An Estee Lauder cosmetics counter is seen in Los Angeles on Aug. 19, 2019.LUCY NICHOLSON/Reuters
Estee Lauder Cos Inc forecast current-quarter profit below analysts’ estimates on Thursday after posting a bigger-than-expected quarterly loss, as travel restrictions and store closures put in place to contain the spread of coronavirus dampened demand for its premium makeup brands.
The company and other cosmetic brands have been struggling in recent months with consumers adapting to the new work-from-home lifestyle and ordering more skincare products than makeup.
This led to Estee Lauder posting a 32 per cent decline in sales in the fourth quarter, pushing its shares down about 6 per cent in premarket trading.
The COVID-19 crisis has also made the M.A.C. brand owner reassess its business as consumers increasingly shop for beauty products online.
Estee Lauder said on Thursday it would cut about 1,500 to 2,000 jobs or about 3 per cent of its workforce globally and also expects to close about 10 per cent-15 per cent of its freestanding stores.
Sales of makeup brands such as M.A.C. and Too Faced have taken a hit on falling demand for the New York-based company’s foundations and lip products. Overall annual sales for its makeup brands fell 18 per cent as the COVID-19 pandemic offset the 5 per cent growth seen in the first half of the year.
Estee Lauder forecast first-quarter adjusted profit per share to be between 80 cents and 85 cents, below estimates of $1.22, according to IBES data from Refinitiv.
The company also expects sales to decline between 12 per cent and 13 per cent, compared to expectations of an 11.42 per cent drop.
Net sales fell 32 per cent to $2.43 billion in the fourth quarter ended June 30, missing estimates of $2.45 billion. Excluding items, the company reported a loss of 53 cents per share, much bigger than Wall Street estimates of a 19-cent loss.
Still, the company reinstated its quarterly dividend payment after suspending it in April.
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