Net Sales Decreased 2% and Diluted EPS
Declined 61% to $1.08
Organic Net Sales1 Decreased 2% and Adjusted
Diluted EPS Declined 25% to $2.59
Organic Net Sales Returned to Growth in the
Second Half and Full Year Adjusted Operating Margin and
Adjusted Diluted EPS Exceeded Outlook
Expects Improved Performance Across Most
Business Areas Partially Offset by Continued Soft Consumer
Sentiment in China in Fiscal 2025
The Estée Lauder Companies Inc. (NYSE: EL) today reported net
sales of $15.61 billion for its fiscal year ended June 30, 2024, a
decrease of 2% from $15.91 billion in the prior year. Organic net
sales decreased 2%, primarily reflecting ongoing softness in
overall prestige beauty in mainland China and a decline in Asia
travel retail driven by the decrease in the first half of fiscal
2024, reflecting actions taken by the Company and its retailers to
reset inventory levels as well as lower conversion. Partially
offsetting these declines was growth in Hong Kong SAR, overall in
the markets of Europe, the Middle East & Africa (“EMEA”), Japan
and Latin America.
The Company reported net earnings of $0.39 billion, compared
with net earnings of $1.01 billion in the prior year. The Company’s
reported effective tax rate was 47.0%, compared with 27.7% in the
prior year. This increase reflects the impact of nondeductible
goodwill impairment charges associated with the Company’s Dr.Jart+
reporting unit, a higher effective tax rate on the Company's
foreign operations due to the geographical mix of earnings and the
unfavorable impact associated with previously issued stock-based
compensation. Diluted net earnings per common share was $1.08,
compared with $2.79 reported in the prior year. Excluding
restructuring and other charges and adjustments as detailed on page
3, adjusted diluted net earnings per common share was $2.59, a 22%
decrease in constant currency. The fiscal 2024 impact of business
disruptions in Israel and other parts of the Middle East was $.06
dilutive to reported and adjusted net earnings per common
share.
___________________________________ 1 Organic 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 of 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.
Fabrizio Freda, President and CEO said, “In fiscal 2024’s fourth
quarter, we achieved our organic sales outlook and exceeded
expectations for profitability, closing a difficult year. Organic
sales and adjusted EPS returned to growth in the second half.
“For fiscal 2025, we anticipate continued declines in the
prestige beauty segment in China, mainly reflecting persistent weak
sentiment among Chinese consumers. We intend to drive share gains
in a market that continues to hold strong long-term promise. In the
rest of our business, we are planning to deliver improved
performance across both developed and emerging markets. To fuel
this, our priorities are reigniting Skin Care, capitalizing on the
multiple growth drivers of high-end Fragrance, moving faster in
leveraging winning channels, launching accretive innovation
inclusive of new, big opportunities, and enhancing our precision
marketing capabilities. From La Mer’s entry into night-specific
consumption, to The Ordinary’s expansion into new markets and more
brands debuting in new channels, like on Amazon’s U.S. Premium
Beauty store, we have a rich slate of initiatives to drive new
consumer acquisition and continue to leverage our strength in
retention. Alongside this work, we are realizing initial benefits
of the Profit Recovery and Growth Plan as we rightsize our cost
structure and simplify the organization to be more agile and faster
to market.
“For fiscal 2025, the Profit Recovery and Growth Plan enables us
to offset the pressure to profitability driven by the prestige
beauty segment’s ongoing softness in China, yielding a more
moderate pace of operating margin expansion than we’d previously
expected. While our sales and profit outlook for fiscal 2025 is
disappointing, this year we will make important strides, as we
implement our strategy reset to continue rebalancing regional
growth, deliver improved annual profitability, and strengthen
go-to-market and innovation capabilities to elevate our execution
in response to a more competitive market. These efforts, coupled
with the strengths of our brands, product portfolio, and talented
teams around the world, will position us to both outperform
prestige beauty in fiscal 2026 and accelerate profitability
expansion.”
Fiscal 2024 Results Reported
net sales decreased 2%, including royalty revenue from the fiscal
2023 fourth quarter acquisition of the TOM FORD brand, the impact
from foreign currency translation and returns associated with
restructuring and other activities.
Reconciliation between GAAP
and Non-GAAP Net Sales Growth
(Unaudited)
Year Ended June 30,
2024(1)
As Reported-GAAP
(1.9
)%
Impact of royalty revenue from the
acquisition of the TOM FORD brand
(0.3
)
Impact of foreign currency translation
0.7
Returns associated with restructuring and
other activities
(0.2
)
Organic, Non-GAAP
(1.7
)%
(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 Common Share
(“EPS”)
(Unaudited)
Year Ended June 30
2024
2023
Growth
As Reported EPS - GAAP
$
1.08
$
2.79
(61
)%
Non-GAAP
Restructuring and other charges
.27
.18
Change in fair value of DECIEM
acquisition-related stock options inclusive of payroll tax
(less the portion attributable to
redeemable noncontrolling interest)
.05
.05
Goodwill and other intangible asset
impairments
1.19
.44
Adjusted EPS - Non-GAAP
$
2.59
$
3.46
(25
)%
Impact of foreign currency translation on
earnings per share
.10
Adjusted Constant Currency EPS -
Non-GAAP
$
2.69
$
3.46
(22
)%
Net sales and operating income in nearly all of the Company’s
product categories and geographic regions were impacted by a
stronger U.S. dollar in relation to most currencies.
Total reported operating income was $0.97 billion, a decrease of
36% from $1.51 billion in the prior year. In constant currency,
adjusted operating income decreased 10% to $1.64 billion, primarily
due to lower net sales, partially offset by lower cost of sales,
excluding the following items:
- Fiscal 2024: $471 million of goodwill and other intangible
asset impairments related to Dr.Jart+, as well as $124 million of
restructuring and other charges and $23 million related to the
change in fair value of DECIEM acquisition-related stock options,
inclusive of payroll tax.
- Fiscal 2023: $207 million of other intangible asset impairments
related to Dr.Jart+, Too Faced and Smashbox, combined, as well as
$85 million of restructuring and other charges and $22 million
related to the change in fair value of DECIEM acquisition-related
stock options.
- The unfavorable impact of foreign currency translation of $50
million.
During the fiscal 2024 second quarter, the Company identified
and corrected prior-period misclassifications of net sales and
operating income between certain of its product categories. As a
result, product category net sales and operating income have been
adjusted from the amounts previously reported for the three months
and year ended June 30, 2023 for comparability purposes. The
misclassifications had no impact on the current-period or
prior-period consolidated statements of earnings, consolidated
statements of comprehensive income, consolidated balance sheets, or
the consolidated statements of cash flows, and the Company
determined that the impact on its current-period and previously
issued financial statements for the respective periods was not
material. See the Q2 Quarterly Earnings section of the Company’s
website for supplemental information relating to the impacts of
these misclassifications.
Results by Product
Category
(Unaudited)
Year Ended June 30
Net Sales
Percentage Change(1)
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Royalty Revenue from
the Acquisition of the TOM FORD Brand
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported Basis
Skin Care
$
7,908
$
8,249
(4
)%
—
%
1
%
(3
)%
$
735
$
1,277
(42
)%
Makeup
4,470
4,532
(1
)
—
—
(1
)
93
(21
)
100
+
Fragrance
2,487
2,451
1
—
—
2
265
370
(28
)
Hair Care
629
652
(4
)
—
—
(4
)
(52
)
(36
)
(44
)
Other
115
53
100
+
(100
+)
—
15
53
4
100
+
Subtotal
$
15,609
$
15,937
(2
)%
—
%
1
%
(2
)%
$
1,094
$
1,594
(31
)%
Returns/charges
associated with
restructuring and
other activities
(1
)
(27
)
(124
)
(85
)
Total
$
15,608
$
15,910
(2
)%
—
%
1
%
(2
)%
$
970
$
1,509
(36
)%
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
124
85
Skin Care - Changes in fair value of
DECIEM acquisition-related stock options inclusive of
payroll tax
23
22
Skin Care - Goodwill and other intangible
asset impairments
471
100
Makeup - Other intangible asset
impairments
—
107
Adjusted Operating Income -
Non-GAAP
$
1,588
$
1,823
(13
)%
(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, excluding the negative impacts which are reflected in
the preceding table.
Skin Care
- Skin Care net sales decreased 3%, primarily due to ongoing
softness in overall prestige beauty in mainland China.
Additionally, net sales declined in Asia travel retail driven by
the decrease in the first half of fiscal 2024, reflecting actions
taken by the Company and its retailers to reset inventory levels,
in part in response to changes in government policies that began in
the second half of fiscal 2023, as well as lower conversion.
Excluding the declines in mainland China and the Company’s global
travel retail business, reported and organic net sales increased
3%.
- Net sales from Estée Lauder, Clinique and Dr.Jart+ declined,
primarily due to continued challenges in mainland China and Asia
travel retail. Partially offsetting the declines:
- Estée Lauder net sales grew mid-single-digits in The Americas,
benefiting from continued strength from the Advanced Night Repair
and Revitalizing Supreme+ product franchises.
- Net sales from Dr.Jart+ more than doubled in the markets of
EMEA and increased double digits in The Americas, reflecting growth
from hero product franchises, including the Cicapair product
franchise, and new product innovation.
- La Mer net sales increased high-single-digits, benefiting from
hero products, such as The Treatment Lotion and The Eye
Concentrate, and new product innovation, such as The Moisturizing
Fresh Cream.
- The Ordinary net sales grew strong double digits, driven by
growth across every geographic region and benefiting from the
continued success of hero products, new product innovation, such as
the Soothing & Barrier Support Serum, and targeted expanded
consumer reach.
- Reported and organic net sales increased double digits in the
second half of fiscal year 2024, driven by double-digit growth from
La Mer, Estée Lauder and The Ordinary.
- Skin Care operating income decreased, primarily reflecting the
year-over-year increase of goodwill and other intangible asset
impairments of $371 million and the decline in net sales, partially
offset by lower cost of sales, including lower obsolescence
charges.
Makeup
- Makeup net sales decreased 1%, primarily driven by the
Company’s global travel retail business and a benefit in the prior
year as a result of changes to M·A·C’s take-back loyalty program,
partially offset by growth overall in the markets of EMEA as well
as in Latin America and Asia/Pacific. Reported and organic net
sales increased low-single digits in the second half of fiscal
2024, primarily driven by Estée Lauder and Clinique.
- Net sales from La Mer decreased, reflecting the impact of
rationalizing product assortment in the Company’s global travel
retail business, partially offset by double-digit growth in
Asia/Pacific that benefited from online and brick-and-mortar
expansion.
- Clinique net sales increased double digits, reflecting strong
growth across all geographic regions, primarily driven by continued
strength across the lip and mascara subcategories.
- Makeup operating results increased, primarily reflecting the
year-over-year decrease of other intangible asset impairments of
$107 million and disciplined expense management, partially offset
by lower sales.
Fragrance
- Fragrance net sales increased 2%, primarily driven by
mid-single-digit growth from the Company’s Luxury Brands, which
increased double digits in Asia/Pacific and The Americas, partially
offset by a decline from Estée Lauder.
- Le Labo net sales grew strong double digits, nearly doubling in
Asia/Pacific, owing to hero product franchises, such as Santal 33
and the City Exclusive collection, targeted expanded consumer reach
globally and new product innovation, such as Lavande 31.
- Net sales from Jo Malone London increased, led by double-digit
growth in The Americas, benefiting from new product innovation,
such as English Pear & Sweet Pea, and continued strength from
hero product franchises, including Wood Sage & Sea Salt and
Cypress & Grapevine.
- Estée Lauder net sales declined, reflecting softer retail sales
during holiday and key shopping moments and pressure in the
Company’s Asia travel retail business that led to lower shipments
for replenishment orders, as well as lower net sales from new
product innovation.
- Fragrance operating income decreased, primarily driven by
strategic investments, including for targeted expanded consumer
reach globally as well as advertising and promotional activities,
to support growth of the Company’s Luxury Brands.
Hair Care
- Hair Care net sales declined 4%, primarily due to Aveda in
North America, reflecting softness in the salon channel and the
Company’s direct-to-consumer distribution channels.
- Hair Care operating results decreased primarily reflecting the
decline in net sales, partially offset by disciplined expense
management.
Results by Geographic Region
(Unaudited)
Year Ended June 30
Net Sales
Percentage Change(1)
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Royalty Revenue from
the Acquisition of the TOM FORD Brand
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported Basis
The Americas
$
4,581
$
4,518
1
%
(1
)%
—
%
—
%
$
34
$
(73
)
100
+%
Europe, the
Middle East &
Africa
6,140
6,225
(1
)
—
(1
)
(2
)
836
843
(1
)
Asia/Pacific
4,888
5,194
(6
)
—
3
(3
)
224
824
(73
)
Subtotal
$
15,609
$
15,937
(2
)%
—
%
1
%
(2
)%
$
1,094
$
1,594
(31
)%
Returns/charges
associated with
restructuring and
other activities
(1
)
(27
)
(124
)
(85
)
Total
$
15,608
$
15,910
(2
)%
—
%
1
%
(2
)%
$
970
$
1,509
(36
)%
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
124
85
The Americas - Changes in fair value of
DECIEM acquisition-related stock options inclusive
of payroll tax
14
22
Europe, the Middle East & Africa -
Changes in fair value of DECIEM acquisition-related
stock options inclusive of payroll tax
9
—
The Americas - Other intangible asset
impairments
—
107
Asia/Pacific - Goodwill and other
intangible asset impairments
471
100
Adjusted Operating Income -
Non-GAAP
$
1,588
$
1,823
(13
)%
(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, excluding the negative (positive) impacts
which are reflected in the preceding table.
The Americas
- Net sales increased double digits in Latin America and were
flat in North America.
- Net sales grew in Latin America in nearly every market and
product category, led by the Priority Emerging Markets2 of Mexico
and Brazil.
- Net sales in Mexico increased double digits, reflecting growth
across all product categories, led by Makeup, and benefiting from
key activations to support key shopping moments and new product
innovation.
- High-single-digit growth in Brazil was driven by double-digit
growth in Makeup and Fragrance, fueled by advertising and
promotional activities to support key campaigns, such as M·A·C’s
launch of M·A·Cximal Silky Matte Lipstick.
- Net sales performance in North America was primarily driven by
the decline in Makeup, including a benefit in the prior year as a
result of changes to M·A·C’s take-back loyalty program, partially
offset by high-single-digit growth in Fragrance, led by the
Company’s Luxury Brands. The performance in North America also
reflected double-digit growth in specialty-multi and a benefit to
online net sales from Clinique’s fiscal 2024 launch on the U.S.
Amazon Premium Beauty store, offset by declines in other channels
of distribution, primarily department stores.
- Operating results increased, primarily driven by:
- An increase of $174 million, which is offset by corresponding
decreases in EMEA and Asia/Pacific, reflecting a full-year true-up
of charges among the Company’s geographic regions to reflect the
updated value of investments in innovation centralized in The
Americas.
- The year-over-year decrease of other intangible asset
impairments of $107 million relating to Too Faced and
Smashbox.
- A full year of royalty revenue from the fiscal 2023 fourth
quarter acquisition of the TOM FORD brand.
- Partially offset by:
- Strategic investments to support advertising and promotional
activities.
- $55 million of lower intercompany royalty income due to the
decrease in income from the Company’s travel retail business.
- An unfavorable year-over-year comparison in adjustments to
stock-based compensation expense related to the Company’s
performance share awards.
___________________________________ 2 The Company’s Priority
Emerging Markets by geographic region: The Americas: Brazil and
Mexico; EMEA: India, the Middle East, Turkey and South Africa; and
Asia/Pacific: Thailand, Malaysia, Vietnam, Indonesia and the
Philippines.
Europe, the Middle East &
Africa
- Net sales decreased 2%, primarily due to the challenges in Asia
travel retail, partially offset by net sales growth in many markets
across the region.
- Global travel retail net sales decreased high-single-digits,
driven by a decline in the first half of fiscal 2024, reflecting
actions taken by the Company and its retailers to reset inventory
levels as well as lower conversion. This decrease was partially
offset by the return to growth in the second half of fiscal 2024
primarily driven by a favorable comparison to the prior-year
period.
- Total net sales in the markets of EMEA grew low-single-digits,
reflecting growth in Skin Care, Makeup and from the Company’s
luxury fragrance brands, which drove double-digit growth in
specialty-multi.
- Operating income was virtually flat, driven by:
- A decrease of $131 million, which is offset by a corresponding
increase in The Americas, due to a full-year true-up of charges
among the Company’s geographic regions to reflect the updated value
of investments in innovation centralized in The Americas.
- The decline in net sales.
- An increase in spending to support advertising and promotional
activities and targeted expanded consumer reach.
- Offset by:
- Lower costs of sales, including lower obsolescence
charges.
- $55 million of lower intercompany royalty expense due to the
decrease in income from the Company’s global travel retail
business.
- A reduction in royalty expense due to the fiscal 2023
acquisition of the TOM FORD brand.
Asia/Pacific
- Net sales decreased 3%, primarily driven by mainland China,
partially offset by double-digit growth in Hong Kong SAR and
Japan.
- Net sales in mainland China decreased, primarily due to ongoing
softness in overall prestige beauty, including during holiday and
key shopping moments.
- In Hong Kong SAR, net sales rose strong double digits,
reflecting growth in Skin Care, Fragrance and Makeup, driven by the
increase in travel compared to the prior year.
- Net sales in Japan increased double digits, led by strong
double-digit growth in Fragrance, driven by domestic and traveling
consumers, which fueled growth in nearly all channels of
distribution, led by freestanding stores.
- Operating income decreased, primarily due to:
- The year-over-year increase in goodwill and other intangible
asset impairments of $371 million relating to Dr.Jart+.
- The decline in net sales.
- A decrease of $43 million, which is offset by a corresponding
increase in The Americas, due to a full-year true-up of charges
among the Company’s geographic regions to reflect the updated value
of investments in innovation centralized in The Americas.
- Partially offset by disciplined expense management.
Cash Flows
- For the twelve months ended June 30, 2024, net cash flows
provided by operating activities were $2.36 billion, compared with
$1.73 billion in the prior year. This increase reflects lower
working capital, primarily due to the improvement in inventory,
partially offset by lower earnings before taxes.
- Capital Expenditures decreased to $0.92 billion compared to
$1.00 billion in the prior year primarily due to timing of payments
relating to the manufacturing facility in Japan, construction of
which was completed in fiscal 2024.
- In May 2024, the Company completed its acquisition of the
Canadian-based, multi-brand company DECIEM Beauty Group Inc.
(“DECIEM”). The Company first invested in DECIEM in 2017, increased
its stake to become majority owner in 2021 and exercised its option
to purchase the remaining interests in DECIEM after a three-year
period. The transaction was completed, subject to the final
calculation of the purchase price pursuant to the contract, for
$859 million, inclusive of payments to option holders and of which
$829 million was paid as of June 30, 2024.
- The Company ended the year with $3.40 billion in cash and cash
equivalents and paid dividends of $0.95 billion.
Fourth Quarter Results
Results by Product Category
(Unaudited)
Three Months Ended June
30
Net Sales
Percentage Change(1)
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Royalty Revenue from
the Acquisition of the TOM FORD Brand
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported Basis
Skin Care
$
2,035
$
1,795
13
%
—
%
2
%
15
%
$
(185
)
$
39
(100
+%)
Makeup
1,105
1,108
—
—
1
1
37
(12
)
100
+
Fragrance
539
544
(1
)
—
1
1
(2
)
27
(100
+)
Hair Care
165
164
1
—
2
2
(2
)
(4
)
50
Other
27
15
80
(40
)
(7
)
33
15
(3
)
100
+
Subtotal
$
3,871
$
3,626
7
%
—
%
1
%
8
%
$
(137
)
$
47
(100
+%)
Returns/charges
associated with
restructuring and
other activities
—
(17
)
(96
)
(52
)
Total
$
3,871
$
3,609
7
%
—
%
1
%
8
%
$
(233
)
$
(5
)
(100
+%)
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
96
52
Skin Care - Changes in fair value of
DECIEM acquisition-related stock options inclusive of
payroll tax
15
24
Skin Care - Goodwill and other intangible
asset impairments
471
—
Adjusted Operating Income -
Non-GAAP
$
349
$
71
100
+%
(1)Percentages are calculated on an
individual basis
Results by Geographic Region(Unaudited)
Three Months Ended June
30
Net Sales
Percentage Change(1)
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Royalty Revenue from
the Acquisition of the TOM FORD Brand
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported Basis
The Americas
$
1,014
$
1,071
(5
)%
(1
)%
—
%
(5
)%
$
277
$
(20
)
100
+%
Europe, the
Middle East &
Africa
1,652
1,253
32
—
—
32
11
(76
)
100
+
Asia/Pacific
1,205
1,302
(7
)
—
4
(4
)
(425
)
143
(100
+)
Subtotal
$
3,871
$
3,626
7
%
—
%
1
%
8
%
$
(137
)
$
47
(100
+%)
Returns/charges
associated with
restructuring and
other activities
—
(17
)
(96
)
(52
)
Total
$
3,871
$
3,609
7
%
—
%
1
%
8
%
$
(233
)
$
(5
)
(100
+%)
Non-GAAP Adjustments to As Reported
Operating Income:
Returns/charges associated with
restructuring and other activities
96
52
The Americas - Changes in fair value of
DECIEM acquisition-related stock options inclusive of payroll
tax
6
24
Europe, the Middle East & Africa -
Changes in fair value of DECIEM acquisition-related stock options
inclusive of payroll tax
9
—
Asia/Pacific - Goodwill and other
intangible asset impairments
471
—
Adjusted Operating Income -
Non-GAAP
$
349
$
71
100
+%
(1)Percentages are calculated on an
individual basis
- For the three months ended June 30, 2024, the Company reported
net sales of $3.87 billion, a 7% increase compared with $3.61
billion in the prior-year period, despite the slowdown in key areas
of the Company’s business, primarily mainland China, Asia travel
retail and North America.
- Organic net sales increased 8%, due to growth across all
product categories, led by Skin Care, driven by the Company’s
global travel retail business. This represented an acceleration
from the 6% growth in the fiscal 2024 third quarter.
- The continued growth in the markets in EMEA, combined, also
contributed to the increase in net sales, particularly in Makeup
and specialty-multi.
- The Americas net sales declined 5%, due, in part, to ongoing
Company-specific challenges, including its distribution mix, with
declines in department stores which offset growth in other
distribution channels, a strong competitive environment and the
overall slowdown in growth in prestige beauty in North
America.
- Net sales in Asia/Pacific decreased 4%, primarily driven by the
decline in mainland China, due to the ongoing softness in overall
prestige beauty, including during key shopping moments. Net sales
in Hong Kong SAR also declined, given the anniversary of the border
reopening in the fiscal 2023 fourth quarter. These declines were
partially offset by strong double-digit growth in Japan.
- Net loss was $284 million, and diluted net loss per common
share was $.79. In the prior-year period, the Company reported a
net loss of $33 million and diluted net loss per common share of
$.09.
- During the three months ended June 30, 2024, the Company
recorded restructuring and other charges, goodwill and other
intangible asset impairments and expense relating to the change in
fair value of DECIEM acquisition-related stock options, inclusive
of payroll tax, that, combined, resulted in an unfavorable impact
of $582 million ($516 million less the portion attributable to
redeemable noncontrolling interest and net of tax), equal to $1.43
per diluted share, as detailed on page 19. The prior-year period
results include restructuring and other charges and expense
relating to the change in fair value of DECIEM acquisition-related
stock options that, combined, resulted in an unfavorable impact of
$76 million ($60 million less the portion attributable to
redeemable noncontrolling interest and net of tax), equal to $.16
per diluted share, as detailed on page 19.
- Excluding restructuring and other charges and adjustments
referred to in the previous bullet, adjusted diluted net earnings
per common share for the three months ended June 30, 2024 was $.64,
an increase from adjusted diluted net earnings per common share of
$.07 in the three months ended June 30, 2023. Adjusted diluted net
earnings per common share was $.67 in constant currency.
Outlook for Fiscal 2025 First Quarter
and Full Year The Company expects global prestige beauty
to grow 2%-3% in fiscal 2025, reflecting the ongoing strength in
many developed and emerging markets globally, albeit with more
tempered growth in certain large markets, such as North America,
partially offset by continued declines in mainland China and Asia
travel retail due to low consumer sentiment and conversion rates.
The Company expects global prestige beauty to re-accelerate to
historical mid-single-digit growth in fiscal 2026, assuming China
progressively stabilizes and then returns to growth.
In fiscal 2025, the Company expects more tempered performance
than the industry, mainly driven by its significant business in
mainland China and Asia travel retail. Elsewhere, the Company
expects to deliver accelerated net sales growth, driven by the
Company’s strategic priorities to reignite Skin Care, capitalize on
the multiple growth drivers of high-end Fragrance, move faster in
leveraging winning channels, launch accretive innovation inclusive
of new, big opportunities, and enhance the Company’s precision
marketing capabilities.
The Company is focused on delivering on the benefits from its
Profit Recovery and Growth Plan (“PRGP”), previously known as the
Profit Recovery Plan (“PRP”). The recent renaming of the PRGP
better reflects the plan’s vision from the outset of both sales
growth acceleration and profit margin recovery. The PRGP is
designed to improve gross margin, lower the Company’s cost base,
including reducing overhead expenses, while reinvesting in key
consumer-facing activities to accelerate growth, create expense
leverage also at lower levels of sales growth and increase agility
and speed-to-market.
The Company’s initiatives under the PRGP are on track and are
still expected to drive operating profit net savings of $1.1
billion to $1.4 billion, including net benefits from the
restructuring program, in fiscal years 2025 and 2026, slightly more
than half of which is expected to be realized through fiscal 2025.
However, the greater than previously expected headwinds in mainland
China and Asia travel retail are expected to partially offset the
PRGP’s initial operating profit net benefits.
The Company remains mindful of risks, including potential
retailer destocking, associated with (i) current consumer sentiment
contributing to the ongoing declines in overall prestige beauty in
mainland China as well as in retail trends in Asia travel retail,
including subdued conversion; (ii) the shift in traveler
demographics and ongoing increase in spending on experiences
impacting Asia travel retail; and (iii) adapting to channel shifts
and the challenging dynamics of a strong competitive environment
amidst the slowdown in growth in prestige beauty in North
America.
The full year outlook reflects the following assumptions and
expectations:
- Net sales growth drivers:
- Targeted expanded consumer reach across geographies and
distribution channels.
- Mainland China and Asia travel retail are generally expected to
decline on a full-year basis, although assuming gradual improvement
in the second half of fiscal 2025.
- In North America, a full-year increase in net sales driven in
part by leveraging winning distribution channels, such as Amazon’s
U.S. Premium Beauty store.
- The rest of the business is expected to accelerate growth, on
average.
- Full-year adjusted operating margin of 11.0% to 11.5%,
inclusive of PRGP benefits.
- Full-year effective tax rate of approximately 32%.
- Net cash flows provided by operating activities to be between
$1.8 billion and $2.0 billion.
- Capital expenditures to be approximately 5%-5.5% of projected
sales to support continued investments in customer facing capital,
including stores and online, as well as in supply chain and
information technology investments.
- No further deterioration of geopolitical tensions.
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; legal and 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 and the impact of changes being made in the
organization, including those related to the PRGP.
Full Year Fiscal 2025
Sales Outlook
- Reported and organic net sales are forecasted to range between
a decrease of 1% to an increase of 2% versus the prior year.
Earnings per Share Outlook
- Reported diluted net earnings per common share are projected to
be between $2.52 and $2.76. Excluding restructuring and other
charges, diluted net earnings per common share are projected to be
between $2.75 and $2.95.
- The Company expects to take charges associated with previously
approved restructuring and other activities. For the Restructuring
Program Component of the Profit Recovery and Growth Plan, the
charges are estimated to be between approximately $99 million to
$119 million, equal to $.19 to $.22 per diluted common share.
Additional restructuring charges are anticipated as initiatives are
approved throughout fiscal year 2025.
- Adjusted diluted net earnings per common share are expected to
increase between 7% and 15% and range between $2.78 and $2.98 on a
constant currency basis.
- Currency exchange rates are volatile and difficult to predict.
Using August 12, 2024 spot rates for fiscal 2025, the foreign
currency translation equates to about $.03 of dilution to net
earnings per common share.
First Quarter Fiscal 2025
Sales Outlook
- Reported and organic net sales are forecasted to decrease
between 5% and 3% versus the prior-year period.
Earnings per Share Outlook
- Reported diluted net earnings per common share are projected to
be $(.09) to flat. Excluding restructuring and other charges,
diluted net earnings per common share are projected to be between
$.02 and $.10.
- The Company expects to take charges associated with previously
approved restructuring and other activities. For the Restructuring
Program Component of the Profit Recovery and Growth Plan, the
charges are estimated to be between approximately $54 million to
$59 million, equal to $.10 to $.11 per diluted common share.
Additional restructuring charges are anticipated as initiatives are
approved throughout fiscal year 2025.
- Adjusted diluted net earnings per common share are expected to
decrease between 89% and 17% and range between $.01 and $.09 on a
constant currency basis.
- Currency exchange rates are volatile and difficult to predict.
Using August 12, 2024 spot rates for fiscal 2025, the foreign
currency translation equates to about $.01 of accretion to net
earnings per common share.
Reconciliation between GAAP
and Non-GAAP - Net Sales Growth (Unaudited)
Three Months Ending
Twelve Months Ending
September 30, 2024(F)
June 30, 2025(F)
As Reported - GAAP
(5%) - (3
%)
(1%) - 2
%
Impact of foreign currency translation
—
—
Returns associated with restructuring and
other activities
—
—
Organic, Non-GAAP
(5%) - (3
%)
(1%) - 2
%
(F)Represents forecast
Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per
Common Share (“EPS”)(Unaudited)
Three Months Ending
Twelve Months Ending
September 30
June 30
2024(F)
2023
Growth
2025(F)
2024
Growth
Forecasted/As Reported EPS -
GAAP
$(.09) - $.00
$
.09
(100+)%
$2.52 - $2.76
$
1.08
100+%
Non-GAAP
Restructuring and other charges
.10 - .11
—
.19 - .23
.27
Change in fair value of DECIEM
acquisition-
related stock options inclusive of payroll
tax
(less the portion attributable to
redeemable
noncontrolling interest)
—
.02
—
.05
Goodwill and other intangible asset
impairments
—
—
—
1.19
Forecasted/Adjusted EPS -
Non-GAAP
$.02 - $.10
$
.11
(82%) - (10%)
$2.75 - $2.95
$
2.59
6% - 14%
Impact of foreign currency translation
(.01
)
.03
Forecasted/Adjusted Constant
Currency EPS -
Non-GAAP
$.01 - $.09
$
.11
(89%) - (17%)
$2.78 - $2.98
$
2.59
7% - 15%
(F)Represents forecast
Conference Call The Estée
Lauder Companies will host a conference call at 9:30 a.m. (ET)
today, August 19, 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: 8001061). 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)
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;
(12)
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;
(13)
changes in product mix to
products which are less profitable;
(14)
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;
(15)
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;
(16)
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;
(17)
the timing and impact of
acquisitions, investments and divestitures; and
(18)
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 June
30
Percentage Change
Year Ended June
30
Percentage Change
($ in millions, except per share data)
2024
2023
2024
2023
Net sales(A)
$
3,871
$
3,609
7
%
$
15,608
$
15,910
(2
)%
Cost of sales(A)
1,093
1,163
(6
)
4,424
4,564
(3
)
Gross profit
2,778
2,446
14
11,184
11,346
(1
)
Gross margin
71.8
%
67.8
%
71.7
%
71.3
%
Operating expenses
Selling, general and administrative(B)
2,444
2,420
1
9,621
9,575
—
Restructuring and other charges(A)
96
31
100
+
122
55
100
+
Goodwill impairment(C)
291
—
(100
)
291
—
(100
)
Impairment of other intangible
assets(C)
180
—
(100
)
180
207
(13
)
Total operating expenses
3,011
2,451
23
10,214
9,837
4
Operating expense margin
77.8
%
67.9
%
65.4
%
61.8
%
Operating income (loss)
(233
)
(5
)
(100
+)
970
1,509
(36
)
Operating income (loss) margin
(6.0
)%
(0.1
)%
6.2
%
9.5
%
Interest expense
91
99
(8
)
378
255
48
Interest income and investment income,
net
41
53
(23
)
167
131
27
Other components of net periodic benefit
cost
(4
)
(3
)
(33
)
(13
)
(12
)
(8
)
Earnings (loss) before income
taxes
(279
)
(48
)
(100
+)
772
1,397
(45
)
Provision for income taxes
7
(16
)
100
+
363
387
(6
)
Net earnings (loss)
(286
)
(32
)
(100
+)
409
1,010
(60
)
Net loss (earnings) attributable to
redeemable
noncontrolling interest
2
(1
)
100
+
(19
)
(4
)
(100
+)
Net earnings (loss) attributable to The
Estée Lauder
Companies Inc.
$
(284
)
$
(33
)
(100
+)%
$
390
$
1,006
(61
)%
Net earnings (loss) attributable to The
Estée Lauder
Companies Inc. per common share
Basic
$
(.79
)
$
(.09
)
(100
+)%
$
1.09
$
2.81
(61
)%
Diluted
$
(.79
)
$
(.09
)
(100
+)%
$
1.08
$
2.79
(61
)%
Weighted-average common shares
outstanding
Basic
359.4
358.3
359.0
357.9
Diluted
359.4
358.3
360.8
360.9
(A) As a component of the Profit Recovery
Plan, now known as the Profit Recovery and Growth Plan,
communicated on November 1, 2023, on February 5, 2024, the Company
announced a two-year restructuring program. The restructuring
program’s main focus includes the reorganization and rightsizing of
certain areas of the Company’s business as well as simplification
and acceleration of processes. The Company plans to substantially
complete specific initiatives under the restructuring program
through fiscal 2026. The Company expects that the restructuring
program will result in restructuring and other charges totaling
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 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 twelve months ended
June 30, 2024, the Company recorded $15 million ($11 million, less
the portion attributable to redeemable noncontrolling interest and
net of tax, or $.03 per common share) and $23 million ($18 million,
less the portion attributable to redeemable noncontrolling interest
and net of tax, or $.05 per common share), respectively, of expense
related to the change in fair value of DECIEM acquisition-related
stock options inclusive of payroll tax. For the three and twelve
months ended June 30, 2023, the Company recorded $24 million ($19
million, less the portion attributable to redeemable noncontrolling
interest and net of tax, or $.05 per common share) and $22 million
($17 million, less the portion attributable to redeemable
noncontrolling interest and net of tax, or $.05, respectively, of
expense related to the change in fair value of DECIEM
acquisition-related stock options.
(C) Based on the Company’s annual goodwill
and other indefinite-lived intangible asset impairment testing as
of April 1, 2024, the Company determined that the carrying value of
the Dr.Jart+ reporting unit and trademark exceeded their estimated
fair values. Given the lower-than-expected growth within key
geographic regions, the reporting unit has made a strategic shift
in its operating plan to exit the travel retail channel. This
revised strategy also includes increased direct investment in other
areas of the business, including in China, to support the brand’s
future growth. As a result of these changes in strategy, the
Company made revisions to the internal forecasts relating to the
Dr.Jart+ reporting unit which were finalized and approved in the
fiscal 2024 fourth quarter, and reflected in the goodwill and other
indefinite-lived intangible asset impairment testing as of April 1,
2024. These changes in circumstances were also indicators that the
carrying amounts of its respective long-lived assets may not be
recoverable. The Company concluded that the carrying value of the
trademark intangible asset exceeded its estimated fair value, which
was determined utilizing the relief-from-royalty method to
determine discounted projected future cash flows and recorded an
impairment charge of $180 million. The Company then performed a
recoverability analysis of the Dr.Jart+ long-lived asset group and,
based on the estimated undiscounted cash flows of the asset group,
concluded that the carrying amount of the long-lived assets were
recoverable. After adjusting the carrying value of the trademark,
the Company completed a quantitative impairment test for goodwill.
As the carrying value of the reporting unit exceeded its estimated
fair value, the Company recorded a goodwill impairment charge of
$291 million. The estimated fair value of the reporting unit was
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 unit. The significant assumptions used in these
approaches include revenue growth rates and profit margins,
terminal value, weighted average cost of capital used to discount
future cash flows, comparable market multiples for the reporting
unit, and royalty rate for the trademark. The most significant
unobservable input used to estimate the fair value of the reporting
unit and trademark intangible asset was the weighted-average cost
of capital, which was 10.5%. For the three and twelve months ended
June 30, 2024, goodwill impairment charges were $291 million and
other intangible asset impairment charges were $180 million
(combined $430 million, net of tax), with a combined impact of
$1.19 per common share.
During the fiscal 2023 second quarter,
given the lower-than-expected results in the overall business, the
Company made revisions to 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 made revisions to 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 twelve months ended June 30, 2023,
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 June 30,
2024
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
—
—
(3
)
2
(1
)
(1
)
—
Restructuring Program Component of
Profit
Recovery Plan
—
—
86
12
98
77
.21
Change in fair value of DECIEM
acquisition-related
stock options inclusive of payroll tax
—
—
—
15
15
11
.03
Goodwill and other intangible asset
impairments
—
—
—
471
471
430
1.19
Total
$
—
$
—
$
82
$
500
$
582
$
516
$
1.43
Year Ended June 30,
2024
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
1
1
7
10
8
.02
Restructuring Program Component of
Profit
Recovery Plan
—
—
92
23
115
90
.25
Change in fair value of DECIEM
acquisition-related
stock options inclusive of payroll tax
—
—
—
23
23
18
.05
Goodwill and other intangible asset
impairments
—
—
—
471
471
430
1.19
Total
$
1
$
1
$
92
$
524
$
618
$
545
$
1.51
Three Months Ended June 30,
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
Leading Beauty Forward
$
—
$
—
$
—
$
3
$
3
$
1
$
—
PCBA Program
17
4
23
5
49
40
.11
Change in fair value of DECIEM
acquisition-related
stock options
—
—
—
24
24
19
.05
Total
$
17
$
4
$
23
$
32
$
76
$
60
$
.16
Year Ended June 30,
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
Leading Beauty Forward
$
—
$
—
$
1
$
7
$
8
$
6
$
.02
PCBA Program
27
3
35
12
77
60
.16
Change in fair value of DECIEM
acquisition-related
stock options
—
—
—
22
22
17
.05
Other intangible asset impairments
—
—
—
207
207
159
.44
Total
$
27
$
3
$
36
$
248
$
314
$
242
$
.67
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 make 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
common 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 June
30
2024
2023
% 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
$
3,871
$
—
$
3,871
$
51
$
3,922
$
3,609
$
17
$
3,626
7
%
8
%
Gross profit
2,778
—
2,778
41
2,819
2,446
21
2,467
13
%
14
%
Operating (loss)
income
(233
)
582
349
10
359
(5
)
76
71
100
+%
100
+%
Diluted EPS
$
(.79
)
$
1.43
$
.64
$
.03
$
.67
$
(.09
)
$
.16
$
.07
100
+%
100
+%
Reconciliation of Certain
Consolidated Statements of Earnings Accounts Before and
After Returns, Charges and Other Adjustments
(Unaudited)
Year Ended June 30
2024
2023
% 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
$
15,608
$
1
$
15,609
$
105
$
15,714
$
15,910
$
27
$
15,937
(2
)%
(1
)%
Gross profit
11,184
2
11,186
84
11,270
11,346
30
11,376
(2
)%
(1
)%
Operating income
970
618
1,588
50
1,638
1,509
314
1,823
(13
)%
(10
)%
Diluted EPS
$
1.08
$
1.51
$
2.59
$
.10
$
2.69
$
2.79
$
.67
$
3.46
(25
)%
(22
)%
CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited, except where noted)
June 30, 2024
June 30, 2023
($ in millions)
(Audited)
ASSETS
Cash and cash equivalents
$
3,395
$
4,029
Accounts receivable, net
1,727
1,452
Inventory and promotional merchandise
2,175
2,979
Prepaid expenses and other current
assets
625
679
Total current assets
7,922
9,139
Property, plant and equipment, net
3,136
3,179
Operating lease right-of-use assets
1,833
1,797
Other assets
8,786
9,300
Total assets
$
21,677
$
23,415
LIABILITIES AND EQUITY
Current debt
$
504
$
997
Accounts payable
1,440
1,670
Operating lease liabilities
354
357
Other accrued liabilities
3,404
3,216
Total current liabilities
5,702
6,240
Long-term debt
7,267
7,117
Long-term operating lease liabilities
1,701
1,698
Other noncurrent liabilities
1,693
1,943
Total noncurrent liabilities
10,661
10,758
Redeemable noncontrolling
interest
—
832
Total equity
5,314
5,585
Total liabilities and equity
$
21,677
$
23,415
SELECT CASH FLOW DATA
(Unaudited, except where noted)
Twelve Months Ended
June 30
($ in millions)
2024
2023 (Audited)
Net earnings
$
409
$
1,010
Adjustments to reconcile net earnings to
net cash flows from operating
activities:
Depreciation and amortization
825
744
Deferred income taxes
(265
)
(186
)
Goodwill and other intangible asset
impairments
471
207
Other items
289
312
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable, net
(285
)
185
Decrease (increase) in inventory and
promotional merchandise
766
(64
)
Decrease in other assets, net
15
26
Increase (decrease) in accounts payable
and other liabilities
135
(503
)
Net cash flows provided by operating
activities
$
2,360
$
1,731
Other Investing and Financing Sources
(Uses):
Capital expenditures
$
(919
)
$
(1,003
)
Settlement of net investment hedges
(23
)
80
Purchases of other intangible assets
—
(2,286
)
Purchases of investments
(18
)
(8
)
Payments to acquire treasury stock
(35
)
(271
)
Dividends paid
(947
)
(925
)
Proceeds (repayments) of current debt,
net
(215
)
218
Proceeds from issuance of commercial paper
(maturities after three months)
—
765
Repayments of commercial paper (maturities
after three months)
(785
)
—
Proceeds from issuance of long-term debt,
net
648
1,995
Repayments and redemptions of long-term
debt
(10
)
(265
)
Payments for acquisition of redeemable
noncontrolling interest
(745
)
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240819392314/en/
Investors: Rainey Mancini rmancini@estee.com
Media: Jill Marvin jimarvin@estee.com
Estee Lauder Companies (NYSE:EL)
Gráfica de Acción Histórica
De Sep 2024 a Oct 2024
Estee Lauder Companies (NYSE:EL)
Gráfica de Acción Histórica
De Oct 2023 a Oct 2024