Feb 5 (Reuters) - Estee Lauder forecast annual sales and profit slightly below estimates on Thursday, as the cosmetics maker increases its marketing spend amid a brand reset while also navigating tariff-related pressures.
Shares slumped about 11% in premarket trading after the owner of brands such as Clinique and M.A.C forecast third-quarter margins to contract 50 basis points.
The company also reiterated its October 2025 forecast of a $100 million tariff hit on annual profit in the second half of the year.
Estee Lauder said it has been ramping up its advertising and promotional investments and considering price hikes to mitigate rising costs.
Under its CEO Stephane de La Faverie's turnaround plans, the company has also been working on 'Beauty Reimagined' strategy to accelerate launches in categories such as skincare, rolling out new luxury price tiers, and boosting innovation and marketing efforts.
While the strategy has helped lift sales in key regions such as China and Europe, the Americas remain under pressure due to cautious spending on luxury makeup and skincare.
The company is navigating the complexity and volatility in the U.S. and has been working to meet the consumers where they are, La Faverie told Reuters during a media call.
Estee Lauder said its travel retail business is temporarily hit by a shift in duty‑free operators at the Beijing and Shanghai airports, including their online channels. There was also persistent weakness across the rest of northern Asia's travel retail markets, it added.
Meanwhile, Elf Beauty raised its annual forecasts and beat quarterly estimates on strong demand from price-conscious shoppers, who are often on the lookout for affordable alternatives.
Estee Lauder expects annual net sales to be in the range of 3% to 5%, the midpoint of which is below analysts' estimates of 4.3% rise, according to data compiled by LSEG.
The midpoint of its full-year adjusted earnings per share target of $2.05 to $2.25 also came in below estimates of $2.16 per share.
The company posted quarterly sales of $4.23 billion, in line with analysts' estimates.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Leroy Leo)
