By Sabela Ojea
Estee Lauder is scheduled to report earnings for its fiscal second quarter before the market opens on Monday. Here’s what you need to know:
–PROFIT: Estee Lauder is expected to post a profit of $182 million, or 51 cents a share, according to FactSet. This compares with a reported profit of $394 million, or $1.09 a share, for the same period a year earlier.
–ADJUSTED PROFIT: Stripping out one-time items, the cosmetics giant’s earnings are forecast to be 54 cents, according to FactSet.
–SALES: The company’s sales are expected to drop to $4.19 billion, according to FactSet. This compares with reported sales of $4.62 billion for the prior year.
The stock has jumped 20% in the past three months, but it has plunged over 50% over the past 12 months.
WHAT TO WATCH:
–Any potential progress made in China will be key to Estee Lauder’s prospects after years of substantial investments in the Asian giant. A slower-than-expected recovery in Asia’s travel retail channel has hurt the beauty company’s performance over the past few quarters, driving analysts’ estimates lower amid outlook cuts.
–Look for commentary around Estee Lauder’s performance in its homemarket, the U.S., as the company works on its distribution strategy to lower its dependency on department stores and fight against growing competition.
–Watch Estee Lauder’s outlook for the year ending in June, as it is expected to move its shares. The company most recently guided for a decline of 2% to an increase of 1% in full-year sales, with Wall Street forecasting a drop of about 1.8%. It also forecast organic sales to decrease between 10% to 8%.
–Estee Lauder is expected to provide details about its profit recovery plan. In November, CEO Fabrizio Freda said the plan isn’t expected to come with benefits until fiscal 2025, noting that the company expects to realize $800 million to $1 billion of incremental operating profit across fiscal 2025 and fiscal 2026 results.
Write to Sabela Ojea at sabela.ojea@wsj.com