-- Estee Lauder (EL) lifted its full-year earnings outlook on Friday as the cosmetics company said it aimed to lay off more staff than previously planned as part of an ongoing restructuring program.
Adjusted earnings are anticipated to come in between $2.35 and $2.45 per share for fiscal 2026, up from the company's prior guidance of $2.05 to $2.25. The current consensus on FactSet is for non-GAAP EPS of $2.23.
The owner of beauty brands such as MAC expects sales to grow by 4%, compared with its previous outlook that called for an increase of 3% to 5%. Organic sales are pegged to rise by 3%, the high end of its previously issued forecast.
Strong year-to-date results and "disciplined cost management" gives the company confidence in raising its fiscal 2026 outlook, Chief Financial Officer Akhil Shrivastava said during an earnings call, according to a FactSet transcript.
The stock was up 6.3% in Friday trade, reducing its year-to-date loss to 22%.
Estee Lauder, which is in talks to merge with Spanish beauty company Puig, said it now aims to eliminate 9,000 to 10,000 positions, up from its previous target of eliminating 5,800 to 7,000 roles. More than 70% of the increase is attributable to reduced department store staff roles as Estee Lauder taps into digital channels, Chief Executive Stephane de La Faverie told analysts.
The company expanded the scope of its restructuring program in April to include additional initiatives, de La Faverie said.
Estee Lauder expects pretax restructuring charges of between $1.5 billion and $1.7 billion, compared with $1.2 billion to $1.6 billion previously projected. The restructuring program is now projected to generate annual gross benefits of $1 billion to $1.2 billion.
For the fiscal third quarter that ended in March, Estee Lauder's adjusted EPS jumped to $0.91 from last year's $0.65, which was the average analyst estimate on FactSet for the 2026 quarter. Sales improved 5% to $3.71 billion, ahead of the Street's view for $3.69 billion.
Revenue in the skin care business rose 3% to $1.86 billion, while makeup increased 4% to $1.07 billion. Fragrance sales climbed 13%.
The company said that business disruptions in the Middle East stemming from the US-Israel war with Iran are projected to have a greater impact on its fourth-quarter results versus the prior three-month period, which benefited from shipments made before the conflict began.
Estee Lauder estimates EPS to take a $0.06 hit in the current quarter and sales to be dragged down by 2%.
Energy prices have soared as the Iran war curtailed shipments through the crucial Strait of Hormuz. The war paused following a recent ceasefire between Washington and Tehran, but a framework for a permanent truce is yet to be reached.
The company's preliminary view is that fiscal 2027 sales would rise by 3% to 5%.
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