Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Lastly, we believe we can unlock meaningful cost efficiency from a combination of shorter supply chains, regionalization of our value chain and improved forecasting accuracy enabled by our new integrated business planning progress -- process across the global operation supported by advanced AI capabilities |
| Our innovation pipeline is robust for fiscal year 2024, but it gets even better and bigger and stronger in fiscal year 2025 with the expansion into the white space opportunity that we have identified |
| Our brand portfolio is better than ever with the recent acquisition of Tom Ford, solidifying our luxury strategy and The Ordinary, which we didn't talk a lot in this call but is becoming a powerhouse brand at the entry of growing active derma segment and is definitely our fastest-growing brand in our portfolio |
| The excellent performance in these regions enabled us to deliver our sales outlook despite a slower-than-expected recovery of overall prestige beauty in Mainland China |
| Adjusted diluted EPS of $0.11 was ahead of the outlook as we achieved a better-than-expected adjusted operating margin |
| There were several drivers for this more favorable profitability, led by a greater contribution to sales from skin care than forecasted as well as disciplined expense management |
| Our calendar year-to-date retail sales performance remain very solid in all recovery markets and in general, both developed and emerging in the mid-single high digit that I quoted before |
| For fiscal year 2024, our revised outlook continues to expect sequentially improving sales trend each quarter with double-digit organic sales growth in the second half |
| We also still expect sequentially stronger adjusted operating margin each quarter with continued consumer-facing investment in our growth engines |
| We move forward with confidence as our fundamentals are strong in this attractive prestige beauty industry |
| And so the resulting -- the result of all these movements is frankly solid and sustainable for the long term because the results is a solid business in Mainland China, which we are supporting and will continue to support |
| And these are positive things for the long term |
| And some of it went into travel retail, like Hainan development and all the other things that happened, which are very good for the long term |
| In the markets of EMEA, we achieved impressive results once more driven by the U.K |
| So when we did in the past these kind of programs, we have been pretty successful in delivering what we wanted |
| We extended our prestige beauty share gains in Western Europe driven by our high-quality hero products and innovation |
| In EMEA's emerging market, India was a standout driven by stellar gains by The Ordinary and double-digit growth by M·A·C |
| In Latin America, prestige beauty remains vibrant, and we again achieved strong results |
| Mexico and Brazil excelled, each up double digits organically |
| So those programs -- that program was successful in both delivering margin expansion and expense leverage at the time |
| We continued our winning ways in many markets across Asia Pacific |
| We were actually expanding operating margins by over 100 basis points a year, anywhere between 60, 80 to 100 basis points a year through that program |
| And we realized very strong prestige beauty share gains with our brands' strong desirability, high-touch services and innovation engaging consumer as retail traffic increasingly returns |
| Our performance in Japan and Australia once again robust driven by our diversified brand portfolio catering to local desires |
| Around the world, our direct-to-consumer business performed especially well |
| Every region contributed, led by double-digit organic sales growth in freestanding stores in Asia Pacific |
| On a global basis, we are thrilled that the makeup renaissance is infusing, and we have been ready to meet consumers as they again embrace their enthusiasm for the category |
| Makeup thrived in the quarter as the Americas, the markets in EMEA and Asia Pacific each contributed high single-digit organic sales growth to offset the pressure in the category from global travel retail |
| We are successfully tapping into and creating trends with on-point innovation like M·A·C Studio Radiance Foundation and Estée Lauder Futurist SkinTint Serum Foundation |
| During this exciting area for the category, our brands are leveraging their expert artists and social media know-how to engage with consumers and generate strong and expanding levels of earned media value |
| Statement |
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| Our first quarter organic net sales declined 11%, and earnings per share was $0.11 |
| As Fabrizio mentioned, while we delivered on our Q1 expectations, we are lowering our fiscal '24 outlook for the balance of the year to reflect the slower-than-expected pace of recovery due to incremental external headwinds that continue to evolve during the second quarter |
| Organic net sales fell 27% in Europe, the Middle East and Africa due to the ongoing headwinds in our Asia travel retail business |
| Organic net sales in our Asia Pacific region fell 3%, primarily due to incremental headwinds from the slower-than-expected recovery of overall prestige beauty in Mainland China |
| We expect full year operating margin to be between 9% and 9.5%, a contraction from 11.4% last year due to the lower sales growth level |
| This includes the slower-than-expected growth in overall prestige beauty as well as the containment of the unstructured market activity in Asia travel retail and in Mainland China |
| Operating income declined 84% to $108 million, and our operating margin contracted to 3.1% from 17% last year |
| And the negative net sales that we see in this first 6 months, for sure, our -- first, this month of the fiscal year are related to the readjustment of inventories that Tracey was mentioned |
| Our gross margin declined 440 basis points compared to last year |
| So our production units this year are down about 25% from what they were last year |
| Our global travel retail business drove the decline, as expected, with organic sales lower by 51% given the combination of trade inventory reduction and a structured market containment |
| First, the expected growth rate of overall prestige beauty has slowed in Asia travel retail and Mainland China, which is currently also evidenced in the presale phase of the 11.11 Shopping Festival |
| We had, in some parts of our Travel Retail business, very low shipments given those policy changes |
| We expect organic sales for our second quarter to decline 8% to 10% |
| Organic net sales declined 7% in hair care and 21% in skin care |
| We expect second quarter adjusted EPS of $0.48 to $0.58 for a decline between 62% to 69% |
| And to your point, we've had issues with high levels of inventory |
| Diluted EPS of $0.11 decreased 92% compared to the prior year |
| But in that specific quarter, the market growth went down to 2% |
| There's been some internal issues with supply chain and forecasting |
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