Why Is Estee Lauder (EL) Up 9.1% Since Last Earnings Report?

Core Viewpoint - Estee Lauder's recent earnings report indicates a decline in both top and bottom lines due to challenges in the Asia-Pacific region, particularly in China and travel retail, leading to a disappointing outlook for the third quarter of fiscal 2025 [2][9]. Financial Performance - Adjusted earnings for the second quarter were 62 cents per share, surpassing the Zacks Consensus Estimate of 32 cents, but down 29% from 88 cents in the previous year [3]. - Quarterly net sales reached $4,004 million, exceeding the Zacks Consensus Estimate of$3,975.4 million, but reflecting a 6% year-over-year decline [3]. Segment Performance - Skin Care sales decreased by 12% year over year to $1,921 million, primarily due to weak consumer sentiment in China [4]. - Makeup revenues fell 1$1,150 million, impacted by declining sales of TOM FORD and other brands [4]. - Fragrance revenues increased by 1% to $744 million, driven by strong performance from Luxury Brands like Le Labo [4]. - Hair Care sales totaled$159 million, down 8% year over year, mainly due to Aveda's performance [4]. Regional Revenue Results - Sales in the Americas declined by 2% to $1,223 million [5]. - Revenues in the EMEA region fell by 6$1,494 million [5]. - Asia-Pacific sales tumbled by 11% to $1,287 million [5]. Margin Analysis - Adjusted gross margin increased by 310 basis points to 76.1$2,586 million and long-term debt of $7,276 million [7]. - Net cash flow from operating activities for the six months ended December 31, 2024, was$387 million, with capital expenditures of $273 million [7]. Dividend Announcement - A quarterly dividend of 35 cents per share was announced, payable on March 17, 2025, to shareholders of record as of February 28, 2025 [8]. Future Outlook - For the third quarter of fiscal 2025, net sales are projected to decline by 10-12% year over year, with adjusted EPS expected to drop by 69-79%, ranging from 20 cents to 30 cents [9][10]. - The company anticipates moderate adjusted gross margin expansion, although offset by sales volume deleverage [11]. Estimate Trends - Recent estimates have shown a downward trend, with the consensus estimate shifting down by 52.83% [12]. Investment Scores - Estee Lauder currently holds a Growth Score of B but has a low Momentum Score of F, resulting in an aggregate VGM Score of D [13].