Estée Lauder Sees Q3 EPS Below View; Updates FY16 Outlook

(RTTNews) - Estée Lauder Companies Inc. (EL) said that it expects third-quarter net earnings per share, before charges associated with restructuring activities, to be between $0.53 and $0.58. Net earnings per common share, including charges associated with restructuring activities, are projected to be between $0.50 and $0.55. Net sales are forecasted to increase between 2% and 3% versus the prior-year period. Net sales are forecasted to increase between 6% and 7% in constant currency.

Analysts polled by Thomson Reuters expect the company to report earnings of $0.76 per share and revenues of $2.65 billion for third-quarter. Analysts' estimates typically exclude special items.

The Company expects to take charges associated with restructuring activities in its fiscal 2016 third quarter of about $16 million, equal to approximately $.03per diluted common share.

The approximate 4% negative currency impact on the sales growth equates to about $.03 of earnings per share. On a constant currency basis and before restructuring charges, third-quarter earnings per share are expected to decrease 15% to 22%, reflecting the Company's planned strategic investments to fuel growth momentum.

Fabrizio Freda, President and Chief Executive Officer, said, "In the second half of the fiscal year, we will continue to fuel our growth momentum with strategic investments to build upon our strengths, capabilities and infrastructure to further enhance our long-term competitive advantage. We expect to continue to outperform global prestige beauty and we are raising the bottom of our full fiscal year constant currency sales growth estimate to between 7% and 8%. In light of market challenges, expected continued currency headwinds and our decision to invest in sustaining our growth momentum, we are maintaining our forecasted adjusted constant currency earnings per share growth estimate of 10% to 12%, before charges, for the 2016 fiscal year."

Looking ahead for Fiscal 2016, the company projects net earnings per share before charges associated with restructuring activities to be between $3.07 to $3.12. Net earnings per common share, including charges associated with restructuring activities, are projected to be between $2.98 and $3.05. Net sales are forecasted to increase between 4% and 5% versus the prior-year period. Net sales are forecasted to grow between 9% and 10% in constant currency. Net sales adjusting for the effect of the accelerated retailer orders are forecasted to grow between 7% and 8% in constant currency.

Wall Street currently is looking for fiscal year 2016 earnings of $3.18 per share on annual revenues of $11.20 billion.

Reflecting the strength of the U.S. dollar, foreign currency translation is expected to negatively impact sales by approximately 5%.

The Company expects to take charges associated with restructuring activities in fiscal 2016 of between $40 million to $50 million, equal to $.07 to $.09 per diluted common share.

The approximate 5% negative currency impact on the sales growth equates to about $.29 of earnings per share. On a constant currency basis and adjusting for restructuring charges and the effect of the accelerated retailer orders, diluted earnings per share are expected to grow between 10% and 12%.