Estée Lauder boosts guidance on bumper first quarter

(Sharecast News) - Shares in Estee Lauder Companies shone on Monday, after the beauty and fragrance giant posted above-forecast quarterly numbers and lifted full-year guidance.

Sales in the three months to September end jumped 7%, or by 6% on an organic basis, to $3.72bn - ahead of expectations for 5% growth - while adjusted operating income soared to $449m from $255m.

Driving the growth was a robust performance in skin care, its biggest division, with particularly strong demand for popular brands La Mer and The Ordinary. However, fragrance also performed especially well, with sales spiking 20% and earnings nearly doubling to $166m. Estee Lauder said its luxury perfume brands - led by Le Labo, Tom Ford and Jo Malone London - drove the growth.

Stephane de La Faverie, chief executive, called the first quarter "another powerful step forward" for the US business.

He continued: "Growth is accelerating, profitability is strengthening significantly and the impact of Beauty Reimagined is becoming increasingly evident across our business. We are bringing more breakthrough innovation to consumers, amplifying the desirability of our brands with bold, high-impact campaigns and building a faster, more agile organisation.

Looking to the rest of the year, and Estee Lauder now expects organic net sales growth of between 4% and 5.5%, up from previous guidance for between 3% and 5%. Adjusted diluted net earnings were slated to come in between $3.20 and $3.45 a share, up from between $3.10 and $3.35 a share.

As at 1330 GMT, the Wall Street stock had put on 3% in pre-market trading.

Under the Beauty Reimagined turnaround strategy, which de La Faverie launched a year ago, Estee Lauder has sought to bolster lacklustre sales by focusing on innovation and expanding into new channels and markets. It has also streamlined operations and cut costs.