Key Takeaways- The Estimize consensus is trending higher for Estée Lauder ahead of Friday’s report, yet lower for competitor Elizabeth Arden which reports tonight and has continually underwhelmed in its reports.
- Estée Lauder is running ahead of Elizabeth Arden in the beauty realm as they successfully revamp their brand with innovative products and celebrity spokesmodels. RDEN has come under fire for continuing to support outdated brands such as Juicy Couture and Ed Hardy.
Estée Lauder Companies (N:EL), one of the world’s leading manufacturer of beauty products, is scheduled to report FQ2 2016 earnings on February 5, before the markets open. Estee Lauder’s investments into new products and the user experience has been key to the company’s continued success. Last quarter, the company surprised with an 18.5% beat on EPS, and the Estimize community is expecting the company to surpass estimates once again on Friday. The Estimize consensus is calling for EPS of $1.12 and revenue of 3.089 billion, both slightly higher than Wall Street’s estimates for $1.09 and $3.075B. Compared to the same period last year, earnings have remained relatively flat as currency headwinds hinder international growth. That said, Estee Lauder’s formidable portfolio of brands including Smashbox and Tom Ford Beauty, have bolstered its position in a crowded market. In March Estée Lauder is prepared to launch a new product line, Estée Edit, endorsed by blogger Irene Kim and Kendall Jenner. With a rich portfolio of brands and consistent new products, Estée Lauder is on track for a strong fiscal quarter.
On the other hand, Elizabeth Arden (O:RDEN) has not been as fortunate as Estée Lauder. Sales have been negatively impacted by industry weakness in celebrity fragrances and currency headwinds. The company has continued to underwhelm shareholders, positing negative surprises 7 of the last 8 quarters. This quarter, the Estimize consensus calls for EPS of $0.58 and revenue of $341.71 million, slightly lower than Wall Street’s estimates of $0.60 and $342.3M. In Q1 2016 RDEN experienced YoY growth of 58%, which may be indicative of the company making a comeback after more than 8 negative quarters. However, the company hit a new 52-week low on January 20, meaning any positive news in tonight’s report could help the stock recover. The largest issue Elizabeth Arden seems to have is the fact that its brands such as Juicy Couture, Ed Hardy, Mariah Carey are viewed as outdated. The company has been making some significant acquisitions in the spa space however, with the Elizabeth Arden Red Door Spa recently announcing its acquisition of CityMani, following the acquisition of Manicube last November. These acquisitions are steps Elizabeth Arden is taking to reshape the company and differentiate itself from others in the industry.
