Net Sales Decreased 7% and Diluted EPS
Declined to $.87
Organic Net Sales1 Decreased 8% and Adjusted
Diluted EPS Declined to $.88
Delivered Organic Net Sales, as Expected,
and Exceeded Adjusted Diluted EPS Outlook
Revising FY24 Outlook to Narrow Net Sales
Range and Lower Adjusted Diluted EPS for Tax, while
Reaffirming Operating Profitability
Further Expands Its Profit Recovery Plan
with the Announcement of a Restructuring Program
The Estée Lauder Companies Inc. (NYSE: EL) today reported net
sales of $4.28 billion for its second quarter ended December 31,
2023, a decline of 7% from $4.62 billion in the prior-year period.
Organic net sales fell 8%, reflecting the expected challenges in
Asia travel retail as well as ongoing softness in overall prestige
beauty in mainland China. The decrease also reflects a 1% headwind
due to business disruptions in Israel and other parts of the Middle
East. Partially offsetting these pressures, organic net sales grew
in several markets in Asia/Pacific and Europe, the Middle East
& Africa, as well as in nearly every market in Latin
America.
The Company reported net earnings of $313 million, compared with
net earnings of $394 million in the prior-year period. The
Company’s reported effective tax rate was 37.6% in the quarter,
compared to 25.4% in the prior-year period. The increase in rate
reflects a higher effective tax rate on the Company’s foreign
operations, due to the change in the Company’s geographical mix of
earnings for fiscal 2024 as well as the unfavorable impact from
previously issued share-based compensation. Diluted net earnings
per common share was $.87, compared with $1.09 reported in the
prior-year period. Excluding restructuring and other charges and
adjustments as detailed on page 2, adjusted diluted net earnings
per common share declined to $.88. The fiscal 2024 second quarter
impact of business disruptions in Israel and other parts of the
Middle East was $.02 dilutive to net earnings per common share.
Fabrizio Freda, President and Chief Executive Officer said, “For
the second quarter of fiscal 2024, we delivered our organic sales
outlook and exceeded expectations for profitability. The Ordinary
and La Mer in Skin Care, Clinique in Makeup, and Le Labo and Jo
Malone London in Fragrance performed strongly. Many developed and
emerging markets around the world continued to grow organically and
at retail. While mainland China and Asia travel retail declined,
our retail sales trended ahead of organic sales, and these
businesses are poised to return to organic sales growth in the
second half.
_________________________________________ 1Organic net sales
represents net sales excluding returns associated with
restructuring and other activities; non-comparable impacts of
acquisitions, divestitures and brand closures; as well as the
impact from foreign currency translation. The Company believes that
the Non-GAAP measure of organic net sales growth provides
year-over-year sales comparisons on a consistent basis. See page 2
for reconciliations to GAAP.
Freda emphasized, “We made progress in the first half across
several strategic priorities, including reducing inventory in the
trade of Asia travel retail, improving working capital, realizing
higher levels of net pricing, and managing expenses with
discipline. We are, encouragingly, at an inflection point. In the
second half of fiscal 2024, we are positioned to return to strong
organic sales growth and expand our profitability from the first
half. Moreover, today we have announced that we are further
expanding our Profit Recovery Plan, which benefits fiscal years
2025 and 2026, to include a restructuring program. We believe this
now-larger plan will better position the Company to restore
stronger, and more sustainable, profitability while also supporting
sales growth acceleration and increasing agility and
speed-to-market.”
Fiscal 2024 Second Quarter
Results Reported net sales decreased 7%, including
royalty revenue from the fiscal 2023 fourth quarter acquisition of
the TOM FORD brand and the impact from foreign currency
translation.
Reconciliation between GAAP
and Non-GAAP Net Sales Growth
(Unaudited)
Three Months Ended
December 31, 2023(1)
As Reported - GAAP
(7.4
)%
Impact of royalty revenue from the
acquisition of the TOM FORD brand
(0.4
)
Impact of foreign currency translation
(0.2
)
Returns associated with restructuring and
other activities
—
Organic, Non-GAAP
(7.9
)%
(1)Percentages are calculated on an
individual basis
Adjusted diluted net earnings per common share excludes
restructuring and other charges and adjustments as detailed in the
following table.
Reconciliation between GAAP
and Non-GAAP - Diluted Net Earnings Per Share (“EPS”)
(Unaudited)
Three Months Ended
December 31
2023
2022
Growth
As Reported EPS - GAAP
$
.87
$
1.09
(20
)%
Non-GAAP
Restructuring and other charges
.02
.02
Change in fair value of
acquisition-related stock options (less the portion attributable
to
redeemable noncontrolling interest)
(.01
)
(.01
)
Other intangible asset impairments
—
.44
Adjusted EPS - Non-GAAP
$
.88
$
1.54
(43
)%
Impact of foreign currency translation on
earnings per share
.01
Adjusted Constant Currency EPS -
Non-GAAP
$
.89
$
1.54
(42
)%
Total reported operating income was $574 million, a 3% increase
from $556 million in the prior-year period. In constant currency,
adjusted operating income decreased 24%, primarily reflecting lower
net sales and excludes the following items:
- Fiscal 2024 second quarter: $3 million restructuring and other
charges and adjustments.
- Fiscal 2023 second quarter: $207 million of other intangible
asset impairments related to Dr.Jart+, Too Faced and Smashbox,
combined, as well as $5 million of restructuring and other charges
and adjustments.
- The unfavorable impact of foreign currency translation of $9
million.
During the fiscal 2024 second quarter, the Company identified
and corrected prior-period misclassifications of net sales and
operating income between certain of its product categories. As a
result, product category net sales and operating income have been
adjusted from the amounts previously reported for the three and six
months ended December 31, 2022 for comparability purposes.
Presentation of product category net sales and operating income for
three and nine months ended March 31, 2023, and fiscal years ended
June 30, 2023 and 2022, will also be adjusted to reflect the
misclassifications arising in those periods for comparability
purposes within the prospective filings. The misclassifications had
no impact on the current-period or prior-period consolidated
statements of earnings, consolidated statements of comprehensive
income, consolidated balance sheets, or the consolidated statements
of cash flows, and the Company determined that the impact on its
current-period and previously issued financial statements for the
respective periods was not material. See the Quarterly Earnings
section of the Company’s website for supplemental information
relating to the impacts of these misclassifications.
Results by Product
Category
(Unaudited)
Three Months Ended December
31
Net Sales
Percentage Change(1)
Operating
Income (Loss)
Percentage
Change
($ in millions)
2023
2022
Reported Basis
Impact of Royalty
Revenue from the Acquisition of the TOM
FORD Brand
Impact of Foreign
Currency Translation
Organic Net Sales
(Non-GAAP)
2023
2022
Reported Basis
Skin Care
$
2,173
$
2,427
(10
)%
—
%
—
%
(10
)%
$
415
$
433
(4
)%
Makeup
1,167
1,263
(8
)
—
—
(8
)
30
(24
)
100
+
Fragrance
737
734
—
—
—
—
131
153
(14
)
Hair Care
173
183
(5
)
—
(1
)
(6
)
(3
)
4
(100
+)
Other
30
14
100
+
(100
+)
—
7
9
(1
)
100
+
Subtotal
$
4,280
$
4,621
(7
)%
—
%
—
%
(8
)%
$
582
$
565
3
%
Returns/charges
associated with
restructuring and
other activities
(1
)
(1
)
(8
)
(9
)
Total
$
4,279
$
4,620
(7
)%
—
%
—
%
(8
)%
$
574
$
556
3
%
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
8
9
Skin Care - Changes in fair value of
acquisition-related stock options
(5
)
(4
)
Skin Care - Other intangible asset
impairments
—
100
Makeup - Other intangible asset
impairments
—
107
Adjusted Operating Income -
Non-GAAP
$
577
$
768
(25
)%
(1)Percentages are calculated on an
individual basis. Refer to the Reconciliation between GAAP and
Non-GAAP Net Sales Growth on page 2 for additional detail on the
organic impacts to reported net sales.
The product category net sales commentary below reflects organic
performance, which excludes the positive impacts reflected in the
preceding table.
Skin Care
- Skin Care net sales declined 10%, reflecting a decrease in the
Company’s Asia travel retail business primarily due to the ongoing
actions by the Company and its retailers to reset retailer
inventory levels, including the response to changes in government
and retailer policies in the second half of fiscal 2023 related to
unstructured market activity, and lower conversion of travelers to
consumers. The decline also reflected the impacts from the ongoing
softness in overall prestige beauty in mainland China, including
lower sales during the 11.11 Global Shopping Festival.
- Net sales from Estée Lauder, Clinique and Origins declined,
primarily reflecting the aforementioned challenges in Asia travel
retail and mainland China. Estée Lauder net sales increased double
digits in The Americas, reflecting growth from the Advanced Night
Repair product franchise, including the fiscal 2024 launches of
Advanced Night Repair Rescue Solution with Bifidus Ferment and
Advanced Night Cleansing Balm, and the recent launch of the
Nutritious line of products. These declines were partially offset
by:
- Double-digit net sales growth from The Ordinary, globally and
across all geographic regions, reflected continued strength from
hero products, successful innovation, such as the Soothing &
Barrier Support Serum, and strong holiday demand.
- Net sales increases from La Mer in every geographic region,
benefiting from hero product franchises and commercial activations
globally, including for holiday.
- Double-digit net sales growth from M·A·C was fueled by the
successful launch of the Hyper Real franchise line of
products.
- Skin Care operating income decreased, primarily reflecting the
decline in net sales, partially offset by the prior-year period
other intangible asset impairment of $100 million relating to
Dr.Jart+ and disciplined expense management.
Makeup
- Makeup net sales declined 8%, primarily reflecting challenges
in the Company’s Asia travel retail business previously discussed.
- M·A·C net sales decreased, primarily due to the phasing out of
select products in preparation for new product launches and a
benefit in the prior-year period as a result of changes to M·A·C’s
take back loyalty program, globally, as well as the challenges in
Asia travel retail. Partially offsetting these pressures, net sales
increased double digits in Latin America and several markets in
Asia/Pacific, benefiting from new product innovation, such as the
fiscal 2024 Studio Radiance Foundation and Locked Kiss Ink 24HR
Lipcolour.
- Net sales from Estée Lauder decreased, primarily due to the
challenges in Asia travel retail.
- These declines were partially offset by strong double-digit net
sales growth from Clinique, benefiting from broad-based growth in
the lip, face and eye subcategories and owing to both continued
success of hero products and new product innovation.
- Makeup operating results increased, primarily reflecting the
prior-year period other intangible asset impairments relating to
Too Faced and Smashbox, combined, of $107 million and disciplined
expense management, partially offset by the decrease in net
sales.
Fragrance
- Fragrance net sales were flat, as increases from luxury brands
Le Labo and Jo Malone London were offset by a decline from Estée
Lauder.
- Net sales from Le Labo grew strong double digits, primarily due
to robust consumer demand for the brand’s hero product franchises,
such as Santal 33 and Another 13, its City Exclusives collection
and strong holiday performance. In Asia/Pacific, net sales more
than doubled, benefiting from targeted expanded consumer reach,
including in mainland China, Thailand and Malaysia.
- Jo Malone London net sales increased, owing to compelling
holiday offerings and social media activations. Net sales in The
Americas grew double digits, benefiting from the Cologne Intense
collection, and grew high-single-digits in Asia/Pacific, primarily
driven by continued success of the English Pear & Freesia
product franchise.
- Estée Lauder net sales declined, primarily due to the timing of
holiday shipments compared to the prior-year period.
- Fragrance operating income declined, primarily driven by
strategic investments to support growth, including for
holiday.
Hair Care
- Hair Care net sales decreased 6%, primarily driven by Aveda
reflecting softness in North America.
- Hair Care operating results decreased, primarily driven by the
decline in net sales.
Results by Geographic
Region
(Unaudited)
Three Months Ended December
31
Net Sales
Percentage Change(1)
Operating
Income (Loss)
Percentage
Change
($ in millions)
2023
2022
Reported Basis
Impact of Royalty
Revenue from the Acquisition of the TOM
FORD Brand
Impact of Foreign
Currency Translation
Organic Net Sales
(Non-GAAP)
2023
2022
Reported Basis
The Americas
$
1,242
$
1,235
1
%
(1
)%
—
%
(1
)%
$
(55
)
$
(85
)
35
%
Europe, the
Middle East &
Africa
1,589
1,816
(13
)
—
(1
)
(14
)
379
409
(7
)
Asia/Pacific
1,449
1,570
(8
)
—
1
(7
)
258
241
7
Subtotal
$
4,280
$
4,621
(7
)%
—
%
—
%
(8
)%
$
582
$
565
3
%
Returns/charges
associated with
restructuring and
other activities
(1
)
(1
)
(8
)
(9
)
Total
$
4,279
$
4,620
(7
)%
—
%
—
%
(8
)%
$
574
$
556
3
%
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
8
9
The Americas - Changes in fair value of
acquisition-related stock options
(5
)
(4
)
The Americas - Other intangible asset
impairments
—
107
Asia/Pacific - Other intangible asset
impairments
—
100
Adjusted Operating Income -
Non-GAAP
$
577
$
768
(25
)%
(1)Percentages are calculated on an
individual basis. Refer to the Reconciliation between GAAP and
Non-GAAP Net Sales Growth on page 2 for additional detail on the
organic impacts to reported net sales.
The geographic region net sales commentary below reflects
organic performance, which excludes the negative/(positive) impacts
reflected in the preceding table.
The Americas
- Net sales decreased 1%, reflecting a decline in North America,
partially offset by double-digit growth in Latin America.
- Net sales in North America decreased low-single-digits, driven
by the United States, primarily reflecting a benefit in the
prior-year period due to M·A·C’s take back loyalty program and
Aveda softness previously discussed. This was partially offset by
double-digit growth from The Ordinary and Jo Malone London, fueling
growth in Skin Care and Fragrance, respectively. The performance in
North America also reflected double-digit growth in
specialty-multi, which was more than offset by declines in other
channels of distribution, primarily department stores.
- In Latin America, net sales increased in nearly every country,
led by the emerging markets of Brazil and Mexico, and across
Makeup, Skin Care and Fragrance.
- Operating results in The Americas increased, primarily
reflecting the prior-year period other intangible asset impairments
of $107 million relating to Too Faced and Smashbox, combined,
partially offset by $85 million of lower intercompany royalty
income due to the decline in income from the Company’s travel
retail business.
Europe, the Middle East &
Africa
- Net sales declined 14%, primarily due to the Company’s Asia
travel retail business and a 2% headwind from business disruptions
in Israel and other parts of the Middle East.
- Global travel retail net sales decreased double digits,
primarily due to the ongoing actions by the Company and its
retailers to reset retailer inventory levels, including the
response to changes in government and retailer policies in the
second half of fiscal 2023 related to unstructured market activity,
and lower conversion of travelers to consumers. These actions and
changes led to lower product shipments compared to the prior-year
period.
- In Europe, the Middle East & Africa, mixed performance by
market led to flat growth.
- Operating income decreased, driven by the decline in net sales,
partially offset by $85 million of lower intercompany royalty
expense due to the decline in income from the Company’s travel
retail business and lower cost of sales.
Asia/Pacific
- Net sales decreased 7%, driven by the impacts from ongoing
challenges in mainland China, as previously discussed, partially
offset by growth across several other markets, led by Hong Kong
SAR.
- In mainland China, the net sales declined primarily due to Skin
Care and reflected lower sales and mixed performance during the
11.11 Global Shopping Festival (“11.11”). The Company’s 11.11 net
sales growth on Douyin more than doubled, led by Estée Lauder and
La Mer, and was more than offset by the net sales decline on Tmall.
The decrease in Skin Care was partially offset by strong growth in
Fragrance, driven by the launch of Le Labo in the fourth quarter of
fiscal 2023 and double-digit growth from Jo Malone London and TOM
FORD, and in Hair Care, due to Aveda.
- Net sales in Hong Kong SAR increased strong double digits,
benefiting from the reopening of borders and the corresponding
resumption of travel leading to the return of brick-and-mortar
traffic compared to the prior-year period.
- Operating income increased, driven by the prior-year period
other intangible asset impairment of $100 million related to
Dr.Jart+ and disciplined expense management, partially offset by
the decrease in net sales.
Six-Months Results
- For the six months ended December 31, 2023, the Company
reported net sales of $7.80 billion, a 9% decrease compared with
$8.55 billion in the prior-year period. Organic net sales decreased
9%, primarily driven by Asia travel retail and mainland China.
- The Company’s reported effective tax rate was 36.3% for the six
months ended December 31, 2023, compared to 23.9% in the prior-year
period. The increase in rate reflects a higher effective tax rate
on the Company’s foreign operations, due to the change in the
Company’s geographical mix of earnings for fiscal 2024 as well as
the unfavorable impact from previously issued share-based
compensation.
- Net earnings were $344 million, and diluted net earnings per
share was $.95. In the prior-year six months, the Company reported
net earnings of $883 million and diluted net earnings per share of
$2.45.
- During the six months ended December 31, 2023, the Company
recorded restructuring and other charges and change in fair value
of acquisition-related stock options, that, combined, resulted in
an unfavorable impact of $13 million ($10 million less the portion
attributable to redeemable noncontrolling interest and net of tax),
equal to $.03 per diluted share, as detailed on page 15. The
cybersecurity incident disclosed in July 2023 was dilutive to
fiscal 2024 year-to-date net earnings per common share by $.07. The
prior-year period results include restructuring and other charges,
other intangible asset impairments, and change in fair value of
acquisition-related stock options, that, combined, resulted in an
unfavorable impact of $219 million ($167 million less the portion
attributable to redeemable noncontrolling interest and net of tax),
equal to $.46 per diluted share.
- Excluding restructuring and other charges and adjustments
referred to in the previous bullet, adjusted diluted net earnings
per common share for the six months ended December 31, 2023 was
$.98, and declined 65% in constant currency. For the six months
ended December 31, 2023, the unfavorable impact of foreign currency
translation on adjusted diluted net earnings per common share was
$.03.
Cash Flows
- For the six months ended December 31, 2023, net cash flows
provided by operating activities were $937 million, compared with
$751 million in the prior-year period. This increase reflects lower
working capital, primarily due to the improvement in inventory,
partially offset by lower earnings before taxes.
- Capital Expenditures increased to $527 million from $419
million in the prior-year period primarily due to timing of
payments relating to the construction of the manufacturing facility
in Japan.
- The Company ended the quarter with $3.94 billion in cash and
cash equivalents and paid dividends of $0.47 billion.
Outlook for Fiscal 2024 Third Quarter
and Full Year The Company entered the second half of
fiscal 2024 focused on re-establishing sustainable, profitable
long-term growth across regions, product categories, brands and
channels. For the full-year fiscal 2024 outlook, the Company is
tightening its organic sales outlook range amid macroeconomic
volatility in some areas around the world and both lowering and
tightening its adjusted diluted net earnings per share range to
reflect the anticipated increase in its global effective tax rate,
primarily due to the expected geographical mix of earnings for
fiscal 2024, partially offset by expected favorability from foreign
currency translation. With these revisions, the Company is
maintaining its adjusted full-year operating margin outlook.
The Company plans to continue to strategically invest in
consumer-facing activities in areas to support recovery, share
gains and long-term profitable growth. These investments include
innovation, advertising, growth of its emerging markets and the
completion of its first manufacturing facility in Asia, located in
Japan, to support the development of the regionalization of the
supply chain in the Asia/Pacific region.
Leveraging the progress the Company has made through the first
half of fiscal 2024, its full year outlook reflects the following
assumptions and expectations:
- A return to double-digit organic net sales growth in the second
half of fiscal 2024.
- Following meaningful progress made during the first half of
fiscal 2024, continued reduction of retailer inventory in Asia
travel retail to achieve retailers’ target levels by the end of the
fiscal 2024 third quarter.
- Clinique doubling down in Active Derma with new campaigns
starting in the United States and the United Kingdom in the second
half of fiscal 2024.
- An incremental in-period charge in cost of goods sold, which is
pressuring gross margin in both the fiscal 2024 third quarter and
for the full year.
- Stronger operating margin in the second half of fiscal 2024
compared to the first half, leveraging the return to organic net
sales growth.
- Full year effective tax rate of approximately 35% largely due
to the estimated geographical mix of earnings in fiscal 2024.
- Improvements in the Company’s inventory balance and days to
sell for fiscal year 2024.
- Excludes the impacts from the remaining payment for DECIEM
anticipated in May 2024 primarily related to net interest
expense.
Fiscal 2025 and 2026 Profit Recovery Plan Today, the
Company announced it is further expanding its Profit Recovery Plan
for fiscal years 2025 and 2026 to include a restructuring program.
The now-larger overall plan is focused on rebuilding stronger, more
sustainable profitability, supporting sales growth acceleration and
increasing speed and agility. The plan is designed to improve gross
margin, lower the cost base and reduce overhead expenses, while
increasing investments in key consumer-facing activities. Upon
completion of this plan, the Company expects to have improved its
gross margin and expense base to drive greater operating leverage
for the future.
The restructuring program will begin during the Company’s fiscal
2024 third quarter. Specific initiatives under this restructuring
program are expected to be substantially completed by the end of
fiscal 2026. The restructuring program’s main focus includes the
reorganization and rightsizing of certain areas of the Company as
well as simplification and acceleration of processes.
In connection with the restructuring program, at this time the
Company estimates a net reduction in the range of approximately
3-5% of its positions as of June 30, 2023. This reduction takes
into account the elimination of some positions as well as
retraining and redeployment of certain employees in select
areas.
Once fully implemented, the Company expects to take
restructuring and other charges of between $500 million and $700
million, before taxes, consisting of employee-related costs,
contract terminations, asset write-offs and other costs associated
with implementing these initiatives. The program is expected to
yield annual gross benefits of between $350 million and $500
million, before taxes, of which a portion is expected to be
reinvested in consumer facing areas to drive sustainable,
profitable growth. The Company now expects to drive incremental
operating profit through the initiatives in the Profit Recovery
Plan of $1.1 billion to $1.4 billion, including net benefits from
the restructuring program. This is an increase from the $800
million to $1 billion previously communicated. The plan is
anticipated to enable the realization of nearly all of the expected
benefits in fiscal years 2025 and 2026, more than half of which is
expected to benefit fiscal 2025 operating profitability.
The Company remains optimistic about the long-term prospects and
future growth opportunities in global prestige beauty. As part of
this plan, the Company expects to increase its investments in the
strong equity and desirability of its brands to drive sustainable
growth, and believes it is well-positioned to drive better
diversified growth across its portfolio.
The Company continues to monitor the effects of the global macro
environment, including the risk of recession; currency volatility;
inflationary pressures; supply chain challenges; social and
political issues; regulatory matters, including the imposition of
tariffs and sanctions; geopolitical tensions; and global security
issues. The Company is also mindful of inflationary pressures on
its cost base and is monitoring the impact on consumer
preferences.
Third Quarter Fiscal 2024
Sales Outlook
- Reported net sales are forecasted to increase between 3% and 5%
versus the prior-year period. Currency exchange rates are volatile
and difficult to predict. Using December 29, 2023 spot rates for
the third quarter of fiscal 2024, this range includes:
- An unfavorable impact from foreign currency translation of
1%.
- A 1% headwind due to the potential risks of further business
disruptions in Israel and other parts of the Middle East.
- Organic net sales, which excludes returns associated with
restructuring and other activities; non-comparable impacts from
acquisitions, divestitures and brand closures; as well as the
impact of foreign currency translation, are forecasted to increase
between 4% to 6%.
Earnings per Share Outlook
- Reported diluted net earnings per common share are projected to
be between $.35 and $.46.
- Excluding restructuring and other charges, diluted net earnings
per common share are projected to be between $.36 and $.46.
- Assumes an incremental in-period charge in cost of goods
sold.
- The potential risks of further business disruptions in Israel
and other parts of the Middle East are expected to have a dilutive
impact to net earnings per share of $.03.
- The net impact from the increase in the Company’s net interest
expense and the decrease in its effective tax rate compared to the
elevated rate in the prior-year period is expected to dilute net
earnings per share by $.02.
- Adjusted diluted net earnings per common share are expected to
range between a decrease of (18%) and an increase of 3% on a
constant currency basis.
- Currency exchange rates are volatile and difficult to predict.
Using December 29, 2023 spot rates for the third quarter of fiscal
2024, the foreign currency translation impact equates to about $.03
of dilution to net earnings per share.
Full Year Fiscal 2024
Sales Outlook
- Reported and Organic net sales are forecasted to range between
a decrease of 1% to an increase of 1% versus the prior-year
period.
Earnings per Share Outlook
- Reported diluted net earnings per common share are projected to
be between $2.04 and $2.20. Excluding restructuring and other
charges and adjustments, diluted net earnings per common share are
projected to be between $2.08 and $2.23.
- The combined impact from the increases in the Company’s net
interest expense and effective tax rate is expected to dilute net
earnings per share by $.53.
- Assumes an incremental in-period charge in cost of goods sold
in the fiscal 2024 third quarter.
- The potential risks of further business disruptions in Israel
and other parts of the Middle East are expected to have a dilutive
impact to net earnings per share of $.08.
- Adjusted diluted net earnings per common share are expected to
decrease between 38% and 34% on a constant currency basis.
- Currency exchange rates are volatile and difficult to predict.
Using December 29, 2023 spot rates for fiscal 2024, the foreign
currency translation impact equates to about $.07 of dilution to
earnings per share.
Reconciliation between GAAP
and Non-GAAP - Net Sales Growth
(Unaudited)
Three Months Ending
Twelve Months Ending
March 31, 2024(F)
June 30, 2024(F)
As Reported - GAAP
3% - 5
%
(1%) - 1
%
Impact of royalty revenue from the
acquisition of the TOM FORD brand
—
—
Impact of foreign currency translation
1
—
Returns associated with restructuring and
other activities
—
—
Organic, Non-GAAP
4% - 6
%
(1%) - 1
%
(F)Represents forecast
Reconciliation between GAAP
and Non-GAAP - Diluted Net Earnings Per Share (“EPS”)
(Unaudited)
Three Months Ending
Twelve Months Ending
March 31
June 30
2024(F)
2023
Growth
2024(F)
2023
Growth
Forecasted/As Reported EPS -
GAAP
$0.35 - $0.46
$ .43
(19%) - 6%
$2.04 - $2.20
$ 2.79
(27%) - (21%)
Non-GAAP
Restructuring and other charges
.00 - .01
.04
.02 - .03
.18
Change in fair value of
acquisition-related
stock options (less the portion
attributable to
redeemable noncontrolling interest)
—
—
.01
.05
Other intangible asset impairments
—
—
—
.44
Forecasted/Adjusted EPS -
Non-GAAP
$0.36 - $0.46
$ .47
(24%) - (3%)
$2.08 - $2.23
$ 3.46
(40%) - (36%)
Impact of foreign currency translation
.03
.07
Forecasted/Adjusted Constant
Currency EPS
- Non-GAAP
$0.39 - $0.49
$ .47
(18%) - 3%
$2.15 - $2.30
$ 3.46
(38%) - (34%)
(F)Represents forecast
Conference Call The Estée
Lauder Companies will host a conference call at 9:30 a.m. (ET)
today, February 5, 2024 to discuss its results. The dial-in
number for the call is 877-883-0383 in the U.S. or 412-902-6506
internationally (conference ID number: 9476045). The call will also
be webcast live at
http://www.elcompanies.com/investors/events-and-presentations.
Cautionary Note Regarding
Forward-Looking Statements Statements in this press
release, in particular those in “Outlook,” as well as remarks by
the CEO and other members of management, may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements may
address the Company’s expectations regarding sales, earnings or
other future financial performance and liquidity, other performance
measures, product introductions, entry into new geographic regions,
information technology initiatives, new methods of sale, the
Company’s long-term strategy, restructuring and other charges and
resulting cost savings, and future operations or operating results.
These statements may contain words like “expect,” “will,” “will
likely result,” “would,” “believe,” “estimate,” “planned,” “plans,”
“intends,” “may,” “should,” “could,” “anticipate,” “estimate,”
“project,” “projected,” “forecast,” and “forecasted” or similar
expressions. Although the Company believes that its expectations
are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, actual results may differ
materially from the Company’s expectations.
Factors that could cause actual results to differ from
expectations include, without limitation:
(1)
increased competitive activity
from companies in the skin care, makeup, fragrance and hair care
businesses;
(2)
the Company’s ability to develop,
produce and market new products on which future operating results
may depend and to successfully address challenges in the Company’s
business;
(3)
consolidations, restructurings,
bankruptcies and reorganizations in the retail industry causing a
decrease in the number of stores that sell the Company’s products,
an increase in the ownership concentration within the retail
industry, ownership of retailers by the Company’s competitors or
ownership of competitors by the Company’s customers that are
retailers and the Company’s inability to collect receivables;
(4)
destocking and tighter working
capital management by retailers;
(5)
the success, or changes in timing
or scope, of new product launches and the success, or changes in
timing or scope, of advertising, sampling and merchandising
programs;
(6)
shifts in the preferences of
consumers as to where and how they shop;
(7)
social, political and economic
risks to the Company’s foreign or domestic manufacturing,
distribution and retail operations, including changes in foreign
investment and trade policies and regulations of the host countries
and of the United States;
(8)
changes in the laws, regulations
and policies (including the interpretations and enforcement
thereof) that affect, or will affect, the Company’s business,
including those relating to its products or distribution networks,
changes in accounting standards, tax laws and regulations,
environmental or climate change laws, regulations or accords, trade
rules and customs regulations, and the outcome and expense of legal
or regulatory proceedings, and any action the Company may take as a
result;
(9)
foreign currency fluctuations
affecting the Company’s results of operations and the value of its
foreign assets, the relative prices at which the Company and its
foreign competitors sell products in the same markets and the
Company’s operating and manufacturing costs outside of the United
States;
(10)
changes in global or local
conditions, including those due to volatility in the global credit
and equity markets, natural or man-made disasters, real or
perceived epidemics, supply chain challenges, inflation, or
increased energy costs, that could affect consumer purchasing, the
willingness or ability of consumers to travel and/or purchase the
Company’s products while traveling, the financial strength of the
Company’s customers, suppliers or other contract counterparties,
the Company’s operations, the cost and availability of capital
which the Company may need for new equipment, facilities or
acquisitions, the returns that the Company is able to generate on
its pension assets and the resulting impact on funding obligations,
the cost and availability of raw materials and the assumptions
underlying the Company’s critical accounting estimates;
(11)
impacts attributable to the
COVID-19 pandemic, including disruptions to the Company’s global
business;
(12)
shipment delays, commodity
pricing, depletion of inventory and increased production costs
resulting from disruptions of operations at any of the facilities
that manufacture the Company’s products or at the Company’s
distribution or inventory centers, including disruptions that may
be caused by the implementation of information technology
initiatives, or by restructurings;
(13)
real estate rates and
availability, which may affect the Company’s ability to increase or
maintain the number of retail locations at which the Company sells
its products and the costs associated with the Company’s other
facilities;
(14)
changes in product mix to
products which are less profitable;
(15)
the Company’s ability to acquire,
develop or implement new information technology, including
operational technology and websites, on a timely basis and within
the Company’s cost estimates; to maintain continuous operations of
its new and existing information technology; and to secure the data
and other information that may be stored in such technologies or
other systems or media;
(16)
the Company’s ability to
capitalize on opportunities for improved efficiency, such as
publicly-announced strategies and restructuring and cost-savings
initiatives, and to integrate acquired businesses and realize value
therefrom;
(17)
consequences attributable to
local or international conflicts around the world, as well as from
any terrorist action, retaliation and the threat of further action
or retaliation;
(18)
the timing and impact of
acquisitions, investments and divestitures; and
(19)
additional factors as described
in the Company’s filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the fiscal
year ended June 30, 2023.
The Company assumes no responsibility to update forward-looking
statements made herein or otherwise.
The Estée Lauder Companies Inc. is one of the world’s leading
manufacturers, marketers and sellers of quality skin care, makeup,
fragrance and hair care products, and is a steward of luxury and
prestige brands globally. The Company’s products are sold in
approximately 150 countries and territories under brand names
including: Estée Lauder, Aramis, Clinique, Lab Series, Origins,
M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, Jo Malone London,
Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, AERIN Beauty,
Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN
PARIS, Too Faced, Dr.Jart+, and the DECIEM family of brands,
including The Ordinary and NIOD.
ELC-F ELC-E
CONSOLIDATED STATEMENT OF
EARNINGS
(Unaudited)
Three Months Ended
December 31
Percentage
Change
Six Months Ended
December 31
Percentage
Change
($ in millions, except per share data)
2023
2022
2023
2022
Net sales(A)
$
4,279
$
4,620
(7
)%
$
7,797
$
8,550
(9
)%
Cost of sales(A)
1,154
1,219
(5
)
2,224
2,242
(1
)
Gross profit
3,125
3,401
(8
)
5,573
6,308
(12
)
Gross margin
73.0
%
73.6
%
71.5
%
73.8
%
Operating expenses
Selling, general and administrative(B)
2,544
2,630
(3
)
4,893
4,874
—
Restructuring and other charges(A)
7
8
(13
)
8
10
(20
)
Impairment of other intangible
assets(C)
—
207
(100
)
—
207
(100
)
Total operating expenses
2,551
2,845
(10
)
4,901
5,091
(4
)
Operating expense margin
59.6
%
61.6
%
62.9
%
59.5
%
Operating income
574
556
3
672
1,217
(45
)
Operating income margin
13.4
%
12.0
%
8.6
%
14.2
%
Interest expense
98
52
88
193
98
97
Interest income and investment income,
net
40
26
54
81
41
98
Other components of net periodic benefit
cost
(3
)
(2
)
(50
)
(5
)
(5
)
—
Earnings before income taxes
519
532
(2
)
565
1,165
(52
)
Provision for income taxes
195
135
44
205
278
(26
)
Net earnings
324
397
(18
)
360
887
(59
)
Net earnings attributable to redeemable
noncontrolling interest
(11
)
(3
)
(100
+)
(16
)
(4
)
(100
+)
Net earnings attributable to The Estée
Lauder Companies Inc.
$
313
$
394
(21
)%
$
344
$
883
(61
)%
Net earnings attributable to The Estée
Lauder Companies Inc. per common share
Basic
$
.87
$
1.10
(21
)%
$
0.96
$
2.47
(61
)%
Diluted
$
.87
$
1.09
(20
)%
$
0.95
$
2.45
(61
)%
Weighted-average common shares
outstanding
Basic
358.7
357.7
358.6
357.8
Diluted
360.0
360.4
360.3
360.9
(A)The Company approved specific
initiatives under the Post-COVID Business Acceleration Program (the
“PCBA Program”) through fiscal 2022 and has substantially completed
those initiatives through fiscal 2023. Additional information about
the PCBA Program is included in the notes to consolidated financial
statements in the Company’s Annual Report on Form 10-K for the
fiscal year ended June 30, 2023.
(B)For the three and six months ended
December 31, 2023, the Company recorded $(5) million ($(4) million,
less the portion attributable to redeemable noncontrolling interest
and net of tax) and $3 million ($2 million, less the portion
attributable to redeemable noncontrolling interest and net of tax),
respectively, of expense (income) related to the change in fair
value of acquisition-related stock options related to DECIEM, and
recorded $(4) million ($(4) million, less the portion attributable
to redeemable noncontrolling interest and net of tax), and $(3)
million ($(3) million, less the portion attributable to redeemable
noncontrolling interest and net of tax) of income for the three and
six months ended December 31, 2022, respectively.
(C)During the fiscal 2023 second quarter,
given the lower-than-expected results in the overall business, the
Company revised the internal forecasts relating to its Smashbox
reporting unit. The Company concluded that the changes in
circumstances in the reporting unit triggered the need for an
interim impairment review of its trademark intangible asset. The
remaining carrying value of the trademark intangible asset was not
recoverable and the Company recorded an impairment charge of $21
million reducing the carrying value to zero.
During the fiscal 2023 second quarter, the
Dr.Jart+ reporting unit experienced lower-than-expected growth
within key geographic regions and channels that continue to be
impacted by the spread of COVID-19 variants, resurgence in cases,
and the potential future impacts relating to the uncertainty of the
duration and severity of COVID-19 impacting the financial
performance of the reporting unit. In addition, due to
macro-economic factors, Dr.Jart+ has experienced
lower-than-expected growth within key geographic regions. The Too
Faced reporting unit experienced lower-than-expected results in key
geographic regions and channels coupled with delays in future
international expansion to areas that continue to be impacted by
COVID-19. As a result, the Company revised the internal forecasts
relating to its Dr.Jart+ and Too Faced reporting units.
Additionally, there were increases in the weighted average cost of
capital for both reporting units as compared to the prior year
annual goodwill and other indefinite-lived intangible asset
impairment testing as of April 1, 2022.
The Company concluded that the changes in
circumstances in the reporting units, along with increases in the
weighted average cost of capital, triggered the need for interim
impairment reviews of their trademarks and goodwill. These changes
in circumstances were also an indicator that the carrying amounts
of Dr.Jart+’s and Too Faced’s long-lived assets, including customer
lists, may not be recoverable. Accordingly, the Company performed
interim impairment tests for the trademarks and a recoverability
test for the long-lived assets as of November 30, 2022. The Company
concluded that the carrying value of the trademark intangible
assets exceeded their estimated fair values, which were determined
utilizing the relief-from-royalty method to determine discounted
projected future cash flows and recorded an impairment charge of
$100 million for Dr.Jart+ and $86 million for Too Faced. The
Company concluded that the carrying amounts of the long-lived
assets were recoverable. After adjusting the carrying values of the
trademarks, the Company completed interim quantitative impairment
tests for goodwill. As the estimated fair value of the Dr.Jart+ and
Too Faced reporting units were in excess of their carrying values,
the Company concluded that the carrying amounts of the goodwill
were recoverable and did not record a goodwill impairment charge
related to these reporting units. The fair values of these
reporting units were based upon an equal weighting of the income
and market approaches, utilizing estimated cash flows and a
terminal value, discounted at a rate of return that reflects the
relative risk of the cash flows, as well as valuation multiples
derived from comparable publicly traded companies that are applied
to operating performance of the reporting units. The significant
assumptions used in these approaches include revenue growth rates
and profit margins, terminal values, weighted average cost of
capital used to discount future cash flows and royalty rates for
trademarks. The most significant unobservable input used to
estimate the fair values of the Dr.Jart+ and Too Faced trademark
intangible assets was the weighted average cost of capital, which
was 11% and 13%, respectively.
For the three and six months ended
December 31, 2022, other intangible asset impairment charges were
$207 million ($159 million, net of tax), with an impact of $.44 per
common share.
Returns and Charges Associated
With Restructuring and Other Activities and Other
Adjustments
(Unaudited)
Three Months Ended December
31, 2023
Sales Returns
Cost of Sales
Operating Expenses
Total
After Redeemable
Noncontrolling Interest and Tax
Diluted EPS
(In millions, except per share data)
Restructuring
Charges
Other Charges/
Adjustments
PCBA Program
$
1
$
—
$
5
$
2
$
8
$
6
$
.02
Change in fair value of
acquisition-related
stock options
—
—
—
(5
)
(5
)
(4
)
(.01
)
Total
$
1
$
—
$
5
$
(3
)
$
3
$
2
$
.01
Six Months Ended December 31,
2023
Sales Returns
Cost of Sales
Operating Expenses
Total
After Redeemable
Noncontrolling Interest and Tax
Diluted EPS
(In millions, except per share data)
Restructuring
Charges
Other Charges/
Adjustments
PCBA Program
$
1
$
1
$
4
$
4
$
10
$
8
$
.02
Change in fair value of
acquisition-related
stock options
—
—
—
3
3
2
.01
Total
$
1
$
1
$
4
$
7
$
13
$
10
$
.03
Three Months Ended December
31, 2022
Sales Returns
Cost of Sales
Operating Expenses
Total
After Redeemable
Noncontrolling Interest and Tax
Diluted EPS
(In millions, except per share data)
Restructuring
Charges
Other Charges/
Adjustments
Leading Beauty Forward
$
—
$
—
$
—
$
1
$
1
$
1
$
—
PCBA Program
1
—
4
3
8
6
.02
Change in fair value of
acquisition-related
stock options
—
—
—
(4
)
(4
)
(4
)
(.01
)
Other intangible asset impairments
—
—
—
207
207
159
.44
Total
$
1
$
—
$
4
$
207
$
212
$
162
$
.45
Six Months Ended December 31,
2022
Sales Returns
Cost of Sales
Operating Expenses
Total
After Redeemable
Noncontrolling Interest and Tax
Diluted EPS
(In millions, except per share data)
Restructuring
Charges
Other Charges/
Adjustments
Leading Beauty Forward
$
—
$
—
$
(2
)
$
3
$
1
$
1
$
—
PCBA Program
6
(1
)
6
3
14
10
.03
Change in fair value of
acquisition-related
stock options
—
—
—
(3
)
(3
)
(3
)
(.01
)
Other intangible asset impairments
—
—
—
207
207
159
.44
Total
$
6
$
(1
)
$
4
$
210
$
219
$
167
$
.46
Results by Product
Category
(Unaudited)
Six Months Ended December
31
Net Sales
Percentage Change(1)
Operating Income
(Loss)
Percentage
Change
($ in millions)
2023
2022
Reported Basis
Impact of Royalty
Revenue from the Acquisition of the TOM
FORD Brand
Impact of Foreign
Currency Translation
Organic Net Sales
(Non-GAAP)
2023
2022
Reported Basis
Skin Care
$
3,813
$
4,539
(16
)%
—
%
—
%
(16
)%
$
452
$
969
(53
)%
Makeup
2,229
2,320
(4
)
—
—
(4
)
(10
)
(4
)
(100
+)
Fragrance
1,373
1,330
3
—
—
3
238
277
(14
)
Hair Care
321
340
(6
)
—
(1
)
(6
)
(25
)
(8
)
(100
+)
Other
62
27
100
+
(100
+)
—
11
27
(2
)
100
+
Subtotal
$
7,798
$
8,556
(9
)%
—
%
—
%
(9
)%
$
682
$
1,232
(45
)%
Returns/charges
associated with
restructuring and
other activities
(1
)
(6
)
(10
)
(15
)
Total
$
7,797
$
8,550
(9
)%
—
%
—
%
(9
)%
$
672
$
1,217
(45
)%
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
10
15
Skin Care - Changes in fair value of
acquisition-related stock options
3
(3
)
Skin Care - Other intangible asset
impairments
—
100
Makeup - Other intangible asset
impairments
—
107
Adjusted Operating Income -
Non-GAAP
$
685
$
1,436
(52
)%
(1)Percentages are calculated on an
individual basis
Results by Geographic
Region
(Unaudited)
Six Months Ended December
31
Net Sales
Percentage Change(1)
Operating
Income (Loss)
Percentage
Change
($ in millions)
2023
2022
Reported Basis
Impact of Royalty
Revenue from the Acquisition of the TOM
FORD Brand
Impact of Foreign
Currency Translation
Organic Net Sales
(Non-GAAP)
2023
2022
Reported Basis
The Americas
$
2,450
$
2,358
4
%
(1
)%
—
%
3
%
$
(237
)
$
40
(100
+%)
Europe, the
Middle East &
Africa
2,841
3,498
(19
)
—
(1
)
(20
)
523
743
(30
)
Asia/Pacific
2,507
2,700
(7
)
—
2
(5
)
396
449
(12
)
Subtotal
$
7,798
$
8,556
(9
)%
—
%
—
%
(9
)%
$
682
$
1,232
(45
)%
Returns/charges
associated with
restructuring and
other activities
(1
)
(6
)
(10
)
(15
)
Total
$
7,797
$
8,550
(9
)%
—
%
—
%
(9
)%
$
672
$
1,217
(45
)%
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
10
15
The Americas - Changes in fair value of
acquisition-related stock options
3
(3
)
The Americas - Other intangible asset
impairments
—
107
Asia/Pacific - Other intangible asset
impairments
—
100
Adjusted Operating Income -
Non-GAAP
$
685
$
1,436
(52
)%
(1)Percentages are calculated on an
individual basis
This earnings release includes some non-GAAP financial measures
relating to charges associated with restructuring and other
activities and adjustments, as well as organic net sales. Included
herein are reconciliations between the non-GAAP financial measures
and the most directly comparable GAAP measures for certain
consolidated statements of earnings accounts before and after these
items. The Company uses certain non-GAAP financial measures, among
other financial measures, to evaluate its operating performance,
which represent the manner in which the Company conducts and views
its business. Management believes that excluding certain items that
are not comparable from period-to-period, or do not reflect the
Company’s underlying ongoing business, provides transparency for
such items and helps investors and others compare and analyze
operating performance from period-to-period. In the future, the
Company expects to incur charges or adjustments similar in nature
to those presented herein; however, the impact to the Company’s
results in a given period may be highly variable and difficult to
predict. The Company’s non-GAAP financial measures may not be
comparable to similarly titled measures used by, or determined in a
manner consistent with, other companies. While the Company
considers the non-GAAP measures useful in analyzing its results,
they are not intended to replace, or act as a substitute for, any
presentation included in the consolidated financial statements
prepared in conformity with GAAP.
The Company operates on a global basis, with the majority of its
net sales generated outside the United States. Accordingly,
fluctuations in foreign currency exchange rates can affect the
Company’s results of operations. Therefore, the Company presents
certain net sales, operating results and diluted net earnings per
share information excluding the effect of foreign currency rate
fluctuations to provide a framework for assessing the performance
of its underlying business outside the United States. Constant
currency information compares results between periods as if
exchange rates had remained constant period-over-period. The
Company calculates constant currency information by translating
current-period results using prior-year period monthly average
foreign currency exchange rates and adjusting for the
period-over-period impact of foreign currency cash flow hedging
activities.
Reconciliation of Certain
Consolidated Statements of Earnings Accounts
Before and After Returns,
Charges and Other Adjustments
(Unaudited)
Three Months Ended December
31
2023
2022
% Change
($ in millions, except per share data)
As Reported
Returns/ Charges/
Adjustments
Non- GAAP
Impact of Foreign
Currency Translation
Non- GAAP, Constant
Currency
As Reported
Returns/ Charges/
Adjustments
Non- GAAP
Non- GAAP
Non- GAAP,
Constant Currency
Net sales
$
4,279
$
1
$
4,280
$
(8
)
$
4,272
$
4,620
$
1
$
4,621
(7
)%
(8
)%
Gross profit
3,125
1
3,126
(3
)
3,123
3,401
1
3,402
(8
)%
(8
)%
Operating income
574
3
577
9
586
556
212
768
(25
)%
(24
)%
Diluted EPS
$
.87
$
.01
$
.88
$
.01
$
.89
$
1.09
$
.45
$
1.54
(43
)%
(42
)%
Six Months Ended December
31
2023
2022
% Change
($ in millions, except per share data)
As Reported
Returns/ Charges/
Adjustments
Non- GAAP
Impact of Foreign
Currency Translation
Non- GAAP, Constant
Currency
As Reported
Returns/ Charges/
Adjustments
Non- GAAP
Non- GAAP
Non- GAAP,
Constant Currency
Net sales
$
7,797
$
1
$
7,798
$
3
$
7,801
$
8,550
$
6
$
8,556
(9
)%
(9
)%
Gross profit
5,573
2
5,575
3
5,578
6,308
5
6,313
(12
)%
(12
)%
Operating income
672
13
685
15
700
1,217
219
1,436
(52
)%
(51
)%
Diluted EPS
$
.95
$
.03
$
.98
$
.03
$
1.01
$
2.45
$
.46
$
2.91
(66
)%
(65
)%
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, except where
noted)
December 31,
2023
June 30,
2023
December 31,
2022
($ in millions)
(Audited)
ASSETS
Cash and cash equivalents
$
3,939
$
4,029
$
3,725
Accounts receivable, net
1,752
1,452
1,932
Inventory and promotional merchandise
2,603
2,979
3,069
Prepaid expenses and other current
assets
621
679
641
Total current assets
8,915
9,139
9,367
Property, plant and equipment, net
3,220
3,179
2,908
Operating lease right-of-use assets
1,819
1,797
1,847
Other assets
9,329
9,300
6,609
Total assets
$
23,283
$
23,415
$
20,731
LIABILITIES AND EQUITY
Current debt
$
1,500
$
997
$
260
Accounts payable
1,252
1,670
1,507
Operating lease liabilities
366
357
349
Other accrued liabilities
3,456
3,216
3,539
Total current liabilities
6,574
6,240
5,655
Long-term debt
6,640
7,117
5,111
Long-term operating lease liabilities
1,695
1,698
1,757
Other noncurrent liabilities
1,812
1,943
1,487
Total noncurrent liabilities
10,147
10,758
8,355
Redeemable noncontrolling
interest
850
832
819
Total equity
5,712
5,585
5,902
Total liabilities and equity
$
23,283
$
23,415
$
20,731
SELECT CASH FLOW DATA
(Unaudited)
Six Months Ended
December 31
($ in millions)
2023
2022
Net earnings
$
360
$
887
Adjustments to reconcile net earnings to
net cash flows from operating activities:
Depreciation and amortization
408
359
Deferred income taxes
(83
)
(31
)
Impairment of other intangible assets
—
207
Other items
174
192
Changes in operating assets and
liabilities:
Increase in accounts receivable, net
(279
)
(295
)
Decrease (increase) in inventory and
promotional merchandise
405
(156
)
Decrease in other assets, net
44
33
Decrease in accounts payable and other
liabilities, net
(92
)
(445
)
Net cash flows provided by operating
activities
$
937
$
751
Other Investing and Financing Sources
(Uses):
Capital expenditures
$
(527
)
$
(419
)
Settlement of net investment hedges
(26
)
138
Payments to acquire treasury stock
(33
)
(257
)
Dividends paid
(474
)
(451
)
Proceeds of current debt, net
780
244
Repayments of commercial paper (maturities
after three months)
(785
)
—
Repayments and redemptions of long-term
debt, net
(5
)
(258
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240205183616/en/
Investors: Rainey Mancini rmancini@estee.com
Media: Jill Marvin jimarvin@estee.com
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