By Arriana McLymore
Nov 2 (Reuters) - Estee Lauder raised its annual sales and profit forecasts on Monday, banking on resilient demand for its luxury skincare and fragrance brands ahead of the holiday season as CEO Stephane de La Faverie's year-long turnaround efforts boost growth.
"Growth is accelerating, profitability is strengthening significantly, and the impact of Beauty Reimagined is becoming increasingly evident across our business," de La Faverie said in a statement.
Demand from affluent consumers
and younger shoppers has remained resilient despite economic uncertainty, supporting sales of brands including Le Labo, Tom Ford and Jo Malone London.
Mainland China is a bright spot in Estee Lauder's turnaround efforts. The company expects strong organic sales growth from new and existing products following increased consumer-facing investment. De La Faverie said in August the company had also reduced discounts and promotional activity in the market.
Analysts say Chinese consumers are becoming more selective in their luxury spending and increasingly favor brands that build local relevance.
Luxury groups including Gucci owner Kering, LVMH and Hermes are facing fresh headwinds from the expanding conflict in the Middle East and China's tax crackdown on wealthy shoppers, adding to pressure from weak demand in key markets including China and the US.
Prestige beauty products have proved more resilient, however, as China's aspirational middle-class consumers shift spending away from entry-level luxury goods towards higher-end skincare, makeup and fragrance products.
In the Americas, Estee Lauder's organic sales were up 4% compared with a 2% decline a year ago. Organic sales in China increased 9%, matching the growth rate recorded a year earlier.
Analysts expect Estee Lauder, which has said acquisitions remain a tool for reshaping its portfolio across geographies, categories and price points, to focus on smaller niche deals after ending talks to buy Spanish fashion and beauty group Puig.
The company has also broadened distribution by bringing selected brands to Amazon's US Premium Beauty store and capitalizing on events such as Prime Day.
It has expanded its online presence in Southeast Asia through Shopee and TikTok Shop, complementing growth on platforms such as Tmall and Douyin and helping lift online organic sales.
Under the "Beauty Reimagined" strategy, Estee Lauder has focused on accelerating innovation, expanding into new channels and markets, using AI to improve consumer insights and marketing, increasing consumer-facing investment, streamlining operations and cutting costs.
The company now expects fiscal 2027 organic sales growth of 4% to 5.5%, compared with its previous forecast of 3% to 5%.
It forecast annual adjusted profit of $3.20 to $3.45 per share, up from a prior range of $3.10 to $3.35.
The company's shares rose nearly 3% in premarket trading. The stock is up about 4% so far this year.
First-quarter sales rose 7% to $3.72 billion, topping analysts' expectations for a 5% increase to $3.65 billion, according to LSEG data.
Adjusted profit of 72 cents per share also beat estimates of 51 cents.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Louise Heavens and Mark Potter)
