Net Sales For Quarter Up 13% on Constant Currency Basis;
Earnings Per Share For Quarter Increases 17%
NEW YORK, Oct. 27 /PRNewswire/ -- The Estee Lauder Companies Inc.
(NYSE: EL) today reported net sales for the first quarter ended September 30,
1998 of $997.0 million, an 11% increase from $900.6 million in the prior year.
Excluding the impact of foreign currency translation, net sales increased 13%
during the quarter.
The Company reported net earnings of $71.6 million for the quarter, up
16% from $61.8 million in the same period last year. Both basic and diluted
earnings per common share for the quarter rose 17% to $.55 from $.47 in the
same period a year ago.
Leonard A. Lauder, Chairman and Chief Executive Officer, said, "We are
very pleased that we began our fiscal year with strong momentum that produced
outstanding results. Our solid sales growth this quarter underscores the
success and continuing demand for our products across all brands."
Mr. Lauder added, "Although many global economies are unstable, our broad
geographic base and diverse brand portfolio gives us balance to weather these
environments and generate consistent sales and earnings growth. Our goal is
to continue this momentum during fiscal 1999 and beyond."
In the Americas region, the Company reported a 17% increase in net sales,
to $656.3 million, versus the prior year quarter. Higher sales were achieved
from the strength of new products across all categories, excellent growth from
existing products from our core brands and the inclusion of sales from jane
and Aveda, both of which were acquired in the second quarter of fiscal 1998.
Operating income in the region increased as a result of the higher sales and
the positive impact of operational efficiencies.
In Europe, the Middle East & Africa, net sales increased 8% over the prior
year quarter, excluding the impact of foreign currency rate changes. Most
markets turned in solid performances, led by the United Kingdom, Spain, Italy
and France. These sales increases were partially offset by lower sales in the
distributor and travel retail businesses. Reflecting the impact of a weaker
U.S. dollar against most European currencies, the Company posted a 9% increase
in reported net sales over the prior year to $244.9 million. First quarter
operating profitability increased compared to the prior year quarter,
principally due to improved results in Spain, Italy and the United Kingdom.
On a local currency basis, Asia/Pacific net sales increased 1% versus the
prior year quarter. Double-digit sales increases in Thailand and Malaysia and
strong sales growth in Japan were partially offset by lower sales primarily in
Hong Kong and Taiwan. Reported net sales in the region decreased 16% over the
prior year to $95.8 million as the continued strength of the U.S. dollar
versus Asian currencies tempered reported sales. Operating profit increased
primarily due to higher operating income in Japan, reflecting planned
efficiencies in operating expenses.
From a product category standpoint, makeup product sales grew 16% before
foreign currency translation. Reported makeup sales increased 14% during the
quarter to $371.2 million, as a result of new product introductions such as
Clinique's Quickliner For Eyes and Prescriptives' Photochrome, and the ongoing
strength of existing products like Clinique's Superlast Cream Lipstick, and
Estee Lauder's Two-In-One Eyeshadow and Minute Makeup. Sales increases of new
and existing products from other brands also fueled makeup growth. Fragrance
sales were up 10% excluding the impact of foreign currency translation.
Reported fragrance sales grew 9% over the prior year quarter to
$295.8 million, driven by the current quarter launch of Estee Lauder's
Dazzling Gold and Dazzling Silver, the European introduction of Kiton Napoli,
continued strong sales of Clinique Happy and the ongoing successful rollout of
Hilfiger Athletics and "tommy girl." Net sales of skin care products for the
current quarter increased 5% excluding the impact of foreign currency
translation. Skin care sales benefited from the continued success of Estee
Lauder's Diminish and Clinique's All About Eyes. Reported skin care product
sales increased 2% to $304.9 million, reflecting the adverse impact of
currency translation given the relative concentration of skin care sales in
Asia. Sales of hair care products increased to $25.1 million, reflecting the
inclusion of the Aveda hair care product line.
The Estee Lauder Companies Inc. is one of the world's leading
manufacturers and marketers of quality skin care, makeup, fragrance and hair
care products. The Company's products are sold in over 100 countries and
territories under well-recognized brand names, including Estee Lauder,
Clinique, Aramis, Prescriptives, Origins, M-A-C, Bobbi Brown essentials, Tommy
Hilfiger, jane, Donna Karan and Aveda.
The forward-looking statements in this press release, such as those in
quotations, involve risks and uncertainties. Factors that could cause actual
results to differ from those statements are contained in the Company's filings
with the SEC, including those detailed in the "forward-looking statements"
section of the Company's report on Form 10-K for the year ended June 30, 1998.
THE ESTEE LAUDER COMPANIES INC.
SUMMARY OF CONSOLIDATED RESULTS
(In millions, except per share data)
Three Months Ended
September 30
1998 1997
Net Sales $997.0 $900.6
Cost of sales 229.6 204.4
Gross Profit 767.4 696.2
Selling, general and administrative expenses:
Selling, general and administrative 638.2 582.2
Related party royalties 7.6 8.0
645.8 590.2
Operating Income 121.6 106.0
Interest (expense) income, net (6.1) 1.0
Earnings before Income Taxes and Minority Interest 115.5 107.0
Provision for income taxes 43.9 42.8
Minority interest -- (2.4)
Net Earnings 71.6 61.8
Preferred stock dividends 5.9 5.9
Net Earnings Attributable to Common Stock $65.7 $55.9
Net earnings per common share (a):
Basic $.55 $.47
Diluted .55 .47
Weighted average common shares outstanding (a):
Basic 118.5 118.4
Diluted 120.1 119.3
(a) In December 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share."
Consistent with the requirements of SFAS No. 128, net earnings per
common share and weighted average common shares outstanding for the
three months ended September 30, 1997, have been restated for
purposes of comparability.
SOURCE The Estee Lauder Companies Inc.
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