Shares of Estee Lauder (NYSE:EL) are down more than 9% after the company cut its guidance for the full year.
EL reported EPS of $1.90 per share to easily top the $1.67 per share expected. Revenue came in at $4.25 billion to miss on the $4.32 billion consensus, driven by the underperformance in the regions of Americas and the Asia Pacific.
“In the Asia/Pacific region, several markets prospered, led by Japan while our China results were pressured by COVID restrictions,” the management commented.
EL stock was especially hit after it slashed guidance to now expect adjusted EPS between $7.05 and $7.15, which compares to the prior guidance of $7.43 to $7.58, and lower than the estimate of $7.57.
The company is now calling for sales to come in between +7% to +9% vs +13% to +16% earlier.
“Given our outstanding performance year-to-date, we expect to deliver a record year in fiscal 2022 despite temporary COVID-driven headwinds that reduced our fourth quarter outlook. We are confident that our business in China will rebound when COVID abates and accelerate our momentum.”
Barclays analyst Lauren Lieberman is “deeply” surprised by the big guidance cut.
“To be sure, with a major distribution center in Shanghai, we probably should have been braced for more short-term pressure on the business but even still, the implied magnitude of organic sales declines in F4Q (expected to be down -10-18% by our math) is striking,”
“While others may well have been better prepared for today’s release, we don’t expect anyone will have expected a shock to EPS of this degree,” she added.
Stifel analyst Mark Astrachan said the results were “worse-than-feared.”
“We anticipate EL shares to meaningfully underperform, partly reflecting weak F3Q22 sales relative to peers and limited visibility on timing of improvement in China,” he told clients.
By Senad Karaahmetovic