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Estée Lauder Raises Outlook Again as Chinese Consumers Buy More

Skincare sales are flourishing in Asia, and the group's high-end beauty labels such as La Mer are performing well.
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By
  • Bloomberg

NEW YORK, United States — Estée Lauder raised its full-year guidance for the second time this year after it exceeded expectations in the latest quarter on the back of booming sales in Asia.

The cosmetics company now sees full-year adjusted earnings per share of $5.15 to $5.19 after profit and sales beat estimates in the third quarter. It had already boosted its outlook for that metric in February.

Skincare sales are flourishing in Asia, and Estée Lauder’s high-end beauty labels such as La Mer are performing well despite wider worries of a luxury slowdown in China. While the company had “anticipated a gradual moderation of growth in China and travel retail starting in the quarter,” that fortunately didn’t happen, chief executive Fabrizio Freda said.

Estée Lauder has been working to connect with younger shoppers in the US by acquiring up-and-coming beauty brands and investing more in e-commerce. In recent years, the cosmetics giant has acquired numerous trendy brands, including Glamglow, Becca and Too Faced. Still, sales in the Americas slipped 2 percent in the quarter, even as Asia and Europe logged double-digit growth.

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Demand for artisanal fragrances has accelerated as shoppers flock to the company's upscale products, including Tom Ford's Black Orchid scent. Estée Lauder recently bought three brands in what it calls the "ultra-prestige" fragrance category: Le Labo, Frederic Malle and By Kilian. Those brands drove the fragrance sector's growth in the quarter, even as certain designer scents lost luster.

Estée Lauder shares rose more than 4 percent in early trading. The stock had gained 32 percent this year through Tuesday’s close, outpacing the S&P 500.

By Kim Bhasin; editors: Anne Riley Moffat, Craig Giammona.

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