Why Estée Lauder Stock Was Sinking on Friday

What happened

Some stocks were smelling rather sweet on Friday, but that wasn’t the case with storied perfume and cosmetics maker Estée Lauder (EL -3.31%). The company’s share price sagged 3.3% on the day, following the release of its latest set of quarterly results.

So what

For its fourth quarter of fiscal 2023, Estée Lauder had $3.61 billion in net sales, 1% higher than in the same period last year. On the other hand, the company flipped to a net loss according to generally accepted accounting principles (GAAP), with a $32 million shortfall ($0.09 per share) against the fourth-quarter 2022 profit of $50 million.

On average, analysts tracking the stock were estimating that the top line would be lower at $3.47 billion, but its net loss would be narrower, at $0.03 per share.

One of the big factors in Estée Lauder’s performance during the quarter was a 16% year-over-year decline in sales of skin care products in the Europe, Middle East, and Africa region. The company attributed this to weakness in the travel retail segment.

In its home market of the U.S., sales declined, but this was compensated somewhat by robust growth in Latin America. As a result, growth was flat across the company’s Americas segment. 

Now what

In its earnings release, Estée Lauder proffered guidance for both its current (first) quarter, and the entirety of fiscal 2024. The company forecasts its net sales will increase by 5% to 7% over the fiscal 2023 level, placing the total at a maximum $17.02 billion. That, unfortunately, is below the consensus analyst projection of $17.21 billion. Headline per-share earnings are anticipated to land at $3.43 to $3.70.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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