Beauty products company Estée Lauder (NYSE:EL) met Wall Street’s revenue expectations in Q3 CY2024, but sales fell 4.5% year on year to $3.36 billion. On the other hand, next quarter’s revenue guidance of $3.27 billion was less impressive, coming in 23.6% below analysts’ estimates. Its non-GAAP profit of $0.14 per share was 46.8% above analysts’ consensus estimates.

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Estée Lauder (EL) Q3 CY2024 Highlights:

• Revenue: $3.36 billion vs analyst estimates of $3.37 billion (in line)

• Adjusted EPS: $0.14 vs analyst estimates of $0.10 (46.8% beat)

• Revenue Guidance for Q4 CY2024 is $3.27 billion at the midpoint, below analyst estimates of $4.28 billion

• Adjusted EPS guidance for Q4 CY2024 is $0.28 at the midpoint, below analyst estimates of $1.06

• Gross Margin (GAAP): 72.4%, up from 69.6% in the same quarter last year

• Operating Margin: -3.6%, down from 2.8% in the same quarter last year

• Free Cash Flow was -$811 million compared to -$703 million in the same quarter last year

• Organic Revenue fell 5% year on year (-11% in the same quarter last year)

• Market Capitalization: $31.26 billion

Fabrizio Freda, President and Chief Executive Officer said, “Our first quarter results are largely aligned with our outlook on an adjusted basis, despite the fact that the expected headwinds in China and Asia travel retail were greater than anticipated. Our Profit Recovery and Growth Plan drove gross margin expansion, which was partially offset by operating deleverage. Other pillars of our strategic reset also delivered promising initial results.

Company Overview

Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE:EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.

Personal Care

While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.

Sales Growth

A company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones grow for years.