mercoledì 7 febbraio 2018

Fabrizio Freda, the jewel behind Estée Lauder's results

Estée Lauder Companies, led by the Italian ceo Fabrizio Freda, have just reported financial results for its second quarter ended December 31, 2017. The company achieved net sales of $3.74 billion, an increase of 17%, compared with $3.21 billion in the prior-year quarter.

Incremental sales from the Company’s acquisitions of Too Faced and BECCA contributed approximately 2 percentage points of the reported sales growth. Net earnings were $123 million, and include provisional one-time charges of $394 million related to the U.S. Tax Cuts and Jobs Act (TCJA) that was signed into law in December 2017.

On a diluted earnings per share basis, including the one-time charges and restructuring and other charges, the company earned $.33. In the prior-year second quarter, the company reported net earnings of $428 million and diluted earnings per share of $1.15.

Estee Lauder Companies had its target price raised by equities researchers at Morgan Stanley from $139.00 to $147.00 (the company closed at $135 on February 7). The brokerage currently has an “overweight” rating on the stock.  A number of other research firms also recently issued reports on EL. Wells Fargo & Co restated a “buy” rating and issued a $150.00 price target on shares of Estee Lauder Companies in a research note on Wednesday, January 31st. BMO Capital Markets raised their price target on Estée Lauder Companies to $140.00 and gave the stock a “market perform” rating in a research note on Wednesday, January 31st. Piper Jaffray Companies set a $144.00 price target on Estee Lauder Companies and gave the stock a “buy” rating in a research note on Monday, January 22nd.

Fabrizio Freda, President and Chief Executive Officer, said, "In constant currency, our sales grew 14%, led by exceptional strength in travel retail, global online and Asia, along with strong double-digit growth in several markets in Europe, including Italy and Benelux. We delivered double-digit sales gains across most product categories and many brands, including Estée Lauder, luxury brands and most mid-sized brands. In the holiday season, our brands achieved outstanding results from their e-commerce businesses, and customizable gift options were significant contributors. These elements, along with our accelerating cost saving efforts and our progress executing our Leading Beauty Forward initiatives, resulted in an impressive adjusted 23% earnings per share growth in constant currency. Net sales increased sharply, with exceptional double-digit gains from Estée Lauder, La Mer, Origins and GLAMGLOW, and strong growth from Clinique".

Strong sales growth in makeup was primarily driven by incremental sales from the company’s fiscal 2017 second quarter acquisitions of Too Faced and BECCA, exceptionally strong double-digit increases from Tom Ford, and strong double-digit gains from Estée Lauder. Higher makeup sales were also generated from M•A•C.
Fragrance operating income increased sharply, reflecting higher sales from Jo Malone, Estée Lauder and Tom Ford, as well as disciplined expense management. Jo Malone delivered outstanding double-digit growth in travel retail and generated sales increases in every region, with double-digit growth in Europe and Asia/Pacific, reflecting strong growth from existing fragrances, targeted expanded consumer reach and the recent launch of the English Oak fragrances.
Le Labo, By Kilian and Editions de Parfums Frédéric Malle each benefitted from growth in existing products and new launches and targeted expanded consumer reach. Hair care sales rose reflecting gains from Aveda and Bumble and bumble. Aveda grew, driven by solid performance in the online channel, while growth from Bumble and bumble was driven by the launch of the brand in Ulta Beauty.
Fabrizio Freda, Ceo of Estee Lauder Companies Inc.


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