Shares of The Estée Lauder Companies (NYSE: EL) dropped sharply in pre-market trading on Wednesday after the cosmetics company’s revenues declined 11% year-over-year to $3.93 billion in fiscal Q1, in line with analysts’ estimates. The company’s organic net sales fell 5% year-over-year as a result of macroeconomic headwinds including “COVID-19 restrictions in China.”
EL reported adjusted earnings of $1.37 per diluted share, a fall of 28% year-over-year, and failing to meet consensus estimates of $1.31.
Fabrizio Freda, President, and CEO of Estée Lauder commented, “For fiscal 2023, we are lowering our outlook primarily to reflect tighter inventory management in Asia travel retail, given reduced traffic as a result of COVID- 19 restrictions, tightening of inventory by some retailers in the United States, and a greater negative impact from the far-stronger U.S. dollar. We anticipate sequential acceleration to strong organic sales and adjusted EPS growth in the second half of our fiscal year as these pressures begin to abate…”
Adjusted diluted earnings in fiscal Q2 are projected to decline between 54% and 50% on a constant currency basis while in FY23, it is expected to fall in the range of 21% to 19%.
