Estee Lauder (NYSE: EL) reported Q2 EPS of $2.11, $0.21 better than the analyst estimate of $1.90. Revenue for the quarter came in at $4.62 billion versus the consensus estimate of $4.35 billion.

GUIDANCE:

Estee Lauder sees FY2020 EPS of $5.60-$5.70, versus the consensus of $5.94.

• Reported net sales are forecasted to increase between 6% and 8% versus the prior-year period.
• The Company’s recent acquisition of Have & Be is forecasted to contribute approximately 1% to the Company’s overall sales growth.
• Excluding the impact of the acquisition and 1% negative impact from currency, net sales are forecasted to grow between 6% and 8%, in-line with the Company’s long-term growth goal.
• Earnings per Share Outlook
• Reported diluted net earnings per common share are projected to be between $4.83 and $4.95. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $5.60 and $5.70.
• Excluding the $.18 per share dilution related to the acquisition, adjusted diluted earnings per common share are expected to increase between 9% and 11% on a constant currency basis.
• Currency exchange rates are volatile and difficult to predict. Using December 31, 2019 spot rates for the remaining quarters of fiscal 2020, the negative currency impact equates to about $.05 of diluted earnings per common share.
• The Company expects to take charges associated with previously approved restructuring and other activities relating to Leading Beauty Forward of approximately $80 million to $95 million, equal to $.19 to $.21 per diluted common share.

Second Half Fiscal 2020

• Due to the evolving and uncertain nature of the risk related to the coronavirus, the Company is only providing guidance for the second half of the fiscal year at this time instead of the quarterly guidance typically issued.
• Sales Outlook
• Reported net sales are forecasted to increase between 0% and 1% versus the prior-year period. The third quarter is anticipated to be the most negatively impacted by the coronavirus with sales declining versus the prior-year period.
• The Company’s recent acquisition of Have & Be is forecasted to contribute approximately 2% to the Company’s overall sales growth.
• Excluding the impact of the acquisition and 1% negative impact from currency, net sales are forecasted to decline between 0% to 1%.
• Earnings per Share Outlook
• Reported diluted net earnings per common share are projected to be between $1.70 and $1.81. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $1.82 and $1.91.
• Excluding the $.17 per share dilution related to the acquisition, adjusted diluted earnings per common share are expected to decrease between 3% and 7% on a constant currency basis.
• Currency exchange rates are volatile and difficult to predict. Using December 31, 2019 spot rates, the negative currency impact equates to about $.03 of diluted earnings per common share.
• The Company expects to take charges associated with previously approved restructuring and other activities relating to Leading Beauty Forward of approximately $45 million to $60 million, equal to $.10 to $.12 per diluted common share.

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