Estee Lauder Cos. (NYSE: EL) reported Friday that the company more than doubled its fiscal first-quarter profit, citing a strong re-launch of a skin-care line and better-than-expected sales at airport stores helped, according to Associated Press.
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Investors were less cautious, sending shares up 8 percent by midday Friday and at one point touching a 52-week high.
Overall sales were relatively flat excluding the stronger dollar. They grew in Asia, were flat in Europe and slightly down in the U.S. But the company cut costs during the quarter, the first quarter of a four-year plan to improve operating margins. The better-than-expected sales combined with lower expenses helped the company significantly beat its own expectations.
Estee Lauder, whose brands include namesake Estee Lauder and Clinique, also raised its full-year forecast.
The new Estee Lauder Advanced Night Repair anti-aging skin care line launched in 140 countries in July, and was particularly popular in China, CEO Fabrizio Freda said. An ounce of the line's synchronized recovery complex serum costs $47.50
In addition, the company said sales at the company's airport stores -- which account for about 20 percent of the company's profit -- were better than expected.
Profit rose to $140.7 million, or 71 cents per share, in the July-to-September quarter. That's up from $51.1 million, or 26 cents per share, a year ago.
Excluding restructuring charges, it says profit was 85 cents per share -- well ahead of analysts' expectations for earnings of 34 cents a share.
Estee Lauder says revenue slipped 4 percent to $1.83 billion. Analysts polled by Thomson Reuters, on average, predicted revenue of $1.82 billion.
The company expects profit between 80 cents to 87 cents in the second quarter, while analysts expect 85 cents per share.
The company raised its full-year outlook to $1.95 to $2.10 per share, from a previous outlook of $1.55 to $1.70 per share. Analysts predict a profit of $1.79 per share.
Still, Estee Lauder, based in New York, remained cautious about consumer spending and the upcoming holiday season. Freda said some of its important retailers remain under pressure, an H1N1 virus outbreak could dramatically affect its travel retail business and competitors are expected to be aggressive.
The company is focusing its marketing on classic brands, such as Donna Karan's Cashmere Mist fragrance, which has been around since 1994. It is also offering some fragrances for $29.50, $10 less than the previous entry-level price, producing fewer gift sets for the holidays and offering gift sets in a wider range of prices.
Shares rose $3.69, or 8.9 percent, to $44.83 during midday trading after earlier reaching a 52-week high of $45.44. The stock has traded between $19.81 and $43.20 during the past year.
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