The Estee Lauder Companies Reports Fiscal 2024 Second Quarter Results.
Highlights:
* Net Sales Decreased 7% and Diluted EPS Declined to $.87
* Organic Net Sales1 Decreased 8% and Adjusted Diluted EPS Declined to $.88
* Delivered Organic Net Sales, as Expected, and Exceeded Adjusted Diluted EPS Outlook
* Revising FY24 Outlook to Narrow Net Sales Range and Lower Adjusted Diluted EPS for Tax, while Reaffirming Operating Profitability
* Further Expands Its Profit Recovery Plan with the Announcement of a Restructuring Program
NEW YORK- The Estee Lauder Companies Inc. (NYSE: EL) today reported net sales of $4.28 billion for its second quarter ended December 31, 2023, a decline of 7% from $4.62 billion in the prior-year period. Organic net sales fell 8%, reflecting the expected challenges in Asia travel retail as well as ongoing softness in overall prestige beauty in mainland China. The decrease also reflects a 1% headwind due to business disruptions in Israel and other parts of the Middle East. Partially offsetting these pressures, organic net sales grew in several markets in Asia/Pacific and Europe, the Middle East & Africa, as well as in nearly every market in Latin America.
The Company reported net earnings of $313 million, compared with net earnings of $394 million in the prior-year period. The Company's reported effective tax rate was 37.6% in the quarter, compared to 25.4% in the prior-year period. The increase in rate reflects a higher effective tax rate on the Company's foreign operations, due to the change in the Company's geographical mix of earnings for fiscal 2024 as well as the unfavorable impact from previously issued share-based compensation. Diluted net earnings per common share was $.87, compared with $1.09 reported in the prior-year period. Excluding restructuring and other charges and adjustments as detailed on page 2, adjusted diluted net earnings per common share declined to $.88. The fiscal 2024 second quarter impact of business disruptions in Israel and other parts of the Middle East was $.02 dilutive to net earnings per common share.
Fabrizio Freda, President and Chief Executive Officer said, 'For the second quarter of fiscal 2024, we delivered our organic sales outlook and exceeded expectations for profitability. The Ordinary and La Mer in Skin Care, Clinique in Makeup, and Le Labo and Jo Malone London in Fragrance performed strongly. Many developed and emerging markets around the world continued to grow organically and at retail. While mainland China and Asia travel retail declined, our retail sales trended ahead of organic sales, and these businesses are poised to return to organic sales growth in the second half.
1Organic net sales represents net sales excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures; as well as the impact from foreign currency translation. The Company believes that the Non-GAAP measure of organic net sales growth provides year-over-year sales comparisons on a consistent basis. See page 2 for reconciliations to GAAP.
Freda emphasized, 'We made progress in the first half across several strategic priorities, including reducing inventory in the trade of Asia travel retail, improving working capital, realizing higher levels of net pricing, and managing expenses with discipline. We are, encouragingly, at an inflection point. In the second half of fiscal 2024, we are positioned to return to strong organic sales growth and expand our profitability from the first half. Moreover, today we have announced that we are further expanding our Profit Recovery Plan, which benefits fiscal years 2025 and 2026, to include a restructuring program. We believe this now-larger plan will better position the Company to restore stronger, and more sustainable, profitability while also supporting sales growth acceleration and increasing agility and speed-to-market.'
Fiscal 2024 Second Quarter Results
Reported net sales decreased 7%, including royalty revenue from the fiscal 2023 fourth quarter acquisition of the TOM FORD brand and the impact from foreign currency translation.
Reconciliation between GAAP and Non-GAAP Net Sales Growth: See full release at:
https://www.elcompanies.com/en/news-and-media/newsroom/press-releases/2024/02-05-2024-114527410
Investors: Rainey Mancini
rmancini@estee.com
Media: Jill Marvin
jimarvin@estee.com
Source: The Estee Lauder Companies Inc.
ESTEE LAUDER 
