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The American cosmetics group Est\u00e9e Lauder expects its first half results to be negatively impacted by the Covid-related restrictions affecting the travel sector in Asia, particularly in mainland China. Also at issue is a negative dollar effect and the end of certain licensing agreements. As a result, its sales are expected to decline by 17 to 19% for its current quarter compared to the same period last year. For its part, the adjusted earnings per share is expected to be between 5.25 and 5.40 dollars, compared to a previous range of 7.39 dollars to 7.54 dollars.<\/p>\n
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After the announcement of this disappointing outlook, L’Oreal suddenly stalled in the middle of the day and lost nearly 2%, to 312.20 euros, the biggest drop in the Cac 40.<\/p>\n
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The cosmetics group’s share price was weighed down by the more than 8% plunge of Est\u00e9e Lauder on Wall Street, after the announcement of disappointing forecasts for the second quarter and for the whole year. The group is also dragging down Coty, listed in New York.<\/p>\n
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The drop in Est\u00e9e Lauder’s second quarter sales reflects the negative impact of stricter inventory management in travel retail due to the drop in traffic caused by health restrictions (30% of sales are made in China), a 7% decline due to the unfavorable currency effect of the dollar, and finally after the termination of the company’s licensing agreements with Donna Karan New York (DKNY), Michael Kors, Tommy Hilfiger and the Ermenegildo Zegna product lines since June 30 of this year<\/p>\n
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For the whole year, the group is now seeing its net sales fall by 6 to 8% and those, on a like-for-like basis, are up by only 2%. Earnings per share are now only expected to be in the range of 5.01 to 5.21 dollars, compared to a previous estimate of 7.11 to 7.33 dollars. The recovery that was expected in traffic with Hainan, China’s tourist island province, is expected to be weaker than hoped, Estee Lauder said.<\/p>\n
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