New York City-based Estee Lauder Cos Inc. (NYSE:EL) reported a smaller-than-expected rise in quarterly sales than analysts expected for the current quarter. Sales in the current quarter are expected to be in the range of $2.86 billion-$2.89 billion, less than the average analyst estimate of $2.94 billion. MAC, Bobbi Brown and Smashbox, which it acquired in 2010, all reported double digit sales growth.
Net income fell to $93.5 million, or 25 cents per share, in the quarter. On an adjusted basis, the company earned 43 cents per share. Total revenue rose to $2.65 billion from $2.52 billion. Analysts on average had expected a profit of 40 cents per share and revenue of $2.66 billion.
Sales in the Americas, its biggest market, rose 1.4 percent to $1.1 billion, its slowest growth in four quarters. Weak sales in some Asia-Pacific countries, mainly Hong Kong, also dented total sales. The company is also struggling with a strong U.S. dollar’s effect on pricing in international markets.
Uncertainties in some markets has also hurt the cosmetics maker. Britain’s vote to leave the European Union, very difficult market in France after multiple terrorist attacks and sluggish spending in the Middle East have hampered sales for the company. During an earnings call, CFO Tracey Travis said, “We believe risk of other economic and political disruptions will remain high as we start our new fiscal year.”
The company said that there has been strong demand for lipsticks and foundation. A 10 percent increase in makeup sales helped offset a 2 percent decline in its fragrance category. According to Research and Markets, the global cosmetics market is set to grow to $675m by 2020.
The company also forecast a lower-than-expected profit for the full year. The company said it expects fiscal 2017 adjusted profit to be between $3.38 and $3.44 per share, lower than the average analyst estimate of $3.53 per share, according to Thomson Reuters I/B/E/S.
The company said it expects to incur charges of about $80 million-$100 million in fiscal 2017, related to restructuring initiatives. In May, the company set out a range of measures it would implement over the next five years to boost profitability. Those initiatives include exiting businesses in certain markets and reducing its global workforce.