Estee Lauder Cos. (EL) expects its fiscal first-quarter earnings
to be "significantly" higher than its already-rosy view because of
better-than-expected sales and caution on spending.
Shares were up 6.47% premarket at $41.65 on the news. Through
Thursday, the stock was up 26% this year.
The beauty-products industry has suffered as consumers continue
to curb spending, and Estee Lauder has had to lessen its dependence
on faltering U.S. department stores. In the fiscal fourth quarter,
it reported particular weakness in its upscale make-up and
fragrance businesses.
But its efforts to control costs, including an announcement
early this year it would slash 6% of its work force, appear to be
paying off as consumers warm up to discretionary buying again.
In August, Estee Lauder had called for quarterly earnings
between 23 and 30 cents a share, above analysts' estimates at the
time, although its fiscal-year view remained cautious. However,
Estee Lauder said Friday it expected to raise the year's view when
it reports its quarterly results Oct. 30. It also noted it plans to
accelerate investment spending after reining that in because of
uncertainty about the economy linked to the recession and swine
flu.
Regarding the first-quarter outperformance, the company cited
strong sales from new product launches, especially in Asia, as
wells as higher traffic in the travel-retail business and more
beneficial foreign exchange. It said holiday shipments were coming
earlier than they expected, which could pull down earnings this
quarter, when the shipments were mostly expected.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com
