Estee Lauder (NYSE:EL) announced this morning, in conjunction with its quarterly results, that it would be laying off between 3% and 5% of its staff in order to reduce its expenses. Along with the Estee Lauder layoffs, the firm provided much weaker-than-expected guidance for its current quarter and its current fiscal year. However, the firm’s quarterly results came in well above analysts’ average estimates.
EL stock is climbing sharply on the news.
More About the Estee Lauder Layoffs
EL will eliminate up to 3,000 positions. The company, which employs about 62,000 people worldwide, expects its cost-cutting efforts to boost its annual operating profit by $1.1 billion to $1.4 billion.
Previously, the firm had said that it expected its initiatives to raise its operating profit by $800 million to $1 billion.
As a result of its restructuring program, the firm will take pre-tax charges of $500 million to $700 million.
CEO Fabrizio Freda said in a statement that the cosmetics maker had reached a positive turning point. The firm would also make a “concerted effort to retrain and redeploy employees.”
Guidance Misses and Results Beat
For its current third quarter, Estee Lauder predicts it will generate earnings per share of 35 cents to 46 cents, well below analysts’ average outlook of 83 cents. In its current fiscal year, the firm estimates it will produce EPS of $2.08-$2.23, significantly lower than the mean estimate of $2.33. Moreover, it believes its full-year revenue growth will come in at “-1.0% to +1.0%.”
On a positive note, last quarter, the firm generated $4.28 billion in sales and EPS of 88 cents, well above the average outlook of 56 cents and $4.2 billion.
The Price Action of EL Stock
In the last month heading into today, the shares had dropped 3.5%, but they had climbed 19% in the preceding three months. Over the last 12 months, EL stock has slumped 49%.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
