Estee Lauder shares sink as weak forecasts cloud turnaround
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FILE PHOTO: An Estee Lauder cosmetics counter is seen in Los Angeles, California, U.S., August 19, 2019. REUTERS/Lucy Nicholson/File Photo
By Anuja Bharat Mistry
Feb 5 (Reuters) - Estee Lauder raised its annual targets but still fell short of Wall Street expectations as sluggish demand in the Americas weighed on the cosmetics maker's turnaround efforts, sending its shares plunging about 23% in early trading.
The owner of brands such as Clinique and M.A.C has ramped up product launches, added luxury price tiers and bolstered marketing as new CEO Stephane de La Faverie pushes to revive demand across its main markets.
While the efforts lifted sales in China and Europe, the Americas remained under pressure due to cautious consumer spending.
The company is navigating the complexity and volatility in the U.S., La Faverie told Reuters during a media call. He also flagged a slowdown of consumer consumption in Latin America after a strong start.
"A key area of focus remains the Americas, where sales improved sequentially to flat, but U.S. market share gains did not translate into retailer orders," said Robert Ottenstein, analyst with Evercore ISI.
The company's shares were on track for their worst day on record. They gained 40% in 2025, as the CEO's efforts fueled a rebound in sales in China.
Estee Lauder forecast full-year adjusted earnings per share in the range of $2.05 to $2.25, the midpoint of which is below estimates of $2.16. It expects annual net sales to grow in the range of 3% to 5%, with the midpoint below estimates of 4.3%.
The company behind brands such as Jo Malone and Le Labo reiterated its October forecast of a $100 million tariff hit on annual profit in the second half.
Estee expects third-quarter margins to contract 50 basis points.
The company's second-quarter sales of $4.23 billion came in line with analysts' estimates, according to data compiled by LSEG. It earned an adjusted profit of 89 cents per share, compared with estimates of 84 cents.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Leroy Leo)
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