Estée Lauder's latest earnings report was bleak, with its stock price plummeting due to the drag from its travel retail business.
On Wednesday, Estée Lauder's stock price closed down 18.9%, falling over 20% at one point during the day, hitting a six-year low and marking the largest single-day decline since the company went public in 1995.
The stock price plunge was triggered by Estée Lauder's latest quarterly earnings report, which was disappointing overall. The report showed that since the first quarter of fiscal year 2024, Estée Lauder's revenue was $98 million, a year-on-year decline of over 85%; net sales were $3.5 billion, a 10% decrease compared to the same period last year; and net profit plummeted over 90% to $36 million.
In comparison, the fiscal year 2023 earnings report released in August showed that Estée Lauder's total revenue declined 10% year-on-year, and net profit dropped 58%. Revenue in the Americas, Europe, the Middle East, and Africa, as well as the Asia-Pacific region, all declined.
The latest earnings report mentioned that although net sales declined in all markets except the Americas, the company achieved &#34;organic growth&#34; in almost all markets, including Asia-Pacific and Europe. However, the weak performance of the travel retail business in the Asia-Pacific market dragged down overall performance.
The travel retail business mainly refers to duty-free shopping at airports, accounting for 40% of Estée Lauder's sales in certain regions.
Due to the slower-than-expected recovery of the travel retail business in the post-pandemic era, caused by the slower resumption of international flights and visa issuance in the Asia-Pacific region, Estée Lauder's performance in this sector has been sluggish. L'Oréal's latest earnings report also showed a similar trend in the travel retail business.
However, Estée Lauder had anticipated this situation. Fabrizio Freda, the President and CEO of the company, stated during the earnings conference call:
&#34;We do not expect the travel retail business to recover to its previous level.&#34;
In addition, Estée Lauder expects that the Israeli-Palestinian conflict will also impact this fiscal year's performance, with an estimated impact of approximately 22 cents per share, equivalent to $78.7 million, which may result in a 1% decrease in revenue. In the earnings report, Estée Lauder lowered its adjusted earnings per share for fiscal year 2024 by over 35%.
Since the beginning of this year, Estée Lauder's stock price has fallen by 48%, underperforming the S&amp;P 500 index's cumulative increase of 9.23% during the same period.

Latest quarterly net profit plummeted by over 90%, is the leading beauty company failing to capture the Asia-Pacific market?

Historical drop in stock price! Estée Lauder's share price has plummeted.