Perfume demand is rising, and the Chinese market is picking up: Estée Lauder (EL.US)'s Q1 revenue and profit both exceeded expectations, raising full-year performance guidelines

The Zhitong Finance App learned that before the US stock market on November 2, the profit announced by Estée Lauder (EL.US) was better than expected and the performance outlook was raised. Financial reports showed net sales of $37.15 billion for the quarter, up 7% year over year, above market expectations of about $3.65 billion; adjusted diluted earnings of $0.72 per share, far exceeding analysts' expectations of about $0.51; GAAP earnings per share of $0.64, compared to $0.13 for the same period last year.

Driven by higher performance than expectations and guidelines, Estée Lauder's stock price once rose by nearly 5% before the US stock market. Notably, the company will host a capital market day event in Shanghai on November 4 to further promote its China strategy.

Estée Lauder organically grew 6% in the quarter; gross profit margin was 75.7%, up 230 basis points year over year; adjusted operating margin was 12.1%, an increase of 480 basis points.

By category, perfume was the biggest highlight, with net sales of US$861 million, organic growth of 20%; Le Reiber, Tom Ford, Jo Malone, and Kellyanne all achieved double-digit growth; skincare products grew by 4% organic, driven by Aquamarine Mysteries and The Ordinary.

By region, net sales in mainland China were US$614 million, with a 15% increase in reporting volume (organic increase of 9%), and an organic increase of 10% in the Asia-Pacific region, mainly driven by increased restocking orders at Beijing and Shanghai airports and improvements in online retail sales in Hainan.

The company also raised its full-year guidance for FY2027: the forecast for organic net sales growth was raised from 3% to 5% to 4% to 5.5%, the adjusted operating margin forecast was raised to 12.9% to 13.7%, and the adjusted earnings per share forecast was raised from $3.10 to $3.35 to $3.45.

The company also announced a quarterly dividend of $0.35 per share, which will be paid on December 15. President and CEO Stéphane de La Faverie said the company has “gone beyond the stage of resuming growth” and is building multiple drivers for sustainable profitable growth.

Analysts pointed out that this performance is the latest sign of Estée Lauder's transformation efforts to win over consumers. The company is driving growth by reconnecting consumers and attracting a younger customer base. Glimmer, a high-end fragrance launched this summer and endorsed by actor Hailey Stanfield, is the company's most important new fragrance in many years.