Net Sales in Line With Expectations for Estée Lauder

The Estée Lauder Companies Inc. (NYSE:EL)  reported financial results for its fourth quarter and fiscal year ended June 30, 2015. For the three months ended June 30, 2015, the Company reported net sales of $2.52 billion, compared with $2.73 billion in the prior-year period. The fiscal 2014 fourth quarter included the effect of the accelerated retailer orders, described below, which created an unfavorable comparison with the fiscal 2015 fourth-quarter results. Adjusting for the impact of the accelerated orders, net sales in constant currency for the three months ended June 30, 2015 would have increased 7%, in line with the Company’s expectations, and grew in each of the Company’s geographic regions and product categories, except skin care.

The Company’s fourth quarter sales benefited from innovative new products and growth in emerging and developed markets. The Company generated strong gains in the U.S., after adjusting for the accelerated orders, and constant currency double-digit gains in the U.K. Double-digit constant currency increases were generated in many European emerging markets, as well as in Asia/Pacific. The Company reported net earnings of $153.0 million, compared with $257.7 million last year. Diluted net earnings per common share were $.40, compared with $.66 reported in the same prior-year period. Adjusting for the impact of the accelerated orders, diluted net earnings per common share in constant currency for the three months ended June 30, 2015 would have increased 4%.

For the year, the Company achieved net sales of $10.78 billion, a 2% decrease compared with $10.97 billion in the prior year. Net earnings for the year were $1.09 billion, compared with $1.20 billion last year, and diluted net earnings per common share were$2.82, compared with $3.06 reported in the prior year. For the year, the negative impact of foreign currency translation on diluted net earnings per common share was $.24. Excluding the impact of foreign currency translation, net sales increased 3% and diluted net earnings per common share were flat. Adjusting for the impact of the accelerated orders and the charges noted below, net sales and diluted earnings per common share in constant currency for the fiscal year ended June 30, 2015 would have increased 6% and 12%, respectively. Information about GAAP and non-GAAP financial measures, including reconciliation information, is included in this release.

Fabrizio Freda, President and Chief Executive Officer, said, “Today, our Company is more balanced, resilient, and agile and has demonstrated its ability to produce consistent and sustainable results. Together with our powerful brand portfolio and financial discipline we finished our fiscal year with a strong fourth quarter, generating 7% constant currency sales growth, after adjusting for the accelerated sales orders we reported in fiscal 2014. One of the great strengths of our Company is our ability to successfully execute our well-defined strategy. This was clearly evident in fiscal 2015 as we once again delivered strong results despite considerable macroeconomic headwinds and challenges. For the full year, our adjusted 6% local currency sales growth met our expectations, and we exceeded our earnings per share forecast. These results speak to the strength of our underlying business across brands, product categories, geographies and channels.»

During fiscal 2015 and 2014, the Company recorded remeasurement charges of $5.3 million and $38.3 million, equal to approximately $.01 and $.10 per diluted share, respectively, both before and after tax, related to changes in Venezuelan foreign currency exchange rate mechanisms. In the fiscal 2014 fourth quarter, some retailers accelerated sales orders of approximately$178 million in advance of the Company’s July 2014 implementation of its Strategic Modernization Initiative (SMI) in certain of its largest remaining locations. Those orders would have occurred in the Company’s fiscal 2015 first quarter. This amounted to approximately $127 million in operating income, equal to approximately $.21 per diluted common share. Fiscal 2014 also included adjustments associated with restructuring activities.