Retailers, consumers and prices
Check out Estee Lauder’s much better-than-expected end to 2009.
The cosmetics maker said fiscal second-quarter results, due next week, will fly past its forecast and Wall Street’s predictions. Sound familiar? That’s because the company did the same thing back in October, before it released results for the first quarter of its fiscal year.
Analysts noticed the similarity. JP Morgan’s John Faucher entitled his research note “Deja Vu” and many said with the stock’s nice run already (up about 56 percent in 2009), big gains from here are likely limited.
In the latest quarter, U.S. holiday season sales came in better than anticipated. So did sales in Asia and at airports. Another big benefit came from spending cutbacks. Don’t expect such frugality during the second half of the fiscal year. Estee Lauder, led by CEO Fabrizio Freda (seen here), said it would step up investment behind its brands and key priorities “well above” first-half levels.
Does the company’s optimism mean that beauty is back for good? Or was it just a holiday gift? We’ll find out more when Estee Lauder and Elizabeth Arden issue their results on Jan. 28 and Avon follows in early February.
Apparently, travelers looking for some new cosmetics.
Sales at duty free stores — those airport emporiums for everything from perfume to cigarettes and extra-large Toblerone bars – boosted results at both Elizabeth Arden and Estee Lauder.
Elizabeth Arden posted stronger sales than anticipated and an unexpected quarterly profit on Thursday. A day later, Estee Lauder said that travel retail accounted for about 9 percent of sales in its latest quarter, up from the usual range of about 7 percent. Its higher profit came in well ahead of expectations.
There may be fewer passengers traveling these days, but those that are seem to be willing to buy. Still, the market is a volatile one, Estee Lauder CEO Fabrizio Freda told Reuters.
One of their top clients, department store operator Macy’s Inc, announced a sweeping measure to consolidate its divisions into a single unit and slash about 7,000 jobs in an effort to cut costs.
A mere three days later, Estee and Arden both posted sharp declines in quarterly profits, and also announced job cuts. While Estee, known for the Clinique and Bobbi Brown brands, said it would shed about 2,000 jobs, Arden did not specify a number.
Check out the not-so-chipper news in the retail world.
Restaurant chain Burger King reported lower profits and cut its full-year forecast due to the currency fluctuations, while cosmetics and perfume companies Estee Lauder and Elizabeth Arden rang up lower, albeit better-than-expected, profits and said they would cut jobs.
Indeed, retailers overall posted the second weakest monthly same-store sales performance since Thomson Reuters began tracking the data in 2000 as heavy job losses, weakness in the U.S. housing sector and the still-tight credit markets have many consumers closing their wallets.