By  on January 28, 2005

NEW YORK — Momentum is on the side of the Estée Lauder Cos., a trend chief executive officer William Lauder doesn’t see changing any time soon.

A mediocre holiday selling season and continued difficulty in the fragrance market did little to hinder second-quarter results for the New York-based beauty giant, with earnings rising 44.5 percent for the company’s fourth consecutive quarter of double-digit earnings gains.

“We want to be reasonable and rational [when] looking at the general direction of our business as a whole,” Lauder told WWD. “We believe our general expectations are achievable, but by no means are they conservative.”WWD. “We believe our general expectations are achievable, but by no means are they conservative.”

For the three months ended Dec. 31, earnings surged 44.5 percent to $138.3 million, or 60 cents a diluted share, comfortably beating analysts’ consensus estimate of 57 cents. Comparatively, the company reported earnings of $95.7 million, or 41 cents, in the same period a year ago.

Sales for the quarter rose 8 percent to $1.75 billion from $1.62 billion. Excluding the benefits of currency exchange, sales rose 5 percent.

While the holiday windfall retailers hoped for failed to materialize, the company’s commitment to the prestige department stores, a strategy that Lauder has repeatedly been forced to defend, continued to pay dividends.

“[This holiday season] was typical of what keeps going on, the consumer keeps coming later and later,” said Lauder. “It becomes a game of chicken between the consumer and retailer. We expected the consumer to come out earlier than she did.”

Skin care products edged out makeup as the company’s top-selling product category, rising 4 percent in local currencies to $617.4 million for the quarter. As an explanation for skin care’s overtaking of makeup, Lauder noted that skin care products sell at higher price points. “Skin care commands a great deal of loyalty,” he added.

According to the company, higher skin care revenues were driven by the launches of Future Perfect Anti-Wrinkle Radiance Creme and Nutritious Vita-Mineral Energy Lotion. Makeup sales weren’t far behind, rising 10 percent in local currencies to $592.4 million. Leading the charge were makeup-artist brands such as MAC, Bobbi Brown and Stila.

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