Estee Lauder 1st-quarter profit more than doubles on strong skin care sales

Estee Lauder 1Q profit more than doubles

NEW YORK — A strong relaunch of a skin-care line and better-than-expected sales at airport stores helped Estee Lauder Cos. more than double its fiscal first-quarter profit, the company said Friday, but it remained cautious on the upcoming holiday season.

Investors were less cautious, sending shares up 8 percent by midday Friday and at one point touching a 52-week high.

Overall sales were relatively flat excluding the stronger dollar. They grew in Asia, were flat in Europe and slightly down in the U.S. But the company cut costs during the quarter, the first quarter of a four-year plan to improve operating margins. The better-than-expected sales combined with lower expenses helped the company significantly beat its own expectations.

Estee Lauder, whose brands include namesake Estee Lauder and Clinique, also raised its full-year forecast.

The new Estee Lauder Advanced Night Repair anti-aging skin care line launched in 140 countries in July, and was particularly popular in China, Fredo said. An ounce of the line’s synchronized recovery complex serum costs $47.50

“The product has a high gross margin and helped drive the brand gains in global skincare sales and operating income,” said CEO Fabrizio Freda said in a statement.

In addition, the company said sales at the company’s airport stores — which account for about 20 percent of the company’s profit — were better than expected.

Profit rose to $140.7 million, or 71 cents per share, in the July-to-September quarter. That’s up from $51.1 million, or 26 cents per share, a year ago.

Excluding restructuring charges, it says profit was 85 cents per share — well ahead of analysts’ expectations for earnings of 34 cents a share.

Estee Lauder says revenue slipped 4 percent to $1.83 billion. Analysts polled by Thomson Reuters, on average, predicted revenue of $1.82 billion.

“Restructuring savings and accelerated cost-cutting is dramatically altering margin structure as macro environment begins to modestly improve,” Deutsche Bank analyst Bill Schmitz Jr. wrote in a note to investors.

The company expects profit between 80 cents to 87 cents in the second quarter, while analysts expect 85 cents per share.

The company raised its full-year outlook to $1.95 to $2.10 per share, from a previous outlook of $1.55 to $1.70 per share. Analysts predict a profit of $1.79 per share.

Still, Estee Lauder, based in New York, remained cautious about consumer spending and the upcoming holiday season. Freda said some of its important retailers remain under pressure, an H1N1 virus outbreak could dramatically affect its travel retail business and competitors are expected to be aggressive.

In the U.S., “this holiday season consumers will be risk adverse and value conscious,” Freda said in a telephone interview with The Associated Press. They’re likely to focus on classic brands they already know “rather than taking the risk of trying lower quality or unknown products,” he said.

In response, the company is focusing its marketing on classic brands, such as Donna Karan’s Cashmere Mist fragrance, which has been around since 1994. It is also offering some fragrances for $29.50, $10 less than the previous entry-level price, producing fewer gift sets for the holidays and offering gift sets in a wider range of prices.

Shares rose $2.33, or 5.7 percent, to $43.47 during afternoon trading after earlier reaching a 52-week high of $45.44. The stock had traded between $19.81 and $43.20 during the past year.