By Yashaswini Swamynathan
(Reuters) - Cosmetics maker Estee Lauder Cos Inc (N:EL) forecast full-year earnings below estimates and reported lower-than-expected quarterly sales, hurt by weak demand for Clinique and Estee Lauder skin care products.
Shares of Estee Lauder fell as much as 5.3 percent.
The company has been focusing on catering to younger customers by offering brands such as Smashbox and Glamglow, as its "heritage" brands Estee Lauder and Clinique lose some shine in North America.
It is not as if these brands "are falling off a cliff". Part of the weakness comes from their inability to attract young women, Raymond James analyst Joseph Altobello said.
Clinique and Estee Lauder brands are expected to show some "concrete improvement" by the end of 2016, Altobello told Reuters.
Sales in the company's skin care division fell 16 percent to $1.01 billion in the fourth quarter, the worst fall in at least two years.
The division contributed about 40 percent to total sales in the quarter ended June 30.
The company said sales in the travel retail business declined 4 percent in the quarter, mostly hurt by a stronger dollar and a deadly outbreak of Middle East Respiratory Syndrome (MERS) in South Korea.
The currency has risen about 6 percent this year through June 30.
However, fragrances were a bright spot in the quarter, recording sales growth of 9 percent due largely to luxury brands such as Tom Ford and Joe Malone.
These sales come in stark contrast to other perfume makers such as Coty Inc (N:COTY) and Elizabeth Arden Inc (O:RDEN) whose over reliance on mass fragrances has dented sales.
Estee forecast earnings for the year ending June of $3.10-$3.17 per share, including the impact of foreign currency and acquisitions. Analysts on average were expecting a profit of $3.28 per share.
Net income attributable to the company fell 41 percent to $153.0 million, or 40 cents per share.
Excluding items, Estee Lauder earned 40 cents per share, above the average analyst estimate of 34 cents, according to Thomson Reuters I/B/E/S.
The company's revenue fell 7.4 percent to $2.52 billion, missing analysts' estimate of $2.57 billion.
Estee's shares were down at $84.11 on the New York Stock Exchange in early afternoon trading. Up to Friday's close of $88.82, the stock had risen nearly 17 percent this year.