Estee Lauder loses 5% after mixed Q2 results 📉

Cosmetics, perfume and fashion holding company Estee Lauder (EL.US) today presented its Q2 results. The report turned out better than analysts had expected. Forecasts called for a 2.5% year-on-year decline in revenues - these showed a slight year-on-year increase, and instead of a loss per share, the company generated a small profit. Sales, however, posted a decline, and the company pointed to a general downturn in the luxury industry.

• Sales: $15.91 billion vs. $17.71 billion in Q2 2022 (10% year-on-year decline).
• Net sales: $3.63 billion vs. $3.48 billion forecasts 
• Earnings per share: $0.07 vs. $0.04 forecast loss
• Net income: $1.01 billion vs. $2.39 billion in Q2 2023
• Dividen payout of $0.66 per share

In a commentary on the results, the company highlighted stronger demand for products in Asia at the expense of a weakening consumer in the US market. The opening of China, although not going Beijing's way, still reflects higher y/y consumer demand and overseas travel - a sizable portion of Estee Lauder's sales come from airport duty-free zones. However, this demand is not as high as the company had hoped with the result that it lowered its full-year profit forecast - the stock lost nearly 2%

The company pointed to strong demand from emerging market countries, which was unable to offset weaker consumer demand from North America and China. The perfume segment performed particularly strongly, with double-digit sales growth in each of its regions of operation, and demand for makeup-related products also looked good. The company's 'flagship' skin care products sector fared much weaker against the two aforementioned segments. 

The RSI indicator for (EL.US) on the weekly (W1) interval is approaching extreme oversold levels, which have occurred only a few times over the past 8 years. The price is falling to near the levels of the 2020 downturn. The company's shares are losing 5% before the US market opens. Source: xStation5