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EL Q3 Earnings Beat Estimates, Sales Down Amid China Weakness
ELEstée Lauder(EL) ZACKS·2025-05-01 16:55

Core Insights - The Estee Lauder Companies Inc. reported third-quarter fiscal 2025 results with both net sales and earnings declining year over year, primarily due to weak consumer sentiment and reduced conversion rates in China [1][2] Financial Performance - Adjusted earnings were 65 cents per share, surpassing the Zacks Consensus Estimate of 29 cents, but down 33% from 97 cents in the prior year [2] - Quarterly net sales reached 3,550million,exceedingtheZacksConsensusEstimateof3,550 million, exceeding the Zacks Consensus Estimate of 3,507.2 million, but reflecting a 10% decline year over year [2] - Organic net sales decreased by 9% to 3,605million[2]Category−WiseRevenueResults−SkinCaresalesfell123,605 million [2] Category-Wise Revenue Results - Skin Care sales fell 12% year over year to 1,807 million, impacted by weak consumer sentiment and lower conversion rates among Chinese shoppers [3] - Makeup revenues declined 9% to 1,035million,primarilyduetoweakersalesfromkeybrandslikeM⋅A⋅CandEsteˊeLauder[4]−Fragrancerevenuesdecreased31,035 million, primarily due to weaker sales from key brands like M·A·C and Estée Lauder [4] - Fragrance revenues decreased 3% to 557 million, largely due to lower performance from Clinique and Estee Lauder [4] - Hair Care sales totaled 126million,down12126 million, down 12% year over year, mainly due to Aveda's weaker performance [5] Regional Revenue Results - Sales in the Americas fell 6% year over year to 1,052 million [6] - Revenues in the EMEA region declined 18% to 1,358million[6]−Asia−Pacificregionsalestumbled31,358 million [6] - Asia-Pacific region sales tumbled 3% to 1,140 million [6] Margin Analysis - Adjusted gross margin improved by 310 basis points to 75%, driven by the Profit Recovery and Growth Plan (PRGP) [7] - Adjusted operating margin contracted by 270 basis points to 11.4%, due to increased investments and sales volume deleverage [8] Financial Health - The company exited the quarter with cash and cash equivalents of 2,631million,long−termdebtof2,631 million, long-term debt of 7,298 million, and total equity of 4,345million[9]−NetcashflowfromoperatingactivitiesfortheninemonthsendedMarch31,2025,was4,345 million [9] - Net cash flow from operating activities for the nine months ended March 31, 2025, was 671 million, with capital expenditures of 395million[10]RestructuringandFutureOutlook−ThePRGPaimstotransformtheoperatingmodel,withexpectedrestructuringchargesbetween395 million [10] Restructuring and Future Outlook - The PRGP aims to transform the operating model, with expected restructuring charges between 1.2 billion and 1.6billionbeforetaxes[12][13]−Thecompanyanticipatesadeclineinreportednetsalesof8−91.6 billion before taxes [12][13] - The company anticipates a decline in reported net sales of 8-9% for fiscal 2025, with adjusted organic net sales expected to fall by the same percentage [14] - Adjusted EPS is projected to slump by 40-50%, ranging from 1.30 to $1.55 for fiscal 2025 [15]