Estée Lauder Stock Dives on China Warning, Dividend Cut, Withdrawn Outlook

Estée Lauder (EL) shares fell 20% on Thursday after the luxury beauty products maker warned of weakness in China and the Asian travel market, withdrew its full-year guidance, and cut its dividend.

This news came one day after the company appointed CEO Stephane de la Faverie as its new Chief Executive Officer (CEO), effective January 1, 2025.

Estée Lauder reported first-quarter fiscal 2025 revenue fell 4% year over year to $3.36 billion, while analysts surveyed by Visible Alpha expected $3.37 billion. Adjusted earnings per share (EPS) of $0.14 beat expectations.

Organic sales decline due to “deteriorating consumer sentiment in China”

Organic sales fell 5%, which the company blamed primarily on “deteriorating consumer sentiment in China resulting in a further decline in overall aesthetics in mainland China and lower retail conversion rates in Asia and the Hong Kong SAR.” Organic sales were also down due to “lower replenishment orders in retail in Asia, including inventory pressure due to further slowdown in the retail market”.

Estée Lauder explained that due to the “complex beauty landscape” and uncertainty about the recovery of travel markets in China and Asia, it reduced its quarterly dividend to $0.35 from $0.66.

In addition, it cited these factors, as well as a change in leadership, behind the decision to withdraw its 2025 financial outlook. It had previously forecast adjusted earnings per share of $2.75 to $2.95, and revenue “between a 1% decline to a 2% increase.” compared to the previous year.”

Estée Lauder shares fell to their lowest level in more than nine years.