Estee Lauder Sees Its Highest Record Fall After Cutting Guidance

Estee Lauder (EL:US) shares crashed on Wednesday - the highest fall on record - after the beauty business was forced to cut its full-year outlook as it experienced a sluggish recovery in Asia.

Estee was seen as one of the biggest beneficiaries of a rebound in Asia travel following the removal of COVID transactions. However, this boost so far failed to materialize.

As a result, the company is seeing a lower visibility and was forced to adjust its guidance. 

“Our developed and emerging markets grew strongly and exceeded our expectations to offset an even slower-than-expected recovery in Asia travel retail,” Fabrizio Freda, Estee Lauder’s President and Chief Executive Officer said.

For its fiscal third quarter, the company reported an adjusted EPS of $0.47 on revenue of $3.76 billion, which compares to the consensus for earnings of $0.51 on sales of $3.71 billion. While sales in the Americas rose by 3.4%, the EMEA (Europe, Middle East, Africa) region witnessed a 26% slump.

The revised FY 2023 forecast sees the adjusted EPS between $3.29 and $3.39; a material cut to the prior forecast of $4.87 - $5.02 per share. Net sales were predicted to fall 10% - 12% year-on-year.

“Outlook cut reflects significantly greater headwinds in fourth quarter than had expected in February,” Freda added.

The disappointing earnings report came after two Congress members reported the sale of EL shares in 2023. Representatives Daniel S. Goldman and Ro Khanna were both selling EL in January and March, while it was still trading in the mid $200s.

Estee Lauder stock closed at $202.70 on Wednesday.