Estée Lauder (EL) stock experienced a significant decline of 17.54% on Wednesday after the company revised its fiscal-year outlook due to ongoing challenges in China. Estée Lauder now expects sales for fiscal year 2024 to range from a 2% decline to a 1% increase compared to the previous year. In their fiscal fourth-quarter report in August, the company had projected sales growth between 5% and 7%.
Furthermore, the company adjusted its earnings-per-share outlook for fiscal year 2024 to a range of $2.17 to $2.42, down from the previous range of $3.50 to $3.75. CEO Fabrizio Freda stated in the earnings release that the revised outlook is a result of external factors such as slower growth in overall prestige beauty in Asia travel retail and mainland China.
He also mentioned that the ongoing conflict in the Middle East poses a risk to the business. Estée Lauder stock plummeted by 19% to $104.07 on Wednesday, marking its largest percentage decrease on record and reaching its lowest closing price since August 2017. Year-to-date, the stock has fallen by 58%. Additionally, the company anticipates a 9% to 11% decrease in second-quarter revenue compared to the previous year.
The estimated earnings per share for the quarter, ranging from 48 cents to 58 cents, fell well below the FactSet consensus of $1.21. For the fiscal first quarter, Estée Lauder reported earnings of 11 cents per share on revenue of $3.52 billion. Analysts had expected a loss of 21 cents per share on revenue of $3.53 billion. In the same period last year, the company achieved earnings per share of $1.37 on revenue of $3.94 billion. RBC Capital Markets analyst Nik Modi expressed surprise at the weakness in China, as previous indications suggested. Modi rates the stock as Outperform with a price target of $195.
