Strong fragrance and makeup sales helped Estée Lauder post better-than-expected revenue in the fourth quarter, although the cosmetics group was still hampered by Covid-19 disruptions in Asia.
Sales growth was particularly strong in the Americas during the quarter, where the continued easing of Covid-19 restrictions led to consumers returning to go out and shop in physical retail stores. However, this was more than offset by the negative impact on travel and retail traffic resulting from the Covid-19 restrictions in China.
Estée Lauder reported net sales of $3.56 billion for the quarter ending June 30, down 10% from the same period last year, but above expectations of 3.4 billion, according to analysts polled by Refinitiv.
Organic net sales, which exclude recent acquisitions, divestitures and currency fluctuations, decreased 8% in the fourth quarter.
For the full year, Estée Lauder said its organic net sales increased 8%. Fragrance net sales increased across all regions while makeup sales increased across most of its brands, reflecting “recovering western markets, increasing usage occasions.”
The New York-based company reported net income of $52 million for the quarter, below analysts’ expectations of nearly $110.4 million. Adjusting for one-time costs, Estée Lauder reported adjusted earnings per share of 42 cents, above the 33 cents analysts expected.
Estée Lauder cut its full-year sales and profit forecast earlier this year, citing Covid-19 lockdowns in China as a major factor in disrupting supply chains. The company said its distribution facilities in Shanghai returned to normal capacity in early June.
“We are very confident in the strength of our business and the opportunity for long-term dynamic growth in prestige beauty, but recognize that the environment remains complex and uncertain at this stage,” said Chief Executive Fabrizio Freda. in a press release.
As consumers begin to go out again, Estée Lauder forecasts net sales for the full fiscal year 2023 to increase between 3 and 5% from $17.74 billion in 2022. That would be lower than the implied increase analyst forecasts for $19 billion.