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How EL’s Fiscal 3Q16 Revenue Compared to Analysts’ Expectations

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May. 18 2016, Updated 9:09 a.m. ET

Estée Lauder’s 3Q16 revenue in line

As discussed earlier, Estée Lauder’s (EL) fiscal 3Q16 net revenue rose 2.9% to $2.7 billion compared to $2.6 billion in fiscal 3Q15. Excluding the impact of foreign currency translations, its net revenue rose 6% in fiscal 3Q16.

After beating revenue estimates last quarter, Estée Lauder came in line with consensus Wall Street Estimates on revenue in fiscal 3Q16. Analysts had also projected revenue of $2.7 billion for the company.

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Revenue versus peers

The rise in revenue was helped by EL’s newest brand By Kilian’s acquisition, which contributed approximately 10 basis points to its sales growth. In addition, strategic resource allocation and constant currency gains across the board in all regions, especially in the makeup and fragrance categories, helped revenue growth.

Estée Lauder’s global travel retail channel rose 9% in 1Q16, driven by countries in Europe and Asia and partially offset by continued net sales falls in Hong Kong, Brazil, and the United States.

However, Coty’s (COTY) total net revenue for fiscal 3Q16 fell 1% like-for-like following improvements in its fragrance segment’s revenue trend. Procter & Gamble’s (PG) revenue fell 6.9% to $15.8 billion in fiscal 3Q16. Its reported revenue was negatively impacted by a 5% fall in foreign exchange.

Avon’s (AVP) 1Q16 revenue fell 27.1% to $1.3 billion. Excluding currency impacts, its net sales rose 2%.

Specialty-multi channels

The company continues to invest in fast-growing channels by opening new freestanding stores and launching several E&M (electronic and mobile) commerce sites for its brands, mostly with retail (XRT) vendors. For example, GLAMGLOW started selling its products on Nordstrom’s website.

In addition, Estée Lauder increased its presence in specialty-multi channels. For example, in the United States, Estée Lauder launched its Estée Edit product line in Sephora, Clinique continued to expand in Ulta, and other brands added more Bluemercury locations. In Shanghai, Isetan opened a specialty-multi store displaying several of EL’s brands.

EL makes up 0.7% of the iShares MSCI USA Quality Factor ETF (QUAL).[1. Updated as of May 3, 2016]

In the coming parts, we’ll focus on EL’s product category revenue and geographical presence in fiscal 3Q16.

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