Estee Lauder (EL) posts net income of US$692 million in Q1

Highlights

• Estee Lauder Companies, Inc. (NYSE: EL) posted net sales of US$4,392 million, up 23% YoY.
• Its earnings per share diluted increased by 32%, and adjusted EPS diluted rose 29%.
• The company expects net sales to be in the upward range of 11% to 13% in Q2 of FY22 and upwards of 12% to 15% in fiscal 2022 compared to the previous fiscal year.

Estee Lauder Companies, Inc. (NYSE: EL) on Tuesday posted a net income of US$692 million in the first quarter of fiscal 2022, reflecting an increase of 32% YoY. 

The company’s net sales were US$4,392 million, up 23% YoY, compared to US$3,562 million in Q1 of the previous year. Its organic net sales grew by 18%, helped by the reopening of brick-and-mortar stores.

The earnings per share diluted was US$1.88, an increase of 32% on a constant currency basis, and adjusted EPS diluted rose 29% to US$1.89 in the quarter.

The net income rose to US$692 million in the quarter from US$523 billion in the September quarter of the previous year, reflecting a 32% increase YoY. 

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The company total operating income was US$935 million against US$705 million in the corresponding period a year ago, showing a 33% growth YoY. 

Estee’s cash flow for the September quarter was US$(81) million compared to US$358 million in Q1 of the previous year. The decline is due to the return of a normalized working capital need. 

The capital expenditure was US$205 million, up 77% YoY, due to the investment in a new manufacturing facility in Japan.   

The cash and cash equivalents were US$4 billion at the end of the quarter.

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Outlook for Second Quarter Fiscal 2022

The company expects its net sales to increase between 11% and 13% YoY and organic net sales to increase between US$8% and 10% YoY. 

The net EPS diluted to be between US$2.47 and US$2.59, and the adjusted net EPS is expected to be between US$2.51 and US$2.61.

Outlook for full-year fiscal 2022

The net sales are expected to increase between 12% and 15% YoY, and the organic net sales to increase between 9% and 12% YoY in fiscal 2022.

Estee expects the net EPS diluted to be between US$7.09 and US$7.30, and the adjusted net EPS diluted to be between US$7.23 and US$7.38 for FY 2022. 

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The New York-based beauty products company owns brands like Estee Lauder, MAC, Bobbi Brown, Too Faced, etc. The products range from skincare, haircare, makeup to fragrance. Estee Lauder sells products through its brick-and-mortar departmental stores, travel retail, freestanding stores, spas, and e-commerce, and operates in more than 150 countries. 

The company has a current market capitalization of US$120 billion, with a P/E of 42.79 and dividend yield of 0.65%. Its stock was up 4.03% to US$338.255 at 12:51 pm ET. 

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Bottomline

Although the Covid-19 pandemic and restrictions severely hit its operating environment, its online presence helped offset the losses from retail stores. As a result, its sales nearly doubled compared to Q1 of fiscal 2020. Furthermore, the company plans to invest more in advertising, supply chain, and research for business growth in the upcoming quarters. However, investors should evaluate the companies carefully before investing in stocks.