The Estée Lauder Companies Reports Excellent Fiscal 2022 Results

·24 min read

Full Year Net Sales Increased 9% and Diluted EPS Decreased to $6.55 from $7.79

Organic Net Sales1 Grew 8% and Adjusted Diluted EPS Increased 12% in Constant Currency

Strong Organic Sales Growth Expected in Fiscal 2023

NEW YORK, August 18, 2022--(BUSINESS WIRE)--The Estée Lauder Companies Inc. (NYSE: EL) today reported net sales of $17.74 billion for its fiscal year ended June 30, 2022, an increase of 9% from $16.22 billion in the prior-year period. Organic net sales increased 8%, driven by double-digit growth in The Americas and Europe, the Middle East & Africa ("EMEA") regions, largely reflecting a recovery in brick-and-mortar retail stores, as well as double-digit growth in global online2 and growth in travel retail.

The Company reported net earnings3 of $2.39 billion, compared with net earnings of $2.87 billion in the prior-year period. Diluted net earnings per common share was $6.55, compared with $7.79 reported in the prior-year period. Excluding restructuring and other charges and adjustments as detailed on page 3, adjusted diluted net earnings per common share was $7.24, a 12% increase in constant currency.

Fabrizio Freda, President and Chief Executive Officer said, "We delivered excellent results in fiscal 2022, exceeding our expectations in the fourth quarter and achieving record revenue and profitability on an adjusted basis for the year. Our multiple engines of growth strategy proved invaluable amid pandemic and macro complexity, affording us the diversification to seize growth of the moment. The Americas and EMEA prospered, Fragrance soared, and Makeup realized the promise of its emerging renaissance.

"La Mer, M·A·C, and Jo Malone London led the contribution of double-digit organic sales growth by nine brands, impressive on its own and especially so given the significant pressure from COVID-19 in Asia/Pacific at the end of the year. Brick-and-mortar and Online each grew globally, as we capitalized on reopening, extended our consumer reach in high-growth channels, and amplified our omni-channel capabilities."

_________________________________

1 Organic net sales represents net sales excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures; as well as the impact of currency translation. We believe that the Non-GAAP measure of organic net sales growth provides year-over-year sales comparisons on a consistent basis. See page 2 for reconciliations to GAAP.

2 Online sales discussed throughout includes sales of our products from our websites and third-party platforms, as well as estimated sales of our products sold through our retailers’ websites.

3 Net earnings attributable to The Estée Lauder Companies Inc. which excludes net (earnings)/loss attributable to noncontrolling interests and redeemable noncontrolling interest.

Freda concluded, "We are very confident in the strength of our Company and in the vibrant long-term growth opportunity of prestige beauty, but recognize the environment remains complex and uncertain at this point in time. For fiscal 2023, we expect to deliver strong organic sales growth, fueled by our diversified growth engines and enticing innovation, and to take the opportunity in this volatile year to continue investing for our exciting future."

COVID-19 Business Update

The COVID-19 pandemic continued to disrupt the Company’s operating environment globally, primarily impacting supply chain, inventory levels and other logistics during the year ended June 30, 2022. The resurgence of COVID-19 cases in many Chinese provinces led to restrictions late in the fiscal 2022 third quarter that remained in place through the end of fiscal 2022 to prevent further spread of the virus. Consequently, retail traffic, travel and distribution capabilities were temporarily curtailed. The Company’s distribution facilities in Shanghai operated with limited capacity to fulfill brick-and-mortar and online orders beginning in mid-March 2022 and returned to normal capacity by early June 2022.

Fiscal 2022 Results

Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably the acquisition of the majority interest in Deciem Beauty Group Inc. ("DECIEM") and the closure of BECCA); as well as the impact of currency translation. Product category and geographic region sales commentary reflect organic performance.

Reconciliation between GAAP and Non-GAAP Net Sales Growth

(Unaudited)

Year Ended
June 30, 2022

As Reported - GAAP(1)

9

%

Organic, Non-GAAP(2)

8

%

Impact of acquisitions, divestitures and brand closures, net

2

Impact of foreign currency translation

(1

)

Returns associated with restructuring and other activities

As Reported - GAAP(1)

9

%

(1)Includes returns associated with restructuring and other activities

(2)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation.

Adjusted diluted earnings per common share excludes restructuring and other charges and adjustments as detailed in the following table.

Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per Share ("EPS")
(Unaudited)

Year Ended June 30

2022

2021

Growth

As Reported EPS - GAAP(1)

$

6.55

$

7.79

(16

)%

Non-GAAP

Restructuring and other charges

.31

.48

Changes in fair value of contingent consideration

(.01

)

Change in fair value of acquisition-related stock options (less the portion attributable to

redeemable noncontrolling interest)

(.12

)

.09

Goodwill, other intangible and long-lived asset impairments

.50

.40

Other income

(2.30

)

Adjusted EPS - Non-GAAP

$

7.24

$

6.45

12

%

Impact of foreign currency translation on earnings per share

(.04

)

Adjusted Constant Currency EPS - Non-GAAP

$

7.20

12

%

(1)Includes restructuring and other charges and adjustments

Net sales in most of the Company’s product categories and in EMEA were adversely impacted by a stronger U.S. dollar in relation to most currencies. Operating income was favorably impacted by the stronger U.S. dollar.

Total reported operating income was $3.17 billion, an increase from $2.62 billion in the prior-year period. In constant currency, adjusted operating income increased 13% to $3.48 billion, primarily reflecting higher net sales and excluding the following items:

  • Fiscal 2022: $241 million of other intangible asset impairments related to Dr.Jart+ and GLAMGLOW and $144 million of restructuring and other charges, partially offset by $55 million of income related to the change in fair value of DECIEM acquisition-related stock options.

  • Fiscal 2021: $226 million of restructuring and other charges and adjustments, $117 million of goodwill and other intangible asset impairments related to GLAMGLOW and Smashbox, $71 million of asset impairments related to some of the Company’s freestanding stores and $40 million of DECIEM acquisition-related stock options expense.

  • The favorable impact of currency translation of $21 million.

Results by Product Category
(Unaudited)

Year Ended June 30

Net Sales

Percentage Change

Operating
Income (Loss)

Percentage
Change

($ in millions)

2022

2021

Reported
Basis

Constant
Currency

2022

2021

Reported
Basis

Skin Care

$

9,886

$

9,484

4

%

4

%

$

2,753

$

3,036

(9

)%

Makeup

4,667

4,203

11

12

133

(384

)

100

+

Fragrance

2,508

1,926

30

32

456

215

100

+

Hair Care

631

571

11

12

(28

)

(19

)

(47

)

Other

49

45

9

9

(2

)

100

Subtotal

$

17,741

$

16,229

9

%

10

%

$

3,314

$

2,846

16

%

Returns/charges associated with

restructuring and other activities

(4

)

(14

)

(144

)

(228

)

Total

$

17,737

$

16,215

9

%

10

%

$

3,170

$

2,618

21

%

Organic Net Sales Growth - Reconciliation to GAAP
(Unaudited)

Year Ended June 30
2022 vs. 2021

Organic
Net Sales
Growth
(Non-GAAP)(1)

Impact of
Acquisitions,
Divestitures and
Brand Closures, Net

Impact of
Foreign
Currency
Translation

Net Sales
Growth
(GAAP)

Skin Care

%

4

%

%

4

%

Makeup

12

(1

)

11

Fragrance

32

(2

)

30

Hair Care

12

(1

)

11

Other

4

5

9

Subtotal

8

%

2

%

(1

)%

9

%

Returns associated with restructuring and other activities

Total

8

%

2

%

(1

)%

9

%

(1)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation.

Skin Care

  • Skin care net sales grew in The Americas, which was offset by a decline in the EMEA region. Net sales growth from La Mer, Clinique and Bobbi Brown was offset by a decline from Estée Lauder. High single-digit growth in the first nine months of the fiscal year was offset by the negative impacts from the increased COVID-related restrictions in China in the fourth quarter, including the temporarily reduced capacity at the Company’s distribution facilities in Shanghai, resulting in flat skin care growth for the fiscal year.

  • The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 4 percentage points to net sales growth.

  • Double-digit growth from La Mer was driven by strength among Chinese consumers in both mainland China and travel retail. Net sales growth reflected increases in hero products, including Crème de la Mer and the upgrade to The Treatment Lotion. The launch of The Hydrating Infused Emulsion and targeted expanded consumer reach, including the launch on a new online platform in mainland China, also contributed to growth.

  • Clinique net sales growth was driven by strong demand for its hero products, including the Take The Day Off line of products and Even Better Clinical Radical Dark Spot Corrector + Interrupter, as well as the launch of Smart Clinical Repair Wrinkle Correcting Serum.

  • Bobbi Brown delivered strong double-digit skin care net sales growth in every region, led by robust demand from Chinese consumers. Net sales growth reflected increases in hero products, including Soothing Cleansing Oil and Vitamin Enriched Face Base. Successful performance during holiday and key shopping moments, as well as targeted consumer reach also contributed to growth.

  • Estée Lauder skin care net sales declined, reflecting challenges in the second half of fiscal 2022 due to the resurgence of COVID-19 cases in Asia that led to increased restrictions. Estée Lauder was disproportionately impacted by the temporarily reduced capacity at the Company’s distribution facilities in Shanghai in the fourth quarter. Difficult comparisons to the prior-year launch of the upgraded Advanced Night Repair Synchronized Multi-Recovery Complex also impacted growth.

  • Skin care operating income decreased, primarily from lower net sales related to the resurgence of COVID-19 cases in Asia in the second half of fiscal 2022, as well as the year-over-year increase of goodwill and other intangible asset impairments of approximately $135 million.

Makeup

  • Makeup net sales increased among most brands, reflecting continued recovery in western markets, increased usage occasions and easier comparisons to the prior year. The growth was led by increases from both M·A·C and Estée Lauder.

  • M·A·C’s double-digit net sales growth was driven by hero products, such as Studio Fix, the launch of MACStack mascara, and successful social media campaigns to drive the makeup renaissance.

  • Double-digit net sales growth from Estée Lauder was fueled by the Double Wear and Futurist foundation product lines, as well as the successful launch of Double Wear Sheer Long-Wear Makeup.

  • Makeup operating income improved, primarily reflecting higher net sales and the year-over-year reduction of other intangible and long-lived asset impairments of approximately $63 million.

Fragrance

  • Net sales grew across every region and every fragrance brand, led by Jo Malone London, Tom Ford Beauty and Le Labo.

  • Jo Malone London’s net sales grew strong double digits, primarily driven by strength in colognes, particularly in hero franchises like English Pear & Freesia as well as the launches of House of Roses and the Blossoms Collection. Bath & Body and Home also delivered strong growth reflecting consumer habits developed during the pandemic. Successful performance during holiday and key shopping moments also contributed to growth.

  • Tom Ford Beauty grew strong double digits, reflecting strength in its Signature and Private Blend fragrances, including Black Orchid and Oud Wood. The launch of Ombre Leather Parfum also contributed to growth and helped drive the Ombre Leather franchise.

  • Net sales from Le Labo also rose strong double digits with growth in all regions, reflecting the recovery of brick-and-mortar, improved retail traffic, and targeted expanded consumer reach. Growth was driven by hero fragrances, such as Santal 33, as well as the successful launch of Thé Matcha 26.

  • Fragrance operating income increased, driven primarily by higher net sales, partially offset by strategic investments to support brick-and-mortar reopening.

Hair Care

  • Hair care net sales rose across every region, reflecting increases from both Aveda and Bumble and bumble as brick-and-mortar recovered from prior-year closures related to COVID-19 through much of the world.

  • Aveda’s growth reflected the continued success of its hero franchises, including Botanical Repair and Nutriplenish, as well as the relaunch of Full Spectrum Semi-Permanent Treatment Hair Color and the launch of Botanical Repair Strengthening Overnight Serum.

  • Double-digit net sales growth at Bumble and bumble primarily reflected growth in hero franchises and the launches of Thickening Plumping Mask and Thickening Go Big Plumping Treatment. Targeted expanded consumer reach also contributed to growth.

  • Hair care operating results declined reflecting strategic investments to support the brick-and-mortar recovery and targeted expanded consumer reach, partially offset by higher net sales.

Results by Geographic Region

(Unaudited)

Year Ended June 30

Net Sales

Percentage Change

Operating Income

Percentage
Change

($ in millions)

2022

2021

Reported
Basis

Constant
Currency

2022

2021

Reported
Basis

The Americas

$

4,623

$

3,797

22

%

21

%

$

1,159

$

518

100

+%

Europe, the Middle East & Africa

7,681

6,946

11

12

1,360

1,335

2

Asia/Pacific

5,437

5,486

(1

)

(1

)

795

993

(20

)

Subtotal

$

17,741

$

16,229

9

%

10

%

$

3,314

$

2,846

16

%

Returns/charges associated with restructuring

and other activities

(4

)

(14

)

(144

)

(228

)

37

Total

$

17,737

$

16,215

9

%

10

%

$

3,170

$

2,618

21

%

Organic Net Sales Growth - Reconciliation to GAAP

(Unaudited)

Year Ended June 30

2022 vs. 2021

Organic
N
et Sales
Growth
(Non-GAAP)(1)

Impact of
Acquisitions,
Divestitures and
Brand Closures, Net

Impact of
Foreign
Currency
Translation

Net Sales
Growth

(GAAP)

The Americas

16

%

5

%

1

%

22

%

Europe, the Middle East & Africa

10

2

(1

)

11

Asia/Pacific

(2

)

1

(1

)

Subtotal

8

%

2

%

(1

)%

9

%

Returns associated with restructuring and other activities

Total

8

%

2

%

(1

)%

9

%

(1)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures (notably DECIEM and BECCA); as well as the impact of currency translation.

The Americas

  • Net sales grew strong double digits in the United States, Canada and Latin America as brick-and-mortar retail traffic recovered during the year. Net sales increased in every product category and in nearly every distribution channel.

  • The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 5 percentage points to net sales growth.

  • Brick-and-mortar net sales increased strong double digits, benefiting from the year-over-year increase in open retail locations, as well as improved traffic.

  • In North America, net sales growth was led by makeup, which was disproportionately impacted by the greater challenges stemming from the COVID-19 pandemic in the prior-year period, as well as continued growth in fragrance.

  • In Latin America, net sales grew in nearly every market and product category.

  • Operating income in The Americas increased, primarily reflecting higher net sales, the year-over-year reduction of goodwill, other intangible and long-lived asset impairments of $129 million, partially offset by strategic investments to support the reopening of brick-and-mortar retail and the makeup recovery.

Europe, the Middle East & Africa

  • Net sales grew in nearly every market, led by the United Kingdom. The growth reflects strong double-digit recovery in brick-and-mortar compared to the prior year when retail traffic was more negatively impacted by COVID-19.

  • The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 2 percentage points to net sales growth.

  • Net sales from most emerging markets in the region increased double digits, driven by the brick-and-mortar recovery.

  • Net sales grew double digits in makeup, fragrance and haircare, partly reflecting the return of more social activities and in-store services.

  • Global travel retail net sales increased year-over-year reflecting continued growth from Asia/Pacific despite increased travel restrictions beginning in March 2022 that particularly impacted Hainan. Travel retail net sales also grew from EMEA and The Americas driven by increased traffic as COVID-19 restrictions were lifted.

  • Operating income increased, reflecting brick-and-mortar recovery, partially offset by an increase in the intercompany royalty expense related to the growth in our travel retail business.

Asia/Pacific

  • Net sales declined slightly, reflecting variability in recovery and COVID restrictions across the region. Net sales growth in more than half of the markets in the region was offset by increased COVID-19 restrictions during the second half of fiscal 2022. Mid-single-digit growth in the first nine months of the fiscal year was offset by the negative impacts from the increased COVID-related restrictions in China in the fourth quarter, including the temporarily reduced capacity at the Company’s distribution facilities in Shanghai, resulting in a modest decline in Asia/Pacific growth for the fiscal year.

  • The non-comparable impacts of net sales related to acquisitions, divestitures and brand closures contributed approximately 1 percentage point to net sales growth.

  • Net sales declines in makeup and skin care were only partly offset by net sales growth from fragrance and hair care in the region.

  • Net sales declined in brick-and-mortar due to soft traffic in areas most impacted by rising cases of COVID-19. Strong double-digit online growth partly offset the decline in brick-and-mortar as the Company and many retailers continued to capture consumer demand online.

  • In mainland China, net sales was close to flat year-over-year as the impact from the rise in COVID-19 restrictions was mostly offset by very strong growth in the first half of fiscal 2022. Net sales benefited from successful programs during key shopping events, including the 11.11 Global Shopping Festival and the 6.18 Mid-Year Shopping Festival, where the Estée Lauder brand was ranked the #1 prestige beauty flagship store on both Tmall and JD.

  • Operating income decreased, due entirely to the fiscal 2022 other intangible asset impairment of $230 million relating to Dr.Jart+.

Cash Flows

  • For the twelve months ended June 30, 2022, net cash flows provided by operating activities were $3.04 billion, compared with $3.63 billion in the prior year, reflecting higher working capital needs to support growth and to mitigate the global supply chain challenges, as well as higher cash paid for taxes, partially offset by higher earnings before taxes, excluding non-cash items.

  • Capital Expenditures increased to $1.04 billion compared to $0.64 billion in the prior-year period, primarily driven by increased investments for a new manufacturing facility in Japan, online capabilities, the Company’s freestanding stores and counters at retailers to support new and existing distribution and information technology enhancements as well as investments to support the reopening of the Company’s offices located around the world, which were previously closed due to COVID-19.

  • The Company ended the year with $3.96 billion in cash and cash equivalents after returning $3.15 billion cash to stockholders through dividends and share repurchases during the twelve month period.

Fourth Quarter Results

  • For the three months ended June 30, 2022, the Company reported net sales of $3.56 billion, a 10% decrease compared with $3.94 billion in the prior-year period. Organic net sales decreased 8%.

  • Strong growth in The Americas where improved foot traffic in brick-and-mortar drove net sales growth in every category was more than offset by the negative impacts from the increased COVID-related restrictions in China that affected travel and retail traffic as well as temporarily reducing capacity at the Company’s Shanghai distribution facilities. In addition, the Company suspended commercial activities in Russia and Ukraine after the invasion of Ukraine. As a result, net sales declined in both Asia/Pacific and EMEA.

  • Net earnings4 were $52 million, and diluted earnings per share was $.14. In the prior-year quarter, the Company reported net earnings4 of $1.02 billion and diluted earnings per share of $2.76.

  • During the three-months ended June 30, 2022, the Company recorded restructuring and other charges, other intangible asset impairments, and expense relating to the change in fair value of acquisition-related stock options that, combined, resulted in an unfavorable impact of $128 million ($101 million less the portion attributable to redeemable noncontrolling interest and net of tax), equal to $.28 per diluted share, as detailed on page 18. The prior-year period results include restructuring and other charges, changes in contingent consideration, goodwill, other intangible and long-lived asset impairments, acquisition-related stock option expense (less the portion attributable to redeemable noncontrolling interest), and other income primarily related to a gain on a previously held equity investment in DECIEM that, combined, resulted in a favorable impact of $696 million ($731 million after tax), equal to $1.98 per diluted share, as detailed on page 18.

  • Excluding restructuring and other charges and adjustments referred to in the previous bullet, adjusted diluted net earnings per common share for the three months ended June 30, 2022 was $.42, a decrease from adjusted diluted net earnings per common share of $.78 in the three months ended June 30, 2021. Adjusted diluted net earnings per common share was $.43 in constant currency.

_________________________________

4 Net earnings attributable to The Estée Lauder Companies Inc. which excludes net (earnings)/loss attributable to noncontrolling interests and redeemable noncontrolling interest.

Outlook for Fiscal 2023 First Quarter and Full Year

The Company enters the fiscal year during a volatile period of record inflation, supply chain disruptions, strengthening U.S. dollar, risk of a slowdown in many markets globally, and with a strong headwind from the August 2022 COVID-19 restrictions in Hainan. The Company remains excited about the prospects and future growth in global prestige beauty and plans to invest in its business during this difficult environment to support share gains and long-term growth. With multiple engines of growth across regions, brands, product categories and channels, the Company is well-positioned to drive diversified growth across its portfolio as it manages through this period.

The full year outlook reflects the following assumptions and expectations:

  • More balanced growth across categories, regions and channels as the impacts of COVID-19 restrictions begin to abate.

  • Targeted expanded distribution throughout the year to retailers that provide broader consumer reach.

  • A continued gradual resumption of global international travel, including to Hainan.

  • Inflationary pressures, including higher transportation and logistics costs, are negatively impacting both cost of sales and operating expenses in fiscal 2023. The Company expects to mitigate most of the impact to its business and costs through strategic price increases, mix optimization and cost savings in other areas.

  • Incremental savings from the Post-COVID Business Acceleration Program and reinvestment in advertising and capabilities.

  • Full-year effective tax rate of approximately 23%.

  • Net cash flows provided by operating activities are forecast to be between $3.1 billion and $3.2 billion, assuming the Company achieves the results described below, and capital expenditures are expected to be approximately 6.5% of projected sales to support the continued build out of the manufacturing facility in Japan and continued investment in customer facing capital including counters and online technologies.

The Company is mindful of ongoing risks related to the COVID-19 pandemic as well as risks related to the effects of the global macro environment, including the risk of recession; currency volatility; increasing inflationary pressures; supply chain disruptions; social and political issues; regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues. The Company is also mindful of inflationary pressures on our cost base and is monitoring the impact on consumer preferences.

Full Year Fiscal 2023

Sales Outlook

  • Reported net sales are forecasted to increase between 3% and 5% versus the prior-year period. This range includes:

    • The negative impact of 1% from the termination of the Company’s license agreements for the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines effective June 30, 2022.

    • A negative impact of 1% related to Russia and Ukraine.

    • A negative 3% due to foreign currency translation, as well as an additional 1% due to certain impacts of foreign currency transactions in key international travel retail markets.

  • Organic net sales, which excludes returns associated with restructuring and other activities; non-comparable impacts from acquisitions, divestitures and brand closures; as well as the impact of currency translation, are forecasted to increase between 7% and 9%. This includes the negative impacts related to Russia and Ukraine, as well as foreign currency transactions, noted above.

Earnings per Share Outlook

  • Reported diluted net earnings per common share are projected to be between $7.11 and $7.33. Excluding restructuring and other charges, diluted net earnings per common share are projected to be between $7.39 and $7.54.

  • Adjusted diluted earnings per common share are expected to increase between 5% and 7% on a constant currency basis. Currency exchange rates are volatile and difficult to predict. Using July 31, 2022 spot rates for fiscal 2023:

    • The negative currency impact equates to about $.20 of diluted earnings per share.

    • The impact from certain foreign currency transactions in key international travel retail markets is expected to negatively impact adjusted diluted earnings per common share growth by 6%.

First Quarter Fiscal 2023

Sales Outlook

  • Reported net sales are forecasted to decrease between 10% and 8% versus the prior-year period. This range includes the negative impacts from the termination of the Company’s license agreements for the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines effective June 30, 2022, the negative impact related to Russia and Ukraine, and the negative impact from foreign currency translation, as well as certain impacts of foreign currency transactions in key international travel retail markets.

  • Organic net sales, which excludes returns associated with restructuring and other activities; non-comparable impacts from acquisitions, divestitures and brand closures; as well as the impact of currency translation, are forecasted to decrease between 6% and 4%. This includes the negative impacts related to Russia and Ukraine, as well as foreign currency transactions, noted above.

Earnings per Share Outlook

  • Reported diluted net earnings per common share are projected to be between $1.16 and $1.28. Excluding restructuring and other charges, diluted net earnings per common share are projected to be between $1.22 and $1.32.

  • Adjusted diluted earnings per common share are expected to decrease between 34% and 28% on a constant currency basis. Currency exchange rates are volatile and difficult to predict. Using July 31, 2022 spot rates for the first quarter of fiscal 2023:

    • The negative currency impact equates to about $.04 of diluted earnings per share.

    • The impact from certain foreign currency transactions in key international travel retail markets is expected to negatively impact adjusted diluted earnings per common share growth by 5%.

Reconciliation between GAAP and Non-GAAP - Net Sales Growth
(Unaudited)

Three Months Ending

Twelve Months Ending

September 30, 2022(F)

June 30, 2023(F)

As Reported - GAAP(1)

(10%) - (8

%)

3% - 5

%

Organic, Non-GAAP(2)

(6%) - (4

%)

7% - 9

%

Impact of acquisitions, divestitures and brand closures

(1

)

(1

)

Impact of foreign currency translation

(3

)

(3

)

Returns associated with restructuring and other activities

As Reported - GAAP(1)

(10%) - (8

%)

3% - 5

%

(1)Includes returns associated with restructuring and other activities

(2)Organic net sales growth represents net sales growth excluding returns associated with restructuring and other activities; non-comparable impacts of already announced acquisitions, divestitures and brand closures (i.e., certain of your designer fragrances); as well as the impact of currency translation.

(F)Represents forecast

Reconciliation between GAAP and Non-GAAP - Diluted Earnings Per Share ("EPS")

(Unaudited)

Three Months Ending

Twelve Months Ending

September 30

June 30

2022(F)

2021

Growth

2023(F)

2022

Variance

Forecasted/As Reported EPS - GAAP(1)

$1.16 - $1.28

$

1.88

(38%) - (32%)

$7.11 - $7.33

$

6.55

9% - 12%

Non-GAAP

Restructuring and other charges

.04 - .06

.01

.21 - .28

.31

Change in fair value of acquisition-related

stock options (less the portion attributable to

redeemable noncontrolling interest)

(.12

)

Other intangible and long-lived asset impairments

.50

Forecasted/Adjusted EPS - Non-GAAP

$1.22- $1.32

$

1.89

(36%) - (30%)

$7.39 - $7.54

$

7.24

2% - 4%

Impact of foreign currency translation

.04

.20

Forecasted Adjusted Constant Currency EPS -

Non-GAAP

$1.26 - $1.36

(34%) - (28%)

$7.59 - $7.74

5% - 7%

(1)Includes restructuring and other charges and adjustments

(F)Represents forecast

Conference Call The Estée Lauder Companies will host a conference call at 9:30 a.m. (ET) today, August 18, 2022 to discuss its results. The dial-in number for the call is 877-883-0383 in the U.S. or 412-902-6506 internationally (conference ID number: 8308619). The call will also be webcast live at http://www.elcompanies.com/investors/events-and-presentations.

Cautionary Note Regarding Forward-Looking Statements

Statements in this press release, in particular those in "Outlook," as well as remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like "expect," "will," "will likely result," "would," "believe," "estimate," "planned," "plans," "intends," "may," "should," "could," "anticipate," "estimate," "project," "projected," "forecast," and "forecasted" or similar expressions.

Factors that could cause actual results to differ materially from our forward-looking statements include the following:

(1)

increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses;

(2)

the Company’s ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in the Company’s business;

(3)

consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell the Company’s products, an increase in the ownership concentration within the retail industry, ownership of retailers by the Company’s competitors or ownership of competitors by the Company’s customers that are retailers and our inability to collect receivables;

(4)

destocking and tighter working capital management by retailers;

(5)

the success, or chan...