The Estée Lauder Companies Inc. (NYSE:EL) today reported net sales of $2.87 billion for its first quarter ended September 30, 2016, a 1% increase compared with $2.83 billion in the prior-year quarter. Net earnings were $294 million, compared with $309 million last year. Diluted net earnings per common share were $.79, including the effect of restructuring and other charges, compared with $.82 reported in the prior year.
Excluding the impact of foreign currency translation, net sales increased 2%. For the quarter, the negative impact of foreign currency translation on diluted net earnings per common share was $.02. Adjusting for the restructuring and other charges, diluted net earnings per common share for the three months ended September 30, 2016 were $.84, and in constant currency rose 5% to $.86.
During the fiscal 2017 first quarter, the Company recorded restructuring and other charges of $31 million ($20 million after tax), equal to $.05 per diluted share, in connection with its previously announced Leading Beauty Forward initiative. See table on page 9.
Fabrizio Freda, President and Chief Executive Officer, said, “Our first quarter sales grew in line with our expectations, while disciplined expense management delivered earnings per share that exceeded our guidance. Our small to mid-sized brands were strong contributors to sales as were the travel retail channel and many developed and emerging markets. As expected, this growth was partially offset by continued macro challenges, a decline in retail traffic in U.S. mid-tier department stores, the results of the slowdown in the Middle East, continued softness in Hong Kong, and difficult comparisons with the prior year in the United States and France.
“Throughout the remainder of the fiscal year, we expect our sales growth to progressively accelerate based on a steady flow of new products, momentum and increased targeted consumer reach for our small and mid-sized brands and M•A•C, and increased social media initiatives to drive brand engagement. We intend to continue to execute on our biggest strategic opportunities and further strengthen our multiple engines of growth to increase profitability and gain share. This includes accelerating our focus on leveraging our stronger engines of growth in makeup, fragrances and key international markets.
“Our focus remains on delivering sustainable and profitable annual growth, and the many actions we have planned give us confidence to reaffirm our expectations for constant currency sales growth of 6% to 7% and earnings per share growth of 8% to 10%, before charges, for the 2017 fiscal year.”
Net sales and operating income in most of the Company’s product categories were unfavorably impacted by the strength of the U.S. dollar in relation to most currencies. Total operating income in constant currency, before charges, increased 1%.
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