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EL Appoints Andrew Ross as Senior Vice President of Strategy

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Aug. 26 2016, Updated 7:04 p.m. ET

Price movement

Estée Lauder Companies (EL) has a market cap of $34.9 billion. It rose by 0.81% to close at $91.23 per share on August 25, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -4.1%, -1.3%, and 4.3%, respectively, on the same day. EL is trading 1.7% below its 20-day moving average, 1.4% below its 50-day moving average, and 1.0% above its 200-day moving average.

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Related ETF and peers

The iShares Russell 3000 ETF (IWV) invests 0.09% of its holdings in Estée Lauder. The ETF tracks a cap-weighted index that measures the investable US equities market, covering the entire market-cap spectrum, including micro-caps. The YTD price movement of IWV was 8.0% on August 25.

The market caps of Estée Lauder’s competitors are as follows:

  • Coach (COH) — $11.1 billion
  • Coty (COTY) — $9.3 billion
  • Avon Products (AVP) — $2.5 billion

Latest news on EL

Andrew Ross has been appointed senior vice president of strategy and new business development, effective September 1, 2016. The company reported that “Mr. Ross will lead the ongoing development and implementation of the Company’s strategy and 10-year Strategic Compass. Mr. Ross will also lead the Company’s mergers, acquisitions, licensing and alliance activities worldwide,” adding that “Mr. Ross will join the Company’s Executive Leadership Team and report jointly to Fabrizio Freda, President and Chief Executive Officer, and Tracey T. Travis, Chief Financial Officer and Executive Vice President, Global Finance and Strategy.”

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Estée Lauder’s performance in fiscal 4Q16

Estée Lauder reported fiscal 4Q16 net sales of ~$2.7 billion, a rise of ~5.2% over the net sales of ~$2.5 billion in fiscal 4Q15. Sales of skincare, makeup, and haircare products rose by 2.0%, 10.2%, and 2.7%, respectively, and sales of fragrance products fell by 2.4% between fiscals 4Q15 and 4Q16. It reported restructuring and other charges of $99.4 million in fiscal 4Q16. The company’s operating income fell by 37.1%. Its net income and EPS (earnings per share) fell to $93.5 million and $0.25, respectively, in fiscal 4Q16, compared with $153.0 million and $0.40, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, EL reported net sales of $11.3 billion, a rise of 4.6% YoY (year-over-year). The company’s gross profit margin and operating income rose by 0.15% and 0.25%, respectively, in fiscal 2016.

Its net income and EPS rose to $1.12 billion and $2.96, respectively, in fiscal 2016, compared with $1.09 billion and $2.82, respectively, in fiscal 2015.

Estée Lauder’s cash and cash equivalents fell by 10.5% and its inventory and promotional merchandise rose by 3.9% in fiscal 2016. Its current ratio fell to 1.6x and its DE (debt-to-equity) ratio rose to 1.6x in fiscal 2016, compared with current and DE ratios of 2.0x and 1.3x, respectively, in fiscal 2015.

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Quarterly dividend

Estée Lauder has declared a quarterly dividend of $0.30 per share on its Class A and Class B common stocks. The dividend will be paid on September 15, 2016, to shareholders of record at the close of business on August 31, 2016.

Projections

The company has made the following projections for fiscal 2017:

  • net sales growth: 6%–7%
  • reported EPS: $3.20–$3.30
  • charges associated with restructuring charges: ~$80 million–$100 million
  • EPS before charges associated with restructuring activities: $3.38–$3.44

The company has made the following projections for fiscal 1Q17:

  • net sales growth: 1%–2% and 2%–3% on a constant-currency basis
  • reported EPS: $0.65–$0.71
  • charges associated with restructuring charges: ~$35 million–$45 million
  • EPS before charges associated with restructuring activities: $0.73–$0.77

In the next part, we’ll look at Altria Group (MO).

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