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Estée Lauder raises FY'18 guidance as Q2 adjusted EPS, sales beat expectations

The Estée Lauder Cos. Inc. on Feb. 2 raised its forecasts for adjusted EPS and net sales for fiscal 2018 as it delivered second-quarter earnings that topped analysts' expectations.

Excluding one-time charges and other adjustments, diluted net earnings per common share for the three months ended Dec. 31, 2017, were $1.52, beating the S&P Capital IQ consensus estimate for normalized EPS of $1.44 and the $1.22 Estée Lauder reported for the same quarter a year earlier.

Net sales for the quarter were $3.74 billion, beating the S&P Capital IQ consensus estimate for revenue of $3.68 billion and 17% above the $3.21 billion the company reported a year earlier. Sales were up 14% quarter on quarter, excluding the impact of foreign exchange.

Net earnings attributable to The Estée Lauder Cos. were $123 million, below the consensus estimate for GAAP net income of $520.6 million compiled by S&P Capital IQ and 71% below the $428 million it reported for the same quarter in fiscal 2017. Those figures include a charge of $394 million the company booked after U.S. President Donald Trump signed the Tax Cuts and Jobs Act into law in December 2017.

On a GAAP basis, earnings per share were 33 cents, below the S&P Capital IQ consensus estimate of $1.39.

Estée Lauder raised guidance for fiscal 2018, saying it anticipated net sales growth of between 12.5% and 13.5%, or between 10% and 11% in constant currency terms. In results for its fiscal first quarter, the cosmetics maker said it expected net sales growth of 10% and 11% for the year, or 8% to 9% excluding the impact of foreign exchange.

The company also projected that full-year diluted net EPS excluding certain charges will total between $4.27 and $4.32, above the range of $4.04 to $4.12 the company gave when it reported fiscal first-quarter results. Including charges, Estée Lauder expects EPS of between $2.79 and $2.88, below the range between $3.77 and $3.88 it articulated in first-quarter results.

The company also said it expected net sales for its fiscal third quarter to grow year over year between 12% and 13%, or between 9% and 10% excluding the impact of currency fluctuations, with reported diluted net EPS of between 89 cents and 92 cents.