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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

Recovering from COVID-19 – Tech Companies Know How!

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HP News

When the year started, no one saw this COVID-19 chaos coming so no one had the slightest clue that markets and stocks would go the way they did. Especially since 2020 started with many promising movements in the tech department! Alphabet Inc. (NASDAQ:GOOG) had a nice run until February 19th, starting the year at price $1,337, and growing to more than $1,526. And then it started going down, all the way to $1,098 as of April 3rd. Similar goes for Amazon.com, Inc. (NASDAQ:AMZN). The stock started the year valued at around $1,848, and it pushed to $2,170, again until February 19th.

Then the COVID-19 roller coaster began!

Amazon’s stock finished at $1,906 as of April 3rd. But this is not bad at all! Its main cloud competitor, Microsoft Corporation (NASDAQ:MSFT)’s stock started the year at a price around $158, and pushed to $188 per share during the period from February 10th to February 19th. And as of March 31st, the price per share settled at around $158, almost the same as the opening price in January. This is also not bad considering the rest of the economy. Even more, Microsoft’s plan to pay out a dividend of 51 cents per share looks doable. This decision has been confirmed by the board of directors as the dividend should be paid out in June 2020. And this will only push Microsoft’s stock higher.

Microsoft cloud solutions vs other solutions

Microsoft’s CEO, Satya Nadella was appointed to the job in 2014. Considering his previous position was being the executive VP of Microsoft’s cloud and enterprise group, his appointment was a clear commitment to Microsoft’s strategy of launching further into the cloud. Besides the cloud, Microsoft’s strength lies within cloud applications, and this is proven to be helping Microsoft’s stock right now. But to be clear, this ”cloud-based” strategy requested much more capital spending, $1 billion every quarter to be exact. And total capital spending for the whole company was just under $2 billion in 2010. So, this was a big decision to say the least!

By doing other software companies’ online business, Microsoft managed to step in Amazon’s backyard. And if we look at Amazon’s stock right now, even during this period, it is clear this was a good path to choose.

Communication and collaboration platforms

Microsoft’s collaboration platform, Teams, is being heavily used during the COVID-19-induced “home office environment”. The increase in use was so high, that Microsoft had to constantly work on expanding the capacity of the platform. On the other hand, everyone started talking about conference solutions from Zoom Video Communications, Inc. (NASDAQ:ZM). Even with some security issues, Zoom has become the choice of many for doing business at home, offering a free basic plan with up to 40 minutes in group “calls”. Many even say that Zoom has managed to outperform Microsoft Teams.

Tech stock seems to be recovering

No matter the current stock price, most tech stocks have found a way to recover from coronavirus. All companies that are supporting millions of people so that they can work from their homes are helping both the economy to stay alive but also themselves by keeping their core business strong. Cloud solutions and e-commerce are the essential players in this scenario. As for other tech companies that did not manage to switch to offering cloud and e-commerce solutions, they are less likely to recover at the same pace as these companies did. And they did quite a good job as some might even exit this unforeseen health crisis even better-off than they were  before it all started.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic 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 Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Is Shale About to Fail Due to Oil Wars?

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Canadian Oil

During March, we had the opportunity to witness an interesting development when it comes to the statements by President Trump. Initially, when oil prices plunged at the beginning of March, the president stated that this presents good news for the consumers. Moreover, Trump stated that low oil prices are due to the biggest tax cuts in US history. However, last Wednesday, everybody started getting nervous as these “incredible” prices started aiming for the 17-year lowest oil price record. These are quite the bad news for the already turbulent industry.

For corporations, things are going South

Whiting Petroleum Corporation (NYSE: WLL), a big shale oil producer in North Dakota, has filed for bankruptcy protection. The oil Industry has taken the greatest hit possibly since the Great Depression, hammered by both COVID-19 pandemic and the price war between Saudi Arabia and Russia which resulted in their pump-at-will policy.

The United States Between Oil Gambit of Russia and Saudi Arabia – Package of Salvation

Meanwhile, President Trump met oil executives on Friday, including U.S. oil giants, such as ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), Occidental Petroleum (NYSE: OXY) and Continental Resources (NYSE: CLR). The subject of the meeting was to grant access to government programs, aimed to help the companies deal with the hit of the coronavirus pandemic. The U.S. oil industry is highly diversified, with more than 6,000 oil companies, from small oil drillers from North Dakota to Texas, to oil giants such as ExxonMobil and Chevron. Mr. Sommers, CEO of the American Petroleum Institute, said that since oil companies are operating in a market economy, no restrictions on production should be imposed. However, he greeted the opportunity for small oil companies to get access to Small Business Administration loans, while larger companies should be entitled to the gigantic $2 trillion package that was enacted last week. These measures should ensure liquidity that the oil sector needs  to survive the epic plunge in demand.

Trump’s Attempt at Shuttle Diplomacy

Alongside with domestic oil producers’ meetings, President Trump posted on Twitter to be acting as an intermediary by speaking to President of Russia, Vladimir V. Putin and the Saudi crown prince Mohammed bin Salman, saying they have agreed on a compromise. Trump has called for oil production cuts in an effort to bolster already shaken oil prices. Oil prices surged 20% that day from $21.92 to $26.42 per barrel and currently are holding at $29 per barrel, which presents an almost 50% increase compared to last week. But the problem is that Dmitri S. Peskov, President Putin’s spokesman has denied any contact between President Putin and Saudi crown prince took place as well as any sort of agreement. So we will need to wait and see what is the actual deal and in which way will it be put into practice.

So, is the shale industry about to fail?

On the other hand, the shale oil industry is even more vulnerable due to the high production costs and the United States being the largest shale oil producer. The fact is that oil price below $50 per barrel is dangerous for the shale oil industry, and at this moment, there are no indications that things will get better anytime soon.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic 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 Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Retail – It’s Really Bad, but For Some Less Than Others

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Foot Locker News

The Financial Times has reported that closures due to the coronavirus outbreak have been nothing less than the last drop for this already troubled industry. On top of which, the recently passed $2.2 trillion stimulus bill does not look encouraging for retail that was already feeling the crunch before all this chaos, just ask Macy’s Inc (NYSE:M) or Nordstrom Inc (NYSE:JWN) whose shares even lost 59.6% in only a month after its latest earnings report.

Is there any hope for a rebound?

A large part of the retail industry that is not involved in selling groceries, toilet paper or disinfectant has very little cash coming in. Labor costs are usually a retailer’s biggest expense and instant measures will relate to this business segment. Many jobs will be lost as Macy’s already announced that the cuts would affect most of their 125,000 workers, while Gap is planning to furlough nearly 80,000 store employees. Similar actions are expected by other name-brand chains whose products are considered nonessential. In addition, not only the sales personnel will be impacted but also the back-office forces. Nordstrom announced that they would furlough a portion of corporate employees on April 5 for six weeks. Cutting mainly part-time, nonunion workers may be the easiest cost-savings move for retailers. And by granting this sort of absence to employees instead of laying them off, they could potentially speed up their return to normal once things restart. So there is at least a small glimpse of hope for a rebound.

Target

Target (NYSE: TGT) is the neighbourhood superstore for many in the U.S., and that’s where many are turning to get their essential goods during the COVID-19 shut-down. But while sales of necessities are soaring, sales of higher margin goods are slowing down, which is putting significant pressure on the earnings potential. Turnover growth of 20% on a year-over-year basis in March forced the company to hire additional employees in order to ensure a high level of service to the customers. But a growth of 50%  in essential products also means it is also becoming more challenging to sustain a high level of service. So, despite a short-term expected decrease in margins, higher turnover and commitment to customers should be of great advantage in the long-run because they will result in a loyal customer base.

Amazon

Amazon.com Inc (NASDAQ:AMZN) is another company which needs to hire additional employees in order to satisfy a surging demand. In March, Amazon announced it plans to hire 100,000 warehouse and delivery workers. Having in mind that a lot of workers are not interested to put themselves at risk by being in close contact with others, Amazon decided to raise wages by 2 dollars per hour until the end of April. Still, there are a lot of workers who are complaining about the healthy precautions taken and believe the company isn’t doing enough to protect its employees. Although the company assures that all necessary measures have been undertaken, employee relations have never been one of Amazon’s strengths. It seems that the mistreatment of employees is only catching up with the e-commerce giant amid the COVID-19 drama.

Nike is optimistic

According to the latest earning reports, Nike Inc.’s (NYSE:NKE) revenues increased to $10.1 billion in the third quarter, which is 5 percent on a reported basis and 7 percent on a currency-neutral basis, driven by 13 percent currency-neutral growth in NIKE Direct with digital sales growth of 36 percent. Digital sales in Greater China increased more than 30 percent while retail sales were impacted by temporary store closures related to COVID-19. Currently, nearly 80 percent of stores have reopened their doors in Greater China with recorded revenue growth in double digits. On the other hand, since March 16th, all Nike-owned stores outside of China, Japan and Korea were closed also to help curb the spread of COVID-19 but Nike is optimistic for a reason as its latest digital sales have almost reached holiday levels and digital does represent 20 percent of its overall business.

Is the positive trend sustainable? 2021 at least has a shot at being brighter…

It is obvious that this crisis will be a major catalyst for the retail industry which is already in trouble due to the development of e-commerce and change in consumer behaviour. Another huge problem relates to landlords who are not willing to support retailers as they insist on paying rents because they also have obligations. This is only an additional dumbbell for the already troubled industry to carry. Consequently, many retailers might not be able to survive this unforeseen health crisis. But there are some who are managing to do well despite it all. However, the question is whether this positive trend can be sustained since traffic at Walmart In (NYSE:WMT), Costco Wholesale Corporation (NASDAQ:COST) and even Target has fallen for the first time since the outbreak as a consequence of stockpiling so not all is that bright. But there is always the silver lining. As economic activity resumes and people go back to shopping, traveling and dining out, 2021 could have very easy EPS and other performance results. But this will only be the case if we don’t see another round of economic shutdowns as Asian nations now fear the second coronavirus wave while Europe and the US are still struggling with the first wave.

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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