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Estee Lauder Posts Higher Earnings on 3% Sales Gain

Net earnings from continuing operations rose 8 percent to $150.4 million on a sales gain of 3 percent to $1.78 billion.

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NEW YORK – The Estee Lauder Companies Inc. said this morning that net earnings from continuing operations for the second quarter ended Dec. 31, 2005 rose 8 percent to $150.4 million on a net sales gain of 3 percent to $1.78 billion. Excluding the impact of currency translations, sales gained 5 percent, the company said in a statement.

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Results were ahead of Wall Street estimates. As a result, shares rose 3 percent to $35.27 in morning trading.

On a per share basis, earnings from continuing operations rose 14 percent to 70 cents. The company said net earnings and diluted earnings per share for the quarter decreased 41 percent and 38 percent, respectively, compared with the prior-year quarter. “The decreases were due to a charge associated with the Company’s Stila business, which was designated as discontinued operations as of September 30, 2005,” the company said.

William P. Lauder, president and chief executive officer, said in a statement that the company’s results “were led by a solid performance from our international operations, while sales in the United States reflected a mixed retail environment. Enhanced focus and execution on cost containment in all areas of our business contributed sharply to our strong earnings. We continue to show progress on our strategic initiatives to drive strong top-line growth, provide further cost savings and generate significant and sustainable profit growth.”

By product segment, skin care sales rose 4 percent while makeup sales soared 11 percent and fragrance sales fell 11 percent. Hair care products and services rose 11 percent. Sales are on a reported basis, and not in local currencies. Regarding the increase in makeup sales, the company said it “primarily reflected solid growth from the company’s makeup artist brands, MAC and Bobbi Brown. Sales growth was also generated from new or recently launched products like Repairwear Anti-Aging Makeup SPF 15 and Colour Surge Butter Shine Lipstick from Clinique, and Individualist Natural Finish Makeup and Tender Blush from Estee Lauder. Lower sales of certain existing products like Superbalanced Compact Makeup SPF 20 from Clinique and So Ingenious by Estee Lauder partially offset these positive results.”

For complete coverage, see tomorrow’s WWD.