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Beauty Beat: Lauder Warns of Lower First-Quarter Profits … Miller Harris Opens Boutique at Saks

Estee Lauder warned that first-quarter earnings for fiscal 2006 will be "significantly below the same prior-year period."

Lauder Warns of Lower First-Quarter Profits
NEW YORK — Anticipating softer sales in the Americas due to the expected negative impact of rising fuel costs on consumer spending, as well as other factors, the Estée Lauder Cos. Inc. warned that first-quarter earnings for fiscal 2006 will be “significantly below the same prior-year period.”

The company said sales in the quarter are forecast to “grow in the low single digits in constant currency.”

For the first half of the company’s fiscal year, sales and earnings have both been revised.

Despite this, the company said that full-year sales and earnings guidance remains unchanged. At constant currency, the company is forecasting net sales to show a year-over-year gain of between 5.5 and 6.5 percent, with diluted earnings per share coming in at between $1.95 and $2.

“This full-year earnings per share estimate includes a slightly more than [14 cent] per share impact from expensing stock-based compensation, as well as a two [cent] to three cent per share estimated impact of potential store closures and/or business disruptions related to the merger of Federated Department Stores Inc. and the May Department Stores Co.,” the Estée Lauder Cos. said in the statement, released late Monday afternoon.

Regarding first-quarter profits, the company said it has “recently been impacted by weakness at certain retailers,” as well as “the general consumer response to higher oil and gas prices, softness in the Southeast region due to the effects of Hurricane Katrina and lower-than-expected sales from promotional programs.”

As a result of these changes, first-half net sales for fiscal 2006 are now expected to grow between 5 and 6 percent (at constant currency), which compares with the company’s prior guidance of a sales gain between 7 and 8 percent. First-half earnings are now pegged to be in the range of 87 cents to 92 cents, which compares with prior guidance of $1.03.

“The company believes that, with the product launches and programs in place for the fiscal second half, it will be able to recoup the expected first-half sales and earnings shortfall,” the company said in the statement.
— Arthur Zaczkiewicz

Miller Harris Opens Boutique at Saks
NEW YORK — Saks Fifth Avenue has teamed with British fragrance brand Miller Harris to open a 215-square-foot mini boutique on the main cosmetics floor of the retailer’s Fifth Avenue flagship here.

The Miller Harris space, which was opened Thursday, consists of a crescent-shaped, dark-wood display case that sits behind a glass-topped, metal counter and chair. The concept, which showcases all 15 Miller Harris fragrances and the brand’s full complement of 46 stockkeeping units — including body care, soaps and candles — was inspired by the look of Miller Harris’ freestanding shop in London’s Mayfair district, noted Christophe Michel, the brand’s managing director.

The Saks space, which was developed over nine months, is the first of its kind for Miller Harris, whose distribution in the U.S. comprises about 20 doors, mainly specialty boutiques and apothecaries. Industry sources estimate Miller Harris’ concept at Saks could generate at least $500,000 in sales volume during its first year.

“The [Miller Harris] brand brings a new lifestyle presence to the store,” said Kate Oldham, Saks’ vice president and divisional merchandise manager of cosmetic accessories and fragrances. She noted Miller Harris founder Lyn Harris’ experience as a nose and her role in creating Miller Harris scents is a point of differentiation for the brand.

“This is a great opportunity for us in terms of exposure,” said Michel. “It embodies the brand so much more than a single fragrance [would].”

A highlight of the space will be the brand’s bespoke fragrance service, whereby customers will be able to work with Harris to concoct a fragrance of their liking for $10,000. The service, which is to include customized bottles, names and engravings, is slated to commence in February and will only be held at the Saks space.

Miller Harris plans to open a concept similar to the Saks space in Japan; to introduce new body lotions in the coming weeks, and to begin supplying an amenities line — including shampoo, conditioner, lotion, body wash and soap in two scents — to 44 Fairmont Resorts and Hotels locations starting in November.
— Matthew W. Evans