Cosmetics maker Estee Lauder Cos. reported a smaller-than-expected rise in quarterly sales, hurt by a slowdown in sales in the Americas as fewer customers visited department stores and tourist spending declined.
Shares of the company were down about 4 percent at $91.34 before the bell on Friday. Up to Thursday’s close, the stock had risen 13.5 percent in the past year.
Sales in the Americas, its biggest market, rose 1.4 pct to $1.1 billion on a reported basis, its slowest growth in four quarters.
Lower retail traffic mainly affected the company’s “heritage” brands Estee Lauder and Clinique, and a few M.A.C freestanding stores.
Demand for its skin care products continued to weaken, as the company cited overall global slowdown in the category. Sales from its namesake brand and Clinique were also hurt by lower sales in some Asia-Pacific countries, mainly Hong Kong.
“Social and political issues, currency volatility and economic challenges are affecting consumer behavior in certain countries, such as Hong Kong, France and some emerging markets,” the company said.
Rival L’Oreal SA earlier reported second-quarter sales growth marginally below forecast as the company said Western Europe was being held back due to a “very difficult market in France.”
Net income attributable to the company fell to $93.5 million, or 25 cents per share, in the quarter, from $153 million, or 40 cents per share, a year earlier.
Net income was hurt by restructuring and other charges. Excluding items, the company earned 43 cents per share. Net sales rose to $2.65 billion from $2.52 billion. Analysts on average had expected a profit of 40 cents per share and revenue of $2.66 billion.
New York City-based Estee Lauder said its expects fiscal 2017 adjusted profit to be between $3.38-$3.44 per share, missing analysts’ estimates of $3.53.
The company also said it expects to incur restructuring charges of about $80 million-$100 million in fiscal 2017, related to its Leading Beauty Forward strategy.
As part of its Leading Beauty Forward strategy, the company had earlier approved restructuring initiatives to exit businesses in certain markets and channels of distribution while also reducing its workforce globally.