Photo: Pear285 / Wikimedia Commons (CC0; MYER Sydney counter, 2013 archive; cropped)
Estée Lauder set long-term targets for annual mid-single-digit organic net sales growth and double-digit adjusted earnings-per-share growth through fiscal 2030, alongside an adjusted operating margin of 16.5% to 18.5% in fiscal 2030.
The beauty company announced the ambitions Wednesday at its Capital Markets Experience in Shanghai, according to its release on Business Wire. The targets are forward-looking, non-GAAP financial goals, not reported results or a guarantee of future performance.
Growth and cost savings underpin the plan
Chief Executive Stéphane de La Faverie and Chief Financial Officer Akhil Shrivastava outlined a plan combining broader sales growth with lower costs and continued spending to attract beauty consumers.
The company said it wants a more balanced contribution from its brands, product categories and geographic regions, including between East and West. Its Beauty Reimagined strategy calls for product innovation, wider consumer reach and sustained investment in its brands.
On costs, Estée Lauder is counting on the completion of approved initiatives under its Profit Recovery and Growth Plan, everyday efficiencies and improvements in adjusted gross margin. It also expects its One ELC operating model to help by simplifying processes and scaling technology and automation.
Margin improvement weighted toward fiscal 2028
The company expects greater margin expansion in fiscal 2028 than in fiscal 2029 or fiscal 2030. It linked that timing to the full-year benefit of the final initiatives approved under its recovery plan through fiscal 2027.
Estée Lauder also aims for an adjusted effective tax rate of 30% or below by fiscal 2030. Higher earnings, lower restructuring payments and working-capital efficiencies are expected to strengthen operating cash flow, while changes to capital spending are intended to help increase free cash flow.
What the adjusted targets leave out
Organic net sales excludes currency-translation effects and certain other items, including non-comparable impacts from acquisitions, divestitures and brand closures. The company’s adjusted measures also exclude specified restructuring and other costs.
Estée Lauder did not provide a full reconciliation of the forward-looking non-GAAP measures to the closest GAAP measures, saying some necessary adjustments could not be forecast with reasonable certainty without unreasonable effort. Those adjustments could be material.
The company cautioned that actual performance could differ materially from its ambitions. Risks it identified include competition, changes in consumer preferences, retailer inventory decisions, currency swings and the execution of its cost-savings plans.
JBizNews Desk | New York
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