Estée Lauder Cuts Forecast Amidst Slowdown In China

Estée Lauder Cuts Forecast Amidst Slowdown In China

Estée Lauder Cuts Forecast Amidst Slowdown In China
Estée Lauder Cuts Forecast Amidst Slowdown In China
Retail Bum

Retail Bum

Retail Bum

Retail Bum

Estée Lauder has cut its annual sales and profit forecast as the company continues to struggle with sales in China.

The ongoing COVID-19 restrictions in the country have presented a more significant challenge than expected. For example, tourism in Hainan, a major shopping hub, has been curtailed, leading to strict inventory management among travel retailers. On top of that, strict lockdowns have also reduced foot traffic.

The company expects its 2023 sales to decline between 6% and 8%, down from its previous forecast of 3% to 5%. Meanwhile, it expects its full-year 2023 adjusted profit per share to decline by 19% to 21%, compared to its previous forecast of 5% to 7%.

That being said, the decline in the Chinese market was somewhat offset by other markets in the Asia-Pacific region and countries in the West, where organic net sales in both fragrance and haircare grew double digits.

The company generated nearly 31% of its sales in the Asia-Pacific region in fiscal 2022.

“Fragrance and Hair Care each rose double digits organically, and Makeup’s renaissance continued to realize its promise in markets reopening,” said Fabrizio Freda, president and chief executive officer. “Skin Care was the most challenged by COVID-19 restrictions in China, which significantly impacted the category in travel retail.”

“All told, 13 brands grew organically, as M·A·C excelled in Makeup, La Mer in luxury Skin Care, Jo Malone London in Fragrance, and Aveda in Hair Care. Encouragingly, we realized strong double-digit gains in many large developed and emerging markets around the world.”

Photo credit: Estée Lauder
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