Cosmetics maker Estee Lauder Cos Inc's profits dropped by more than 40 percent for the quarter ending June, hurt by a stronger dollar and weak demand for skincare products Clinique and Estee Lauder.
Reuters reported that Estee Lauder's net income declined to $153 million from $257.7 million a year earlier as the sales of its skin care division, which accounts 40 percent of total sales, fell by 16 percent to $1.01 billion, the worst fall in at least two years.
The report added that total revenues for the quarter reached $2.52 billion, 7.4 percent lower than the previous year and below analysts' estimate of $2.57 billion. However, Estee Lauder still booked earnings of 40 cents per share, higher than the expected 34 cents.
The Wall Street Journal noted that if currency impacts and advanced orders from the same period last year were excluded, sales would have grown by 7 percent. The paper said the cosmetics maker's skin care products sales declined by 9 percent, while its fragrance and hair care offerings rose by 18 percent and 10 percent, respectively.
The report added that Estee Lauder, whose brands include Clinique, MAC and Bobbi Brown, had strong performance in growing markets and the United Kingdom.
Reuters noted that Estee Lauder has increased its focus on younger customers through its Smashbox and Bobbi Brown brands, with more mature consumers in North America moving away from its "heritage" brands Estee Lauder and Clinique.
The Wall Street Journal said that for the upcoming fiscal year, Estee Lauder expects sales to grow between 8 percent and 10 percent discounting currency impact, while earnings are projected to increase by a tenth, short of analysts' expectation of 16 percent growth.
It added that for the upcoming quarter ending September, Estee Lauder projects up to 14 percent sales growth, but a decline in per share earnings between 3 percent and 6 percent.
