Estee Lauder fell by 10% after lowering its profit forecast

The stock of Estée Lauder (EL), an American cosmetics company, fell by 10% after its announcement of lowering the company’s full-year forecast.

According to Estée Lauder’s outlook, adjusted earnings per share (EPS) will be $1.43 on total revenue of $3.93 billion. Those numbers are close enough to the consensus of $1.33 per share on total revenue of $3.99 billion.

At the same time, as stated by Investing.com, the EL revenue fell by 10% year-on-year (or by 7% on a constant currency basis) in comparison to the previous year. This drop was driven by a sharp 15% decline in Asia Pacific sales.

EL noted that a great impact on its revenue has had a continuing COVID-19 pandemic and associated restrictions, which decrease retail traffic in China, as well as touristic sales in Hainan. The impact is expected to remain in the first financial quarter of 2023. 

Besides that, the company was negatively affected by inflationary pressures and recession concerns, which many face in the current economic situation.

As a result, EL has lowered its forecast for the next financial year because supposedly the company will continue to be under the pressure of such factors as COVID-19 restrictions in China, the U.S. dollar’s strengthening, record growth of inflation, disruptions in the supply chain and risks of economic slowdown in some international markets.