Esté e Lauder Raises Outlook, Announces Job Cuts

Esté e Lauder Cos. on Tuesday bumped up its outlook for the year as it reported better-than-expected profit growth, though it also announced restructuring measures it will undergo over the next five years.

The cosmetics company estimates it will cut its workforce by 900 to 1,200 positions globally, or about 2.5%. Esté e Lauder anticipates $600 million to $700 million in restructuring costs and, ultimately, annual cost savings of about $200 million to $300 million.

Shares in the company fell 2.7% premarket to $94.50.

For the year, Esté e Lauder said it now expects adjusted earnings of $3.09 to $3.14 a share, up from its previous guidance for $3.07 to $3.12 a share, citing a slight moderation in foreign currency translation. The company backed its revenue guidance for between 4% and 5% growth.

As previously announced, Esté e Lauder said it was overhauling its global technology infrastructure, transitioning to a primarily vendor-owned model. The company recorded a charge of $15.2 million—or 2 cents a share—in the third quarter.

Over all for the quarter, Esté e Lauder reported a profit of $265.6 million, down from $272.1 million a year earlier. Per-share earnings were flat at 71 cents, on a lower share count. Excluding the technology charge, earnings were 73 cents a share. Total sales grew 2.9% to $2.66 billion.

The company had forecast earnings of 53 cents to 58 cents a share—below consensus when issued—on revenue of $2.63 to $2.66 billion.

Gross margin edged up to 81% from 80.5%.

Skin-care sales fell 2.5% as currency fluctuations offset double-digit gains in sales of La Mer brand. Makeup sales increased 7.3% on double-digit growth in MAC, Smashbox and Tom Ford as well as gains in Bobbi Brown. Skin-care and makeup segments contributed about 40% of revenue each.

Sales in the Americas and the Asia-Pacific regions both edged up 0.2% while sales in the Europe, Middle East and Africa regions grew 7.7%.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

May 03, 2016 10:05 ET (14:05 GMT)

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