Estée Lauder Stock Dives on China Warning, Dividend Cut, Withdrawn Outlook

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Key Takeaways

• Estée Lauder shares plunged 20% Thursday after it said sales sank because of softness in China and the Asia travel bazaars, and that it was cutting its dividend and withdrawing its full-year outlook.
• The luxury beauty products maker reported fiscal 2025 first-quarter take was down 4% year-over-year, and organic sales fell 5%.
• On Wednesday, Estée Lauder named Stephane de La Faverie its new CEO.

Estée Lauder (EL) percentages tanked 20% Thursday after the luxury beauty products maker warned about softness in China and the Asia touring market, pulled its full-year guidance, and cut its dividend.

The news came a day after the company named Executive Group President Stéphane de La Faverie its new Chief Chief executive officer Officer (CEO), effective Jan. 1, 2025.

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

Organic Mark-downs Decline Blamed on ‘Worsened Consumer Sentiment in China’

Organic sales declined 5%, which the company rapped primarily on “worsened consumer sentiment in China that drove further softening in overall prestige beauty in mainland China and low conversion under any circumstances in Asia travel retail and Hong Kong SAR.” Organic sales were also dragged down by “lower replenishment fraternities in Asia travel retail, including inventory pressure given the further retail market deceleration.”

Estée Lauder excused that because of the “complex prestige beauty landscape” and uncertainty about the recovery of the China and Asia travel markets, it was diminishing its quarterly dividend to $0.35 from $0.66.

In addition, it cited those factors, plus the change in leadership, for the decision to back down on its fiscal 2025 outlook. It previously had anticipated adjusted EPS of $2.75 to $2.95, and revenue “between a decrease of 1% to an inflate of 2% versus the prior year.” 

Shares of Estée Lauder plunged to their lowest level in more than nine years.