Cosmetic company Estée Lauder has experienced a downturn in its financial performance for the first quarter (Q1) of fiscal 2025 (FY 2025), with net sales falling to $3.36bn, a 4% decrease from the previous year’s $3.52bn.
The period ending 30 September 2024 saw organic net sales decline by 5%, largely due to a drop in consumer sentiment in China, which led to a slowdown in the prestige beauty market on the mainland and lower conversion rates in Asia travel retail and Hong Kong SAR.
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The company also faced challenges with reduced replenishment orders in Asia travel retail, compounded by inventory pressures from the decelerating retail market.
However, these declines were partially mitigated by growth in several markets, including Japan and the company’s priority emerging markets.
Estée Lauder registered a net loss of $156m in Q1 FY 2025, a stark contrast to the net earnings of $31m in the previous year.
This loss was primarily attributed to charges related to talcum litigation settlement agreements totalling $159m, covering around 70% of the outstanding talcum litigation cases in Q1 FY 2025 and providing for future case settlements with annual caps for five years from January 2025.
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By GlobalDataThe net loss per diluted common share stood at $.43, compared to net earnings per common share of $.09 in the prior year.
Estée Lauder President and CEO Fabrizio Freda said: “Our first quarter results are largely aligned with our outlook on an adjusted basis, despite the fact that the expected headwinds in China and Asia travel retail were greater than anticipated. Our Profit Recovery and Growth Plan drove gross margin expansion, which was partially offset by operating deleverage. Other pillars of our strategic reset also delivered promising initial results.”
Looking ahead to the second quarter of fiscal 2025, Estée Lauder anticipates a decrease in reported and organic net sales of between 8% and 6% compared to the same period in the previous year.
The company also projects reported diluted net earnings per common share to be between $0.02 and $0.19.
In June, Estée Lauder Companies closed on its acquisition of Canadian-based, vertically integrated, multi-brand company DECIEM Beauty Group to expand its skincare portfolio.
