What to look for when Estée Lauder reports Q4 earnings

The Estée Lauder Companies Inc. (NYSE: EL) is set to release its earnings results for the fourth quarter on Monday before the market opens. The bottom line will be hurt by the costs associated with its investment in new technologies and geographic markets for achieving its long-term strategy.

The results will be impacted by the failure to realize benefits, which may be due to its inability to execute plans, economic conditions, competition, changes in the beauty industry, and other risks. The company continues to see strong consumer demand for its high-quality products.

The company is cautious of the continued decline in retail traffic primarily related to certain brick-and-mortar stores in the US and the UK. The company intends to invest further in the US in the fourth quarter to improve growth. The continuation of tariffs on China and the gradual moderation of net sales growth in China and Travel Retail from recent levels could hurt the results.

Analysts expect the company’s earnings to decrease by 13.10% to $0.53 per share while revenue will increase by 7% to $3.53 billion for the fourth quarter. In comparison, during the previous year quarter, Estée Lauder posted a profit of $0.61 per share on revenue of $3.29 billion. The company has surprised investors by beating analysts’ expectations in all of the past four quarters.

For the third quarter, Estée Lauder reported a 49% jump in earnings driven by strategic investments in its best opportunities combined with creativity and data-driven insights that fueled exciting innovations. Net sales increased by 11% year-over-year as sales growth was experienced in nearly all product categories and channels.

For fiscal 2019, the company expects net sales growth in the range 7% to 8% on a reported basis and in the 10% to 11% range excluding currency translation impact and no impact from the adoption of ASC 606. The earnings are anticipated to be in the range of $4.72 to $4.79 per share and adjusted earnings are predicted to be $5.15 to $5.19 per share range.

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