Esté e Lauder Raises Outlook, Announces Job Cuts
May 03 2016 - 9:20AM
Dow Jones News
Esté e Lauder Cos. on Tuesday bumped up its outlook for the year
as it reported better-than-expected profit growth, though it also
announced restructuring measures it will undergo over the next five
years.
The cosmetics company estimates it will cut its workforce by 900
to 1,200 positions globally, or about 2.5%. Esté e Lauder
anticipates $600 million to $700 million in restructuring costs
and, ultimately, annual cost savings of about $200 million to $300
million.
Shares in the company fell 2.7% premarket to $94.50.
For the year, Esté e Lauder said it now expects adjusted
earnings of $3.09 to $3.14 a share, up from its previous guidance
for $3.07 to $3.12 a share, citing a slight moderation in foreign
currency translation. The company backed its revenue guidance for
between 4% and 5% growth.
As previously announced, Esté e Lauder said it was overhauling
its global technology infrastructure, transitioning to a primarily
vendor-owned model. The company recorded a charge of $15.2
million—or 2 cents a share—in the third quarter.
Over all for the quarter, Esté e Lauder reported a profit of
$265.6 million, down from $272.1 million a year earlier. Per-share
earnings were flat at 71 cents, on a lower share count. Excluding
the technology charge, earnings were 73 cents a share. Total sales
grew 2.9% to $2.66 billion.
The company had forecast earnings of 53 cents to 58 cents a
share—below consensus when issued—on revenue of $2.63 to $2.66
billion.
Gross margin edged up to 81% from 80.5%.
Skin-care sales fell 2.5% as currency fluctuations offset
double-digit gains in sales of La Mer brand. Makeup sales increased
7.3% on double-digit growth in MAC, Smashbox and Tom Ford as well
as gains in Bobbi Brown. Skin-care and makeup segments contributed
about 40% of revenue each.
Sales in the Americas and the Asia-Pacific regions both edged up
0.2% while sales in the Europe, Middle East and Africa regions grew
7.7%.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 03, 2016 10:05 ET (14:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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