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Estée Lauder Stock Surges on Impressive Q2 Results and Outlook

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Feb. 6 2019, Published 3:01 p.m. ET

Strong fiscal 2019 second-quarter results

Estée Lauder (EL) stock soared 11.6% yesterday after the company beat analysts’ expectations for the second quarter of fiscal 2019 (ended December 31). The cosmetic giant’s sales grew 7.0% year-over-year to $4.01 billion, beating analysts’ estimate of $3.92 billion. The top-line growth was driven by its skincare business, performance in the Asia-Pacific region, and online and travel retail sales. The company experienced strong growth in the Chinese market despite ongoing trade tensions.

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However, the company’s sales in the Americas disappointed, and were down 6.9% on a reported basis. The company also faced headwinds in the United Kingdom, where macro issues impacted consumer spending. Overall, the company experienced strong global demand in its Estée Lauder, La Mer, and MAC brands. The company’s adjusted EPS grew 14.5% to $1.74 in the quarter, crushing analysts’ expectation of $1.55.

Guidance raised

Estée Lauder is optimistic that its strategic initiatives will help it beat its growth estimate for the global prestige beauty market this fiscal year. The company raised its growth outlook for fiscal 2019 following its strong second-quarter performance, to 5%–6% from 4%–5%. The company now expects fiscal 2019 adjusted EPS of $4.92–$5.00, up from $4.73–$4.82.

Estée Lauder plans to invest the savings generated from its Leading Beauty Forward program toward innovation, high-quality products, digital advertising, and other growth initiatives. We’ll discuss Estée Lauder’s margins in the next part of this series.

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