EL Estee Lauder Companies Inc

By Sharon Terlep 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 21, 2018).

Sales at Estée Lauder Cos. jumped in the latest quarter due to growing demand for high-end skin-care products and increased business at travel outlets in airports, providing a rare spot of robust growth in the stagnating consumer-products industry.

The New York-based cosmetics company reported a 12% sales increase on a constant-currency basis.

Chief Executive Fabrizio Freda said he is confident the company will maintain sold growth despite looming troubles at department stores throughout Europe. Estée Lauder has been hit hard by the decline of U.S. department stores, which have historically accounted for the bulk of sales.

"Even if there was the same worrying trend in bricks-and-mortar [in Europe] that we're seeing in the U.S., it would not have anywhere near the similar impact," as in the U.S. he said.

The company is less dependent on department-store sales in both Eastern and Western Europe than it is in the U.S., and there is more room in the region to expand online sales, he said.

House of Fraser, an iconic British department store chain sold to Sports Direct International PLC earlier this month after entering a U.K. equivalent of bankruptcy protection, accounts for roughly 10% of Estée Lauder's sales in the U.K., the company said.

Mr. Freda said he believes the retailer will avoid an all-out liquidation like the process under way now at Bon Ton Stores Inc. in the U.S.

"Some doors will close but not the whole business," he said.

In results for the fiscal fourth quarter ended June 30, the company said profit fell 19% and net income fell to $186 million, or 49 cents a share, from $229 million, or 61 cents a share, in the prior-year period.

Excluding certain items, Estée Lauder reported an adjusted profit of 61 cents a share compared with 51 cents a year ago. Sales rose 14% to $3.3 billion for the quarter.

For the current quarter, Estée Lauder expects sales to rise between 5% and 6% compared with the same period a year ago, with adjusted earnings of $1.18 to $1.22 a share.

Full-year earnings for 2019 are seen at $4.38 to $4.51 a share with adjusted earnings of $4.62 to $4.71 a share. Sales are expected increase 4% to 5%.

Shares of Estée Lauder rose 2.9% to $139.87 in early afternoon trading Monday in New York.

--Kimberly Chin contributed to this article.

Write to Sharon Terlep at sharon.terlep@wsj.com

(END) Dow Jones Newswires

August 21, 2018 02:47 ET (06:47 GMT)

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