Estee Lauder beats quarterly estimates on robust growth in fragrances

Estee Lauder said demand for prestige fragrances is being driven by consumers wanting a little bit of luxury in their lives. (Kena Betancur/AFP/Getty Images/CNN)

Estee Lauder beat Wall Street estimates for first-quarter sales and profit on Thursday on strong demand for its Le Labo and Tom Ford fragrances and an uptick in China demand, in fresh signs the beauty company’s turnaround push is starting to work.

Shares of the company, which maintained its annual forecasts, rose about seven per cent in premarket trading.

In the midst of a turnaround under CEO Stephane de La Faverie, Estee Lauder has been ramping up luxury launches, streamlining its supply chain and boosting innovation and marketing efforts, which has helped the cosmetics maker revive sliding sales.

The company, which warned of a US$100 million tariff hit in August, has been shifting production closer to key markets as part of its plans to navigate the ever-shifting trade policies that have crippled broader retail industry.

The Clinique, M.A.C, and Jo Malone London owner saw organic net sales turn positive after facing persistent declines for over a year.

Estee Lauder’s quarterly organic net sales rose three per cent, after falling five per cent a year ago.

Last week, L’Oreal also saw improvement in China, while luxury brands including LVMH and Hermes tentatively indicated a revival in China.

Estee Lauder’s fragrance category saw quarterly organic sales growth of 13 per cent, while sales were up nine per cent in its China and Asia Pacific regions.

“With the worst of China’s luxury slump likely in the rearview mirror, the company saw a rebound from very poor prior-year comps, but (it) is poised for a longer-term return to growth,” said Sky Canaves, analyst with eMarketer.

The company posted quarterly sales of $3.48 billion, compared with analysts’ estimate of $3.38 billion, according to data compiled by LSEG.

Its adjusted profit of 32 cents per share for the quarter ended September 30 largely beat an estimate of 18 cents per share.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai)