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The Estee Lauder Companies Reports Fiscal 2014 Second Quarter Results; Net Sales in Line with Expectations, EPS Better Than Anticipated

February 6, 2014

ENP Newswire - 06 February 2014 Release date- 05022014 - NEW YORK - The Estee Lauder Companies Inc. (NYSE:EL) today reported net sales for its second quarter ended December 31, 2013 of $3.02 billion , a 3% increase compared with $2.93 billion in the prior-year quarter. Excluding the impact of foreign currency translation, net sales increased 4%. Net earnings for the quarter were $432.5 million , compared with $447.5 million last year, and diluted net earnings per common share were $1.09 , compared with $1.13 reported in the prior year. The fiscal 2014 second-quarter results included net adjustments associated with restructuring activities of $(3.5) million ( $(2.3) million after tax), equal to $(.01) per diluted common share. The fiscal 2013 second-quarter results included returns and charges associated with restructuring activities of $14.6 million ( $9.5 million after tax), equal to $.02 per diluted common share. Excluding these restructuring activities in the second quarters of fiscal 2014 and 2013, net earnings for the three months ended December 31, 2013 were $430.2 million , and diluted net earnings per common share were $1.09 , versus a comparable $1.16 in the prior-year period. A reconciliation between GAAP and non-GAAP financial measures is included in this release. Comparisons between the current fiscal year and the prior year second quarters were affected by the accelerated sales orders shifted into the Company's fiscal 2013 second quarter from its third quarter in advance of the Company's January 2013 implementation of SAP as part of its Strategic Modernization Initiative (SMI). This amounted to approximately $94 million in sales and $78 million in operating income, equal to approximately $.13 per diluted common share. Excluding the impact of the shift and restructuring activities, net sales in local currency and operating income for the three months ended December 31, 2013 would have increased 7% and 11%, respectively. Additionally, in the prior-year second quarter, the Company amended the agreement related to the August 2007 sale of Rodan + Fields to receive a fixed amount in lieu of future consideration and other rights and, as a result, recognized $21.3 million as other income, equal to approximately $.04 per diluted common share. Fabrizio Freda , President and Chief Executive Officer, said, 'Our fiscal second quarter sales growth was in line with our expectations, despite softer than expected markets in some geographies. Earnings per share exceeded our forecast, due to strong results in several of our brands and high margin channels, as well as our ability to leverage costs. These results confirm that our business strategy is sound and effective. Adjusting for the accelerated sales orders in the prior year, our local currency sales increased more than 7%. Underscoring our sustainable growth is our strong and diverse portfolio of brands that is balanced by geography, product category and channel. Key drivers of our sales gains in the quarter were the United States and the United Kingdom , our luxury and makeup artist brands, and online and travel retail channels. These factors and continued strength overall in emerging markets more than compensated for soft results in certain European countries and solid but slowing Chinese market growth. 'Our strategy prioritizes the fastest growing areas of our business to drive top-line growth and increase profitability and margins. To achieve this, we plan to continue appropriate levels of targeted investment spending, while leveraging efficient cost management in other expense categories. At the same time, we will bring a steady flow of new products to market and increase brand awareness by further expanding digital and social media capabilities and high-touch in-store service innovation. 'With half of our year behind us, we are narrowing our full fiscal year sales estimate to 6% to 7% in local currency, reflecting softening in some key markets. At the same time, we are reaffirming our earnings per share estimate of $2.80 to $2.87 for the full fiscal year. Our forecast reflects our ability to leverage high growth opportunities while recognizing and navigating tougher environments to deliver our financial goals.' The Company made further progress on its strategic goals and realized continued improvement in cost of sales. As planned, the Company increased global advertising spending versus the prior-year quarter to support its biggest innovations and certain existing products. Results by Product Category Source: The Estee Lauder Companies Inc. The Estee Lauder Companies Inc. Investor Relations: Dennis D'Andrea , 212-572-4384 or Media Relations: Alexandra Trower , 212-572-4430

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Source: ENP Newswire

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