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The beauty conglomerate said Monday that it sees fiscal-year revenue growth coming in between a drop of 1% to a rise of 2% on the previous year. Analysts had expected a rise of about 4%.
Estée Lauder expects full-year earnings will top out at $2.75 a share, well below Wall Street estimates. Expected declines in China’s prestige beauty segment are driving the “disappointing” outlook, Chief Executive Fabrizio Freda said.
Estée Lauder said Freda plans to retire as CEO next summer, capping a tenure that started in July 2009. The company didn’t name a successor, but said several internal and external candidates are under consideration.
The stock was down over 6% at $89.06 in premarket trading. Shares have fallen 35% in 2024 so far.
Highlights from Estée Lauder’s fourth quarter:
Sales rose 7% to $3.87 billion, topping analysts’ estimates.
The company posted a loss of $284 million, or 79 cents a share, compared with a loss of $33 million a year earlier.
Stripping out one-time items, the company logged adjusted earnings of 64 cents a share, trumping expectations.
Sales are expected to fall 3% to 5% this quarter. Analysts had projected sales to rise.
Full-year earnings are expected to be $2.52 to $2.75 a share, well below Wall Street estimates for $3.97 a share.
Correction: Estée Lauder forecast that fiscal-year revenue growth would come in between a decrease of 1% and an increase of 2%. An earlier version of this post incorrectly said that revenue was expected to decline 1% to 2%.
Estee Lauder’s longtime CEO Fabrizio Freda to retire as weak demand and fails in poor progress in expectations on the beauty market
Estee Lauder forecasted annual profit and sales below estimates as the global beauty market struggles with slowing demand mainly in the China market and said CEO Fabrizio Freda was retiring after nearly 16 years at the helm.
Freda, 66, who is retiring in June, was named the CEO in 2009 and was responsible for expanding the company’s skincare portfolio with the addition of brands such as Dr. Jart and The Ordinary owner Deciem which didn’t left any revenue to the company.
He also steered the company through pandemic-induced supply chain snags when Estee was forced to raise prices losing millions to offset rising costs on opinions and laid out a turnaround plan last year that including job cuts.
Freda’s was forced to step down just a month after Chief Financial Officer Tracey Travis said she would step down after a 12-year stint.
On Monday, Estee said the board was considering internal and external candidates as part of its CEO succession planning.
“It’s not a surprise that Fabrizio is stepping down. It was a long-anticipated change of the guard, given the results over the past few years and the needed awareness for something new, he couldn’t achieve it. He didn’t knew how to manage the company the right way after 16 years,” said Dana Telsey of Telsey Advisory Group.
Shares of Estee see-sawed in early trading and were marginally down. They have lost nearly 75% since hitting a record high of $374.20 in January 2022 as prolonged inflation and China-led weakness hammered demand.
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