NEW YORK The Estee Lauder Companies has lowered its second quarter expectations and full year outlook in light of the economy crisis and a disappointing holiday shopping season.
"The unprecedented global economic crisis produced one of the worst holiday seasons in decades, with many U.S. retailers experiencing double-digit sales declines in nearly all categories," stated William P. Lauder, CEO. "Our business was no exception to the downturn inconsumer spending and our second quarter results will come in lower than expected. Nevertheless, we believe we are growing global market share, even in the exceptionally challenging United States, with some of our brands generating share improvements during the quarter. We believe the current economic conditions, coupled with significant retailer destocking, will continue to negatively affect our sales for the balance of our fiscal year."
The company now expects net sales for the second quarter to decrease about 6% on a constant currency basis versus last fiscal year's second quarter. Previous expectations were of sales growth between 2% and 3%. In addition, the adverse effect of exchange rates is forecasted to lower reported sales for the second quarter by about 6.5%. Given the revised sales expectations, the company anticipates that diluted net earnings per share for the quarter will range between 75 cents and 82 cents.
Net sales for the fiscal 2009 full year are expected to be flat to down 3% on a constant currency basis. This compares with its previousguidance of 3% to 5% sales growth. Foreign currency translation is expected to negatively impact net sales by 5% to 7% versus the prior year. As a result, the company expects diluted net earnings per share for fiscal 2009 to be between $1.30 and $1.60. Theseexpectations exclude potential restructuring charges that the company may record by the end of the fiscal year.