In its first financial statement since going public in November, the beauty giant reported Tuesday a 14 percent increase in second-quarter earnings to $58.5 million, or 45 cents a share.
By so doing, it outperformed Wall Street projections, and its stock jumped 3 1/4 points on the New York Stock Exchange, closing at 37.
The profit figures for the quarter, which ended Dec. 31, came after a $4.3 million charge related to the initial public offering. Key to the results were the blockbuster introductions of the EstAe Lauder Pleasures and Tommy Hilfiger fragrances and the company’s acquisitions of Bobbi Brown and MAC color cosmetics brands.
Lauder earned $51.3 million a year ago, but per-share figures then are not comparable because of the November IPO. The special charge is for 164,000 shares of class A common stock distributed to full-time employees when the company went public.
Earnings in the quarter were slightly better than Wall Street expected. Dillon Read & Co., one of the IPO underwriters, projected earnings of 43 cents a share for the quarter.
Sales for the quarter rose 13.4 percent to $860.8 million from $759.1 million.
Net sales of makeup increased 22 percent to $273.4 million as a result of strong growth in established brands and contributions from MAC and Bobbi Brown. Fragrance business increased 15 percent to $288.6 million due to the new scents. Net sales of skin care products were up 5 percent to $298.8 million.
Lauder said stronger international momentum, driven by the rollout of several new products this spring, will “more than offset the slower growth rate expected in the Americas.”
“We continued to improve operating margins during the quarter,” Leonard Lauder, chairman and chief executive officer, said in a statement. Excluding the charge, the company achieved an operating margin of about 13 percent, versus less than 12 percent in the prior year’s period, he added.
Regionally, sales in the Americas rose 18 percent to $473.4 million. Gains were attributable to growth from existing products, the successful rollout of Pleasures and Tommy and contributions from MAC and Bobbi Brown.
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In Europe, the Mideast and Africa, sales were up 8 percent. While the company reported strong performances in Belgium, Spain, Italy, South Africa and its travel retail business, sluggish retail environments in France and Germany and a labor strike in France hurt growth and operating profitability in those areas.
Lauder continued to perform well in the Asia/Pacific region, with net sales up 10 percent to $152.7 million. Net sales growth was particularly strong in Taiwan, Hong Kong, Thailand, Korea and Australia. It also had sales gains in Japan, despite a weak retail environment.
After a $6.9 million special charge, six-month earnings jumped 23.6 percent to $104.9 million, or 81 cents, from $84.9 million. Sales were up 13.1 percent to $1.7 billion from $1.5 billion. — Fairchild News Service