Estee Lauder Cuts Sales Forecast On Supply Chain, Delta Hit

Estee Lauder Cos Inc. cut its full – year sales forecast on Tuesday, as the cosmetic maker grapples with industry – wide supply chain problems and take a hit from the resurgence of COVID-19 cases in its key markets.

Renewed restrictions due to the Delta variant of COVID – 19 in some Eastern markets as well as in parts of Europe hampered demand for the M.A.C brand owner’s lipsticks and foundations at brick – and – mortar stores.

The cosmetics maker’s muted forecast overshadowed a strong first quarter boosted by strength in its La Mer and Clinique skin care brands as shoppers kept up their nighttime routines.

‘The lack of pass – through from a strong first quarter is most notable’, Stifel analyst Mark Astrachan said.

Estee said its makeup category was the only segment yet to reach 2019 levels and added that traffic at its stores that were open also had not breached pre – pandemic levels.

A global supply chain crunch resulting from port congestions and a shortage of labor has led by delays in transportation, and is expected to add to its expenses through the rest of fiscal 2022.

The company now expects net sales to rise between 12% and 15% in fiscal 2022, down from its prior estimate of a 13% to 16% increase.

Still, Chief Financial Officer Tracey Travis said Estee Lauder was in ‘very good shape’ for the holiday season, adding that the company has been taking measures including producing products early and using air freight to avoid delays.

The company is also increasing prices to overcome cost pressures brought on by the supply issues.

Estee’s shares reversed course to trade up about 3% in morning trade.

The New – York Based company reported adjusted earnings of $1.89 per share on revenue of $4.39 billion, both beating analysts’ estimates, according to IBES data from Refinitiv.