How did Estée Lauder perform in the fiscal 2024 third quarter?

Net sales rose 5% to $3.94 billion, with organic net sales up 6%. Diluted EPS was $.91 versus $.43, and adjusted diluted EPS was $.97 versus $.47. Reported operating income increased 79% to $531 million.

What changed in the full-year fiscal 2024 outlook?

The company reduced its organic net sales outlook to a decline of 2% to 1% and raised and tightened its adjusted diluted EPS range to $2.14 to $2.24. It is maintaining its adjusted full-year operating margin outlook, citing macroeconomic headwinds including softness in mainland China and geopolitical volatility.

What is the Profit Recovery Plan?

The plan is designed to improve gross margin, lower the cost base, and reduce overhead while increasing consumer-facing investments. It targets $1.1 billion to $1.4 billion of incremental operating profit in fiscal 2025 and 2026, with a restructuring program expected to total $500 million to $700 million in charges before taxes.

What drove the sales recovery in the quarter?

Organic growth was primarily driven by double-digit growth in EMEA, reflecting higher shipments in Asia travel retail as retail sales trends improved sequentially. La Mer, Estée Lauder, Jo Malone London, Le Labo, and The Ordinary led organic growth, and Asia travel retail returned to growth.

How did results look year to date?

For the nine months ended March 31, 2024, net sales were $11.74 billion, down 5%, and net earnings were $674 million, down 35%. Operating cash flow was $1.47 billion, up from $1.02 billion, mainly due to lower inventory.

EL 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.

The Estée Lauder Companies Inc. (NYSE: EL) reported fiscal 2024 third-quarter results for the quarter ended March 31, 2024, in a press release furnished as Exhibit 99.1.

Net sales were $3.94 billion^a, up 5% from $3.75 billion, with organic net sales up 6%, led by double-digit growth in EMEA on stronger Asia travel retail shipments. Reported net earnings attributable to the company were $330 million, and diluted EPS rose to $.91 from $.43; adjusted diluted EPS was $.97 versus $.47 in the prior-year period. Reported operating income increased 79% to $531 million.

For the full fiscal year 2024, the company is reducing its organic net sales outlook to a decline of 2% to 1%, while increasing and tightening its adjusted diluted EPS range to $2.14 to $2.24^b, a decrease of 38% to 35% versus fiscal 2023 as reported in the filing. Management said it is maintaining its adjusted full-year operating margin outlook and expects the second half of fiscal 2024 to be an inflection point, with accelerating organic sales growth in the fourth quarter. The company also outlined its Profit Recovery Plan, targeting $1.1 billion to $1.4 billion of incremental operating profit in fiscal 2025 and 2026, and a two-year restructuring program with total charges of $500 million to $700 million.

Nine-month results were weaker, with net sales of $11.74 billion^c, down 5%, and net earnings of $674 million, down 35%. Operating cash flow improved to $1.47 billion from $1.02 billion, mainly on lower inventory. The company cited macroeconomic headwinds, including softness in prestige beauty in mainland China and geopolitical volatility, as key risks to its outlook.

02—Key points

Key Highlights

Q3 FY2024 net sales of $3.94 billion, up 5% reported and up 6% organic, driven by EMEA and a recovery in Asia travel retail.
Q3 diluted EPS of $.91 versus $.43 a year earlier; adjusted diluted EPS of $.97 versus $.47.
Reported operating income rose 79% to $531 million in the quarter.
Full-year FY2024 organic net sales outlook reduced to a decline of 2% to 1%; adjusted diluted EPS range raised and tightened to $2.14 to $2.24.
Management expects accelerating organic sales growth in Q4 and operating margin in the second half to exceed the first half and the prior-year period.
Profit Recovery Plan targets $1.1 billion to $1.4 billion of incremental operating profit in fiscal 2025 and 2026, with a restructuring program totaling $500 million to $700 million in charges.
Nine-month net sales fell 5% to $11.74 billion and net earnings fell 35% to $674 million, while operating cash flow rose to $1.47 billion.

03—Questions

Frequently Asked Questions

How did Estée Lauder perform in the fiscal 2024 third quarter?
Net sales rose 5% to $3.94 billion, with organic net sales up 6%. Diluted EPS was $.91 versus $.43, and adjusted diluted EPS was $.97 versus $.47. Reported operating income increased 79% to $531 million.
What changed in the full-year fiscal 2024 outlook?
The company reduced its organic net sales outlook to a decline of 2% to 1% and raised and tightened its adjusted diluted EPS range to $2.14 to $2.24. It is maintaining its adjusted full-year operating margin outlook, citing macroeconomic headwinds including softness in mainland China and geopolitical volatility.
What is the Profit Recovery Plan?
The plan is designed to improve gross margin, lower the cost base, and reduce overhead while increasing consumer-facing investments. It targets $1.1 billion to $1.4 billion of incremental operating profit in fiscal 2025 and 2026, with a restructuring program expected to total $500 million to $700 million in charges before taxes.
What drove the sales recovery in the quarter?
Organic growth was primarily driven by double-digit growth in EMEA, reflecting higher shipments in Asia travel retail as retail sales trends improved sequentially. La Mer, Estée Lauder, Jo Malone London, Le Labo, and The Ordinary led organic growth, and Asia travel retail returned to growth.
How did results look year to date?
For the nine months ended March 31, 2024, net sales were $11.74 billion, down 5%, and net earnings were $674 million, down 35%. Operating cash flow was $1.47 billion, up from $1.02 billion, mainly due to lower inventory.

04—Continue

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