Estée Lauder Q3 2024 Earnings: Challenges in Prestige Beauty and Comparison with Other Consumer Staples Stocks

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Estée Lauder Q3 2024 Earnings Report and Comparison with Other Consumer Staples Stocks

Estée Lauder Q3 2024 Earnings Performance

Estée Lauder reported a net sales decrease of 4.5% year-over-year to $3.36 billion, which was in line with analysts' expectations. The company's organic net sales also decreased by 2%, primarily due to softness in the prestige beauty segment in China and a decline in Asia travel retail. Despite these challenges, the company managed to achieve growth in other markets such as Europe, the Middle East & Africa, Japan, and Latin America.
The company's net earnings for the quarter were $0.39 billion, a significant drop from $1.01 billion in the prior year. This decline was influenced by a higher effective tax rate and nondeductible goodwill impairment charges. Adjusted diluted net earnings per common share (EPS) was $2.59, a 22% decrease in constant currency.

Comparison with Other Consumer Staples Stocks

For the third quarter of 2024, the overall performance of consumer staples stocks was mixed. As a group, revenues slightly exceeded analysts' consensus estimates by 0.5%. Church & Dwight Co., Inc. reported impressive results with a 3.8% increase in net sales to $1,510.6 million, surpassing the Zacks Consensus Estimate of $1,493.8 million. The company's adjusted earnings per share (EPS) of 79 cents beat the consensus estimate of 68 cents.
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Other notable performances include:
  • Clorox (CLX): Reported a trailing four-quarter earnings surprise of 45.9% on average, making it a strong performer in the sector.
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  • The Chef's Warehouse (CHEF): Also carries a Zacks Rank #2 (Buy), indicating favorable performance.

Key Insights

  • Estée Lauder: Despite a challenging quarter, the company is focusing on reigniting growth in skin care, leveraging high-end fragrance, and enhancing precision marketing capabilities. The company anticipates continued declines in the prestige beauty segment in China but expects improved performance in other markets.
  • Church & Dwight: The company's strong performance was driven by robust consumer demand, successful new product launches, and effective execution. The company is cautious about the U.S. consumer and category growth rates for the fourth quarter but projects a reported sales growth of nearly 3.5% and organic sales growth of around 4% for 2024.
In summary, while Estée Lauder faced significant challenges in the third quarter of 2024, particularly in the Chinese market, other consumer staples companies like Church & Dwight showed resilience and growth, driven by strong consumer demand and effective market strategies.