EL Estee Lauder Companies Inc

By Kimberly Chin 

Estée Lauder Cos. projected strong growth in 2020 after the company reported sales increases in Asia and higher demand for its premium skin care brands, sending shares of the company to an all-time high.

The New York-based cosmetics company said it expects sales to rise between 7% and 8% in fiscal 2020, hitting the top end of its projected long-term sales growth of 6% to 8%.

The projections came after the company reported robust demand across all of its emerging markets, led by China. In fiscal 2019, sales from the Asia-Pacific region rose 23% and sales from Europe and the Middle East increased 20% from a year earlier.

Shares rose 12% to $201.02 on Monday. The stock has climbed more than 50% year to date.

Executives said they are confident that a growing middle class, especially in emerging markets, as well as hyperlocal marketing initiatives will drive sales higher next year. "We are benefiting more from the momentum of those markets, and we are less exposed to some of the slower growth channels in particular than we have been historically, " said Chief Financial Officer Tracey Travis in a call with analysts.

About half of Estée Lauder's sales come from North America, which had negative sales growth in 2019, compared with other regions which experienced percentage growth in the double digits. The company said that broader retail trends in the U.S., such as increased competition, slowing beauty sales overall and less foot traffic at stores, have damped growth.

Ms. Travis also said the closure of stores in 2019 from department-store operator Bon-Ton Stores Inc. has added to challenges in its U.S. business, knocking off at least one percentage point of growth in North America.

Chief Executive Fabrizio Freda told analysts he expects the U.S. business to stabilize next year and eventually return to growth in the long term, particularly through Estée Lauder's marketing efforts and new product launches.

Overall net sales climbed 8.6% for the year, compared with fiscal 2018.

Fourth-quarter sales were up 8.9% to $3.59 billion. Excluding currency fluctuations and restructuring-related charges, sales rose 12%. Analysts polled by FactSet estimated quarterly sales of $3.53 billion.

Profit in the three-month period ended June 30 fell to $157 million, or 43 cents a share, largely due to higher expenses and restructuring costs. Excluding certain items, Estée Lauder made 64 cents a share, topping analysts' estimates of 53 cents a share.

The company said it spent more on marketing in the quarter, which helped drive some of its sales growth but also pushed expenses up 5.9%.

Estée Lauder said its multiyear restructuring initiative, which began in May 2016 to help the company cut costs, streamline operations and exit underperforming businesses, will likely be completed in fiscal 2021.

The company now expects the effort to cost between $950 million and $990 million before taxes, but yield cost savings between $425 million and $475 million before taxes. This compares with its previous guidance of $900 million and $950 million in costs and between $350 million and $450 million in savings.

Next year, the company projects per-share earnings to come between $5.62 and $5.74. Excluding restructuring charges and other items, the company expects earnings between $5.90 and $5.98 a share for the year.

In the current quarter, the company expects sales growth of 9% to 10%, and earnings of $1.48 and $1.52 a share. Excluding special items, Estée Lauder forecasts earnings of $1.56 to $1.59 a share.

Write to Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

August 19, 2019 14:53 ET (18:53 GMT)

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