It was a Pyrrhic victory for Estee Lauder
The good news was that the company did report that its EPS from continuing operations increased to $0.45 compared with $0.23 in the year-ago quarter. Net sales also increased 7%, excluding the impact of foreign currency translation. The sales growth in particular was promising, as Estee Lauder experienced net sales growth in each of its product categories as well as in each of its geographic regions. An 18.1% increase in Q4 sales for the fragrance business and a 10.1% increase in sales from the Europe/Africa region were notable.
The problems for Estee Lauder shareholders: The company would have reported EPS from continuing operations that were lower than the prior-year quarter if it weren't for a $0.28 per-share charge Estee Lauder recorded in its 2006 Q4 for non-recurring charges. Management also offered a forecast for its Q1 and FY 2008 that was significantly below what analysts had been expecting.
Overall, it has been tough sledding in 2007 for several beauty/cosmetic stocks. Revlon
The sales growth from Estee Lauder is intriguing. However, it might take some time for the company to convince investors and Wall Street that this stock is as aesthetically pleasing as its products.
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