Specifically, in the context of its strategy, during fiscal 2013 the Company expects to continue to increase gross margins and reduce operating expenses, which allows it to increase global advertising spending and finance SMI, while increasing profitability. Investment in advertising behind strong innovations should continue to create growth well beyond the industry average. In fiscal 2013, the Company is rebalancing its quarterly advertising spending over the year, with the largest increases occurring in the fiscal second and third quarters, compared to prior-year levels.
- Net sales are forecasted to increase between 3% and 4% in constant currency.
- Foreign currency translation is expected to be minimal.
- Comparisons with the current fiscal year third quarter will be affected by the accelerated sales orders shifted into the Company’s fiscal 2013 and 2012 second quarters, from its respective third quarters, in advance of the Company’s implementation of SAP at certain business units in January of both fiscal years. Combined, these actions create a difficult comparison between the fiscal 2013 and fiscal 2012 third quarters of approximately $64 million in sales, or 3%, and $55 million in operating income.
- Diluted net earnings per common share, including charges associated with restructuring activities, are projected to be $.28 to $.32.
- The Company expects to take charges associated with restructuring activities in its fiscal 2013 third quarter of about $3 million. The recording of charges will depend on when the relevant accounting criteria are met.
- Diluted net earnings per common share before charges associated with restructuring activities are projected to be in the range of $.28 to $32.
- In connection with its long-term strategic plan, as well as certain ongoing initiatives, the Company expects to realize savings of approximately $10 million in the third quarter of fiscal 2013.
- Net sales are forecasted to grow between 6% and 7% in constant currency.
- Foreign currency translation is expected to negatively impact sales by approximately 1.0% versus the prior year.
- The Company is raising the range of its diluted net earnings per share estimate, including charges associated with restructuring activities and the impact of the early extinguishment of debt, to $2.44 to $2.52.
- The Company expects to take charges associated with restructuring activities in fiscal 2013 of about $25 million, equal to approximately $.04 per diluted common share. The recording of charges will depend on when the relevant accounting criteria are met.
- As mentioned in this press release, the impact of the extinguishment of debt is equal to $.03 per diluted common share.
- Diluted net earnings per share before charges associated with restructuring activities and the impact of the early extinguishment of debt are now projected to be $2.51 to $2.59, up 11% to 14%.
- The Company’s broad-based growth is expected to continue ahead of the prestige beauty industry for the full fiscal year.
- On a product category basis, in constant currency, hair care and skin care are expected to be the leading sales growth categories, followed by makeup and fragrance.
- Geographic region net sales growth in constant currency is expected to be led by Asia/Pacific, followed by Europe, the Middle East & Africa and the Americas.
- In connection with its long-term strategic plan, as well as certain ongoing initiatives, the Company expects to realize savings of between $50 million and $75 million during fiscal 2013.
Forward-Looking StatementsThe forward-looking statements in this press release, including those containing words like “expect,” “plans,” “may,” “could,” “anticipate,” “estimate,” “projected,” “forecasted,” those in Mr. Freda’s remarks and those in the “Outlook for Fiscal 2013 Third Quarter and Full Year” section involve risks and uncertainties. Factors that could cause actual results to differ materially from those forward-looking statements include the following:
|(1)||increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses, some of which have greater resources than the Company does;|
|(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 changes in timing or scope, of new product launches and the success, or changes in the timing or the scope, of advertising, sampling and merchandising programs;|
|(6)||shifts in the preferences of consumers as to where and how they shop for the types of products and services the Company sells;|
|(7)||social, political and economic risks to the Company’s foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States;|
|(8)||changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, the Company’s business, including those relating to its products or distribution net works, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action the Company may take as a result;|
|(9)||foreign currency fluctuations affecting the Company’s results of operations and the value of its foreign assets, the relative prices at which the Company and its foreign competitors sell products in the same markets and the Company’s operating and manufacturing costs outside of the United States;|
|(10)||changes in global or local conditions, including those due to the volatility in the global credit and equity markets, natural or man-made disasters, real or perceived epidemics, or energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase the Company’s products while traveling, the financial strength of the Company’s customers, suppliers or other contract counterparties, the Company’s operations, the cost and availability of capital which the Company may need for new equipment, facilities or acquisitions, the returns that the Company is able to generate on its pension assets and the resulting impact on its funding obligations, the cost and availability of raw materials and the assumptions underlying the Company’s critical accounting estimates;|
|(11)||shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture nearly all of the Company’s supply of a particular type of product (i.e., focus factories) or at the Company’s distribution or inventory centers, including disruptions that may be caused by the implementation of SAP as part of the Company’s Strategic Modernization Initiative or by restructurings;|
|(12)||real estate rates and availability, which may affect the Company’s ability to increase or maintain the number of retail locations at which the Company sells its products and the costs associated with the Company’s other facilities;|
|(13)||changes in product mix to products which are less profitable;|
|(14)||the Company’s ability to acquire, develop or implement new information and distribution technologies and initiatives on a timely basis and within the Company’s cost estimates and the Company’s ability to maintain continuous operations of such systems and the security of data and other information that may be stored in such systems or other systems or media;|
|(15)||the Company’s ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom;|
|(16)||consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation;|
|(17)||the timing and impact of acquisitions and divestitures, which depend on willing sellers and buyers, respectively, and;|
|(18)||additional factors as described in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2012.|