese customers to the enchantment of perfumes.

And there’s also the Japanese Shiseido Co. Ltd (OTC:SSDOY) that generates far less revenue than both of its competitors, but it is the only that comes as far to the luxury segment. And like others, it redesigned its makeup line to appeal to younger generations. The company just acquired skincare brand Drunk Elephant that will add to the company’s prestige.

And let’s not forget the Parisian Christian Dior (EPA:CDI) whose share price has soared 213% in the last half decade. And there are the private and among the oldest beauty companies in the world, also proudly French-brands: Chanel and Guerlain. And everyone’s going for a piece of the luxury skincare pie!

Outlook

Sales growth for the second quarter is expected to be only in the 7-8% range with the whole fiscal year 2020 also expected to be in the same range. The diluted EPS for the second quarter is expected in the range of $1.75- 1.79 and for the whole fiscal year 2020 $5.58 to $5.69. This estimation includes the unfavourable impact from currency translation. The bottom line is that the company is seeing strong demand for its high-quality products as all four of the company’s biggest brands, each with annual sales well over $1 billion, grew globally. The company expects to further grow ahead of the industry seizing more global share of the beauty market as its CEO, Fabrizio Freda proudly stated that the results reflect the agility and resiliency of the company’s business model. Considering this entire segment, it seems that those investors who are concerned about the weakening economy should perhaps consider the beauty market as even Chinese consumers showed increasing appetite for beauty products, despite the economic slowdown. But the ones who are truly booming are the ‘luxury beauty products’.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com
Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Plugging Into the Future

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Tesla Electric Vehicles

BNEF predicts that by 2040 EV sales will rise to nearly 60% of the global auto market. That is quite a difference compared to 2010, when annual sales were close to zero. With consumer becoming more aware and conscious, along with favorable market forces that are gaining momentum, EVs are quickly becoming the future of the automotive industry with many EV companies showing massive growth potential.

e-tractors

Ideanomics (NASDAQ: IDEX). has acquired 15% of California-based Solectrac, Inc. for $1.3 million, its very first US-based OEM, Solectrac develops, assembles and distributes 100% battery-powered electric tractors for agriculture and utility operations. With this investment in Solectrac, Ideanomics expands its global footprint in the EV industry through specialty commercial vehicles. Moreover, Ideanomics gained a seat on Solectrac’s Board of Directors. This opportunity will give Ideanmoics access to the global agricultural tractor market that is poised for rapid growth, although currently valued at $75 billion. The time has come to say goodbye to diesel tractors.

Solar powered EVs

Besides recently forming an agreement with Atlis Motor Vehicles, Worksport (OTC: WKSP) has announced today to engage Thermal Technology Services Canada to test the Company’s groundbreaking TerraVis™ solar panel technology and increase its efficiency. Increases in product efficiency of even a few per cent can make all the difference when it comes to the performance of an electric vehicle. Each additional mile counts and Worksport is set to deliver the most advanced product with solar technology, from which the technologically advanced and eagerly-anticipated for Atlis XT electric pickup truck can greatly benefit.

Traditional automakers are not wasting any time

General Motors (NYSE: GM) revived the Hummer for the 2022 GMC Hummer EV, a fully electric truck that is expected to arrive in dealership next year. Last week, GM unveiled its “Factory Zero” as it gave a new life to its Detroit-Hamtramck assembly plant. The new GMC Hummer EV electric truck will be built in this all-electric factory, accompanied by the Cruise Origin, a self-driving EV designed by GM and Honda (NYSE: HMC). Last month, Ford (NYSE: F) also announced plans for a new factory at its large Rouge site in Dearborn, Michigan, that will build it’s the all-electric version of its legendary F-150 pickups.

New entrants are upping their game

Northeast Ohio-based Lordstown Motors (NASDAQ: RIDE), which purchased GM’s former Lordstown Assembly Complex and DiamondPeak Holdings Corp. (NASDAQ: DHPC), a special purpose acquisition company, completed a merger that makes the EV startup a publicly traded company, effective Monday. The deal gives Lordstown the financing it needs to start production of its electric Endurance truck. It aims to deliver its truck by next September, the same time Rivian Automotive Inc., Tesla Inc.(NASDAQ: TSLA) and General Motors Co. plan to launch their own electric truck candidates.

Outlook

On Thursday, during the last presidential debate, former Vice President Joe Biden pledged to shift the U.S. economy away from oil. This goal is impossible to reach without a wider EV adoption as road transport accounted for almost 70% of America’s oil consumption in 2019. Therefore, market forces and green government policies can only accelerate the EV revolution, both in the United States and around the world, with Europe already being well on that path. A cleaner tomorrow where we will no longer have to choose between performance, economy and environmental sustainability is well underway.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Solar Energy Is on Track To Become the New Energy King

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Solar Stocks and Corona Virus

When COVID-19 started its relentless march across the globe in March, there was some concern that it would put the solar industry to a halt. This fear was derived from the fact that residential solar sales are usually sold door-to-door as well as plant closures and increasing pandemic-related costs. But this scenario did not play out. In fact, the construction industry has been booming this year.

Innovation

The pandemic has also brought about some innovations that were a long time coming for solar energy. Residential solar companies were forced to adapt their sales to a digital framework. SunPower (NASDAQ:SPWR) is one of the leaders in this digital-first approach, but Tesla (NASDAQ:TSLA) has also caught this wave. Moreover, when it reported its earnings last week, the company revealed it is aiming for its solar business to be just as strong as its main star, the EV business. Elon Musk announced that Tesla’s next ‘killer product’ is its Solar Roof, and that everyone will see why next year. But even Sunrun (NASDAQ:RUN) is adapting to a new normal with fewer physical touchpoints so competition will be intense.

Improved profitability

At the end of the day, the reason solar stocks are up this year is the improved financial performance. Canadian Solar (NASDAQ:CSIQ), JinkoSolar (NYSE:JKS), SolarEdge (NASDAQ:SEDG), and Enphase Energy (NASDAQ:ENPH), four of the biggest equipment suppliers in the industry have remained strong during the pandemic, with some companies also seeing margins increase.

But this piece of good news is a result of the industry focusing more on specializing rather than vertically integrating. For example, SunPower has spun off its development business, inverter manufacturing, and its solar manufacturing arm which led it to better financial results and better margins almost across the board.

Politics

Considering that Joe Biden has taken a clear polling lead over Donald Trump, the boost of solar stocks is not a surprise. Biden’s strategy is much more focused on clean energy than Trump’s, despite not being supportive of the “Green New Deal”.  The overall perception is that Biden will be good for the industry.

Affordability

Solar power is already the cheapest source of electricity in some parts of the world, according to a new report released on October 13th by the International Energy Agency (IEA). This was greatly enabled by governmental policies in more than 130 countries that aim to encourage the rise of renewables by reducing the cost of building new solar installations.

Outlook

As solar technology continues to improve and innovation continues to drive those costs down, solar is on track to become “the new king of electricity supply”. With global efforts to put climate change under control, the solar industry is expected to dominate over the next decade. The EU alone has set a goal to source 32 percent of its energy from renewables by 2030, therefore, the forecast for solar is sunny.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Procter& Gamble Benefits From the Cleaning Boom

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Emerging Companies

On Tuesday, Procter & Gamble (NYSE: PG) managed to beat estimates and raised forecast amid strong demand for its household products. Its shares rose 2% in morning trading.

Key figures

Fiscal first-quarter sales rose 9% as the pandemic fuelled higher demand for cleaning and laundry products, exceeding the prior quarter’s 6% increase. Net sales amounted to $19.32 billion, topping expectations of $18.38 billion. Organic revenue, which strips out the impact of acquisitions, divestitures and foreign currency, also rose 9% in the quarter. This sales boost was enabled by stronger demand in P&G’s largest market, North America.

Sales growth resulted in a net income of $4.28 billion, or $1.63 per share. Not only is this figure higher than Refinitiv’s average of $1.42 per share, but it is also an improvement from last year’s $3.59 billion, or $1.36 per share, a year earlier.

Improved Forecast

Supported by these strong quarter results, P&G also raised its outlook for fiscal 2021. Overall sales growth is now expected in the range between 3% to 4%, up from its prior forecast of 1% to 3%. As for organic revenue, the forecasted range also improved from 2% to 4% to a new range between 4% and 5%. The outlook for its core earnings per share growth has also improved from prior forecast of 3% to 7%. While the early retirement of debt will reduce its net income up to 20 cents a share this fiscal year, core earnings per share are still forecasted to grow between 5% to 8%. As for the impact of after-tax foreign exchange impacts and freight costs, they are estimated to impact earnings at approximately $375 million.

The “antiseptic” cleaning boom

Although the laundry care and healthcare divisions were standout performers as consumers prioritized home cleaning spending, all of P&G’s five business segments enjoyed organic sales growth. Moreover, U.S. consumers did not opt for cheaper brands which was expected to the absence of a new stimulus package.

Fabric and home care, which includes Tide, saw the highest jump. Organic sales rose 14% in the quarter. The home care segment alone saw organic sales soar 30% due to a boost in demand for home cleaning products, like Mr. Clean.

Health care, which includes Oral-B,s saw a double-digit organic sales growth as more consumers bought its digestive and wellness products.

Its beauty segment saw organic sales growth of 7% with the launch of Safeguard hand soap and hand sanitizer as well as new products from Olay that lifted North American sales for skin and personal care. It’s already a known fact that skincare became the new “lipstick index” during the COVID-19 pandemic.

Organic sales for its grooming business rose 6% in the quarter. However, Gillette and Venus brands saw flat organic sales as men don’t appear to be shaving as much during the pandemic. But women’s razors and blades rose by single digits.

The company’s baby, health and family care segment reported organic sales growth of 4%, including Pampers diapers, paper towels and toilet paper.

Outlook

It didn’t take long for Procter & Gamble to leave its conservative fiscal 2021 outlook behind. As consumers spend more time in their households, watching TV and engaging with their social media profiles, P&G is putting more money into advertising to put its brands front and center. The overall image is that P&G’s strong results and growth were enabled by increase in sales volumes, but average prices also rose. P&G did a great job in catching the cleaning boom wave which is why the company expects only a modest slowdown from pandemic-influenced growth rates that result in spiking sales over the recent months.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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