Estee Lauder's stock is experiencing a significant decline following the company's announcement of a fiscal second-quarter loss and a disappointing outlook for the upcoming quarter. The beauty giant reported a 6% drop in net sales to $4.0 billion, with a notable swing to a per-share loss of $1.64, compared to earnings of 87 cents per share in the same period last year. The company's adjusted earnings per share of 62 cents, while better than the 32-cent consensus, were overshadowed by the broader financial challenges. Estee Lauder's CEO, Stéphane de La Faverie, highlighted the impact of weak retail sales trends in the Asia travel retail sector, particularly in Korea, which significantly contributed to the company's underperformance.
In response to these challenges, Estee Lauder has announced an expansion of its restructuring efforts, which includes cutting 5,800 to 7,000 jobs and booking charges of $1.2 billion to $1.6 billion before tax. The company aims to achieve benefits ranging from $0.8 billion to $1.0 billion through these measures. Estee Lauder's strategic vision, "Beauty Reimagined," seeks to transform its operating model to be leaner and more agile, with a focus on expanding consumer coverage and increasing consumer-facing investments. However, the company's third-quarter outlook remains bleak, with expected sales declines of 12% to 10%, primarily due to continued weakness in the Asia travel retail market.
Estee Lauder (EL) shares are down 7.7% to $76.4 as of 7:42 am on February 4th, from its previous close of $82.77 on February 3rd.