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The Estee Lauder Companies Inc. EL is likely to register a decline in both top and bottom lines when it reports third-quarter fiscal 2025 earnings on May 1. The Zacks Consensus Estimate for net sales is pegged at $3.5 billion, implying a decrease of 10.9% from the prior-year quarter's level.
The consensus mark for fiscal third-quarter earnings has decreased a penny in the past 30 days to 30 cents per share, indicating a decline of 69.1% from the figure reported in the year-ago quarter. EL delivered a trailing four-quarter earnings surprise of 101.9%, on average. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
The Estee Lauder Companies Inc. price-consensus-eps-surprise-chart | The Estee Lauder Companies Inc. Quote
Things to Know About EL’s Upcoming Results
The Estee Lauder Companies has been battling a challenging environment marked by weaknesses across China and travel retail. A decline in consumer sentiment in China has been contributing to a slowdown in the prestige beauty sector and lower conversion rates across these markets.
Due to challenges across its Asia travel retail business, weak consumer sentiment in China and Korea, and ongoing global geopolitical uncertainty, the company expects continued volatility and limited visibility in the near term. For the fiscal third quarter, The Estee Lauder Companies anticipates an organic net sales decline of 8-10% compared with the previous quarter’s level, along with adjusted earnings per share (EPS) decline of 69-79%, ranging from 20 cents to 30 cents. Our model expects a 9.1% organic net sales decline in the to-be-reported quarter.
The Estee Lauder Companies has also been grappling with rising operating expenses. In the fiscal second quarter, operating expenses rose 500 basis points (bps) as a percentage of sales. This increase includes a rise in advertising, promotion and innovation expenses, reflecting investments aimed at boosting performance during holidays and key shopping events, as well as driving consumer engagement for new product launches. The persistence of any of these factors is a concern.
Despite these challenges, The Estee Lauder Companies has been benefiting from its Profit Recovery and Growth Plan, which focuses on three main areas: accelerating margin expansion, fueling growth through targeted investments and simplifying processes to enhance agility. The company’s expanded presence in high-growth digital channels is also a positive factor. In addition, EL is well-positioned in emerging markets, where demand is steadily increasing. The continuation of these factors is likely to have offered some respite in its fiscal third-quarter performance.