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Beauty products company Estée Lauder (NYSE:EL) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 5% year on year to $3.94 billion. It made a non-GAAP profit of $0.97 per share, improving from its profit of $0.47 per share in the same quarter last year.
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Estée Lauder (EL) Q1 CY2024 Highlights:
- Revenue: $3.94 billion vs analyst estimates of $3.91 billion (small beat)
- EPS (non-GAAP): $0.97 vs analyst estimates of $0.50 (95.7% beat)
- EPS (non-GAAP) Guidance for Q2 CY2024 is $0.24 at the midpoint, well below analyst estimates of $0.75 (revenue guidance for the period also missed)
- EPS (non-GAAP) Guidance for full 2024 is $2.19 at the midpoint, below analyst estimates of $2.25
- Gross Margin (GAAP): 71.9%, up from 69.1% in the same quarter last year
- Free Cash Flow of $359 million, down 67.7% from the previous quarter
- Organic Revenue was up 5.9% year on year
- Market Capitalization: $52.59 billion
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 CareWhile 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 GrowthEstée Lauder is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 1.4% over the last three years was weak for a consumer staples business.
This quarter, Estée Lauder grew its revenue by 5% year on year, and its $3.94 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 9.6% over the next 12 months, an acceleration from this quarter.
Organic Revenue GrowthWhen analyzing revenue growth, we care most about organic revenue growth. This metric captures a business's performance excluding the impacts of foreign currency fluctuations and one-time events such as mergers, acquisitions, and divestitures.
Estée Lauder's demand has been falling over the last eight quarters, and on average, its organic sales have declined by 3.1% year on year.
In the latest quarter, Estée Lauder's organic sales rose 5.9% year on year. This growth was a well-appreciated turnaround from the 8% year-on-year decline it posted 12 months ago, showing the business is regaining momentum.
Key Takeaways from Estée Lauder's Q1 Results We liked how Estée Lauder beat analysts' EPS expectations this quarter. We were also excited its operating margin outperformed Wall Street's estimates. On the other hand, its revenue and earnings forecast for next quarter missed analysts' expectations. Full-year earnings guidance also missed Wall Street's estimates. Overall, this quarter's results were fine, but guidance is dragging the stock down. Specifically, the stock is down 5.6% after reporting, trading at $138.5 per share.