Estée Lauder Cos. is reporting a downward revision of its full-year outlook, citing ongoing challenges in Asian travel retail and mainland China, as well as potential risks from the Israel-Hamas conflict. The company now expects a decline in net sales of 9% to 11% in the current quarter compared to the same period last year. Additionally, diluted net earnings are projected to fall between 47 cents and 57 cents per share. The conflict in the Middle East could potentially have a dilutive impact of 8 cents on Estée Lauder’s business.

CEO Fabrizio Freda commented on the revision, stating, “Given the slower growth in overall prestige beauty in Asia travel retail and mainland China, we are adjusting our fiscal 2024 outlook.” Freda also highlighted the risks posed by disruptions to the company’s operations in Israel and other parts of the Middle East.

For the entire fiscal year, Estée Lauder now forecasts a net sales decrease of 2% to an increase of 1% compared to the previous year. Diluted earnings per common share are expected to range from $2.08 to $2.35.

The company, known for brands such as MAC and Tom Ford, has been facing challenges in its crucial travel retail business in Asia due to lower-than-expected demand. As a result, Estée Lauder had already adjusted its guidance in August, anticipating a net loss and a sales decline of 10% to 12%. This has further hindered the recovery of its duty-free business. The disappointing news has had a significant impact on the company’s stock, which fell 13% in premarket trading in New York on Wednesday. Year-to-date, the stock has declined by 48%, while the S&P 500 consumer staples index has dropped 7.9% in 2023 thus far.

Useful Links:
1. Estée Lauder Official Website
2. CNBC Article on Estée Lauder’s Outlook Revision