Estée Lauder collapses after bleak outlook for 2023

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Estée Lauder’s stock plummeted yesterday. This follows the revelation of downgraded forecasts from the group for the year 2023. A situation that impacts both the American beauty giant on its turnover and its projected profits.

 

The year 2023 is not exactly positive for Estée Lauder. The group anticipates a downward projection of its sales for the current fiscal year, caused in particular by a recovery of activity that is slow to appear in Asian countries.

 

Following lowered forecasts for its 2023 fiscal year, the US fragrance and cosmetics group saw its shares hit a six-month low of $190.30 during trading hours, closing down 17% at $202.70.

 

A difficult recovery

 

Estée Lauder is lamenting a slower-than-expected recovery of retail sales in Asia in its travel products segment. This situation remains even more marked in the Chinese market.

 

At the same time, its European rivals, LVMH and L’Oréal, have seen their sales increase in the first quarter, stimulated by a rebound in demand on the Chinese market.

 

Those forecasts were “the last thing” Wall Street expected, says Barclays analyst Lauren Lieberman.

 

On the Atlantic side, the U.S. group is also suffering from sales in its domestic market. After organic sales boosted by double-digit growth in the United States, they soon began to fall in the first quarter of 2023.

 

A Bernstein analyst said that Estée Lauder brands are moving toward older customers, even as Millennials and Z generations are increasingly increasing their share of spending on cosmetics. Another important factor to consider is that the group is facing the growth of smaller competitors in the beauty space.

 

Forecasts in the red

 

Estée Lauder expects its net sales for the year 2023 to decline by 10-12%, while the US group previously forecast a decline of 5-7%.

 

The world’s No. 2 beauty and cosmetics company – behind L’Oréal – also expects its adjusted earnings per share to fall by 50 to 51%, compared with its previous expectation of a 27 to 29% decline.

 

Since the pandemic, the Estée Lauder group has been facing great difficulties. It had seen the value of its bonds melt to 86% of the nominal last February. The group puts a lot of hope in the development of the brand Tom Ford Beauty – acquired last November – to recover.

 

Read also >Estée Lauder’s bond at its lowest since the beginning of 2023

 

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Estée Lauder’s stock plummeted yesterday. This follows the revelation of downgraded forecasts from the group for the year 2023. A situation that impacts both the American beauty giant on its turnover and its projected profits.

 

The year 2023 is not exactly positive for Estée Lauder. The group anticipates a downward projection of its sales for the current fiscal year, caused in particular by a recovery of activity that is slow to appear in Asian countries.

 

Following lowered forecasts for its 2023 fiscal year, the US fragrance and cosmetics group saw its shares hit a six-month low of $190.30 during trading hours, closing down 17% at $202.70.

 

A difficult recovery

 

Estée Lauder is lamenting a slower-than-expected recovery of retail sales in Asia in its travel products segment. This situation remains even more marked in the Chinese market.

 

At the same time, its European rivals, LVMH and L’Oréal, have seen their sales increase in the first quarter, stimulated by a rebound in demand on the Chinese market.

 

Those forecasts were “the last thing” Wall Street expected, says Barclays analyst Lauren Lieberman.

 

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Estée Lauder’s stock plummeted yesterday. This follows the revelation of downgraded forecasts from the group for the year 2023. A situation that impacts both the American beauty giant on its turnover and its projected profits.

 

The year 2023 is not exactly positive for Estée Lauder. The group anticipates a downward projection of its sales for the current fiscal year, caused in particular by a recovery of activity that is slow to appear in Asian countries.

 

Following lowered forecasts for its 2023 fiscal year, the US fragrance and cosmetics group saw its shares hit a six-month low of $190.30 during trading hours, closing down 17% at $202.70.

 

A difficult recovery

 

Estée Lauder is lamenting a slower-than-expected recovery of retail sales in Asia in its travel products segment. This situation remains even more marked in the Chinese market.

 

At the same time, its European rivals, LVMH and L’Oréal, have seen their sales increase in the first quarter, stimulated by a rebound in demand on the Chinese market.

 

Those forecasts were “the last thing” Wall Street expected, says Barclays analyst Lauren Lieberman.

 

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Thanks to its extensive knowledge of these sectors, the Luxus + editorial team deciphers for its readers the main economic and technological stakes in fashion, watchmaking, jewelry, gastronomy, perfumes and cosmetics, hotels, and prestigious real estate.

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