The Fiscal Q2 2024 Results Unveiled by The Estée Lauder Companies

The Estée Lauder Companies Inc. (NYSE: EL) disclosed a decline in net sales to $4.28 billion for the second quarter concluding on December 31, 2023, marking a 7% reduction from the previous year’s $4.62 billion. Organic net sales also saw an 8% decrease, attributed to anticipated challenges in Asia travel retail and ongoing softness in the overall prestige beauty sector in mainland China. An additional 1% dip resulted from business disruptions in Israel and other Middle Eastern regions. Despite these setbacks, organic net sales experienced growth in various markets in Asia/Pacific, Europe, the Middle East & Africa, and nearly every Latin American market.

The company reported net earnings of $313 million, a drop from $394 million in the corresponding period of the prior year. The reported effective tax rate for the quarter was 37.6%, up from 25.4% in the prior-year period. This increase was influenced by a higher effective tax rate on the company’s foreign operations, stemming from the shift in geographical earnings mix for fiscal 2024 and the unfavorable impact of previously issued share-based compensation. Diluted net earnings per common share were $.87, compared to $1.09 in the prior-year period. Adjusted for restructuring and other charges, adjusted diluted net earnings per common share declined to $.88. The impact of business disruptions in Israel and other Middle Eastern regions was $.02 dilutive to net earnings per common share.

Fabrizio Freda, President and Chief Executive Officer, expressed satisfaction with the second-quarter results, noting that the company met its organic sales outlook and exceeded profitability expectations. Strong performances were observed in brands such as The Ordinary and La Mer in Skin Care, Clinique in Makeup, and Le Labo and Jo Malone London in Fragrance. Freda highlighted progress in strategic priorities, including inventory reduction in Asia travel retail, improved working capital, enhanced net pricing, and disciplined expense management. He emphasized the company’s position at an inflection point and the expectation of returning to strong organic sales growth and increased profitability in the second half of fiscal 2024. Additionally, the company announced an expansion of its Profit Recovery Plan, including a restructuring program, aimed at reinforcing profitability, supporting sales growth, and enhancing agility and speed-to-market in fiscal years 2025 and 2026.

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