Estée Lauder Companies Third Quarter Earnings Per Share Rise To $.38, Before Restructuring Activities

The Estée Lauder Companies Inc. (NYSE: EL) today reported a solid financial performance for its third quarter ended March 31, 2012. For the quarter, the Company had net sales of $2.25 billion, a 4% increase compared with $2.17 billion reported in the prior-year quarter. Excluding the impact of foreign currency translation, net sales increased 5%. The Company reported net earnings for the quarter of $130.4 million, a 5% increase compared with $124.7 million last year. Diluted net earnings per common share rose 6% to $.33, compared with $.31 reported in the prior year. All mention of net earnings in the body of this release refers to net earnings attributable to The Estée Lauder Companies Inc., which reflects the adjustment for noncontrolling interests.

The fiscal 2012 third quarter results included charges associated with restructuring activities of $28.8 million ($18.8 million after tax), equal to $.05 per diluted common share. The fiscal 2011 third quarter results included returns and charges associated with restructuring activities of $23.5 million ($17.9 million after tax), equal to $.04 per diluted common share.

Excluding these returns and charges in the fiscal 2012 and 2011 third quarters, net sales for the three months ended March 31, 2012 increased 4% to $2.25 billion and net earnings rose 5% to $149.2 million. Diluted net earnings per common share rose 7% to $.38 versus a comparable $.35 in the prior-year period. A reconciliation between GAAP and non-GAAP financial measures is included in this release.

In the second quarter of fiscal 2012, some retailers, primarily in Asia/Pacific, accelerated their orders in advance of the Company’s January 2012 implementation of SAP at certain of its locations and brands. Those additional orders amounted to approximately $30 million in sales that would have likely occurred in the Company’s fiscal 2012 third quarter. Additionally, the Company’s fiscal 2011 third quarter included approximately $42 million of sales resulting from accelerated orders, primarily by retailers in Europe, in advance of the Company’s April 2011 implementation of SAP at certain of its locations. Combined, these actions created a difficult comparison between the fiscal 2012 third quarter and the fiscal 2011 third quarter of approximately $72 million in sales and $54 million in operating income, equal to $.09 per diluted common share. The impact of these shifts by region and product category is included in this release. Additionally, in the current third quarter, the Company established a provision for anticipated returns of approximately $16 million as a result of repositioning certain products due to changes in regulations related to sunscreen products in the United States, which reduced net sales growth by approximately 70 basis points.

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