Reality is catching up with cosmetics. On May 3rd, the American group Estée Lauder lowered its net sales forecast for 2022. These should be only 7% to 9%, and not +13% to 16% as initially expected. While its adjusted profit should be in the range of 7.05 to 7.15 dollars per share, instead of the 7.43 to 7.58 dollars initially targeted.
The cause : the double effect of the anti-covid policy in China and the war in Ukraine. The new restrictions in the Middle Kingdom have slowed down the consumption of luxury goods. While Estée Lauder closed all its shops in Russia and its net sales obviously shrank in Ukraine.
Among the various Estée Lauder brands, the manufacturer of MAC lipsticks and Bobbi Brown foundations is particularly in the eye of the storm. It is suffering from the pressure of product shortages and rising costs. The supply chain, already affected by the pandemic, is now also disrupted by the war in Ukraine.
The downward revision of its results affected Estée Lauder’s share price, which fell by 6% at the close on 3 May. But the share price of the world’s leading cosmetics company, the L’Oréal group, was also affected. Its shares were down 1.9% at 5.30 pm on 3 May. However, it had recovered slightly to –1.4% at 9.30 am on 4 May. The powerful French group had nevertheless achieved a historic year 2021 and a first quarter above expectations.
Read also > WHAT IS THE IMPACT OF THE WAR IN UKRAINE ON LUXURY COSMETICS BRANDS ?
Featured photos : © Estée Lauder
