Estee Lauder Q2 Earnings Beat Estimates; Warns On Volatility In Travel Retail

Estee Lauder Companies Inc EL reported a second-quarter FY23 sales decline of 17% year-on-year to $4.62 billion, beating the consensus of $4.58 billion.
Sales in the Americas decreased 5% Y/Y, Europe, Middle East & Africa dropped 22%, and Asia/Pacific fell 17%.
Net sales from Skin Care fell 25%, Makeup dropped 9%, Fragrance slipped 3%, and Hair Care grew 1%.
Gross profit declined 21% Y/Y to $3.4 billion, with the margin contracting 430 basis points to 73.6%.
Operating expenses decreased 2% Y/Y to $2.8 billion while the operating expense margin was 61.6%, versus 52.3% last year.
Operating margin contracted 1,360 basis points to 12%, and operating income for the quarter fell 61% Y/Y to $556 million.
The company held $3.73 billion in cash and equivalents as of Dec. 31, 2022.
Adjusted EPS of $1.54 beat the analyst consensus of $1.30.
Outlook: Estee Lauder lowers FY23 adjusted EPS outlook from $5.25 - $5.40 to $4.87 - $5.02, against the consensus of $5.41. It sees FY23 sales decline of 7% - 5%.
For Q3, it expects adjusted EPS of $0.37 - $0.47 versus the consensus of $1.77. Reported net sales are forecasted to decrease by 14% - 12%.
The company expects the remainder of the fiscal year to be volatile.
Price Action: EL shares are trading lower by 3.55% at $270.84 on the last check Thursday.
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