The Estée Lauder Companies Inc. (NYSE:EL) today reported net sales for its third quarter ended March 31, 2014 of $2.55 billion, an 11% increase compared with $2.29 billion in the prior-year quarter. Excluding the impact of foreign currency translation, net sales increased 12%. The Company reported a 270 basis-point increase in operating margin, and net earnings for the quarter rose 19% to $213.2 million, compared with $178.8 million last year. Diluted net earnings per common share rose 20% to $.54, compared with $.45 reported in the prior year.
Fabrizio Freda, President and Chief Executive Officer, said, “Our excellent results this quarter reflect our multiple engines of growth across product categories, countries and channels, enabling us to achieve strong local currency sales growth in every geographic region. Sales came in higher than our expectations and we again exceeded our earnings per share forecast. These results were driven by the broad global demand for our diverse prestige beauty brands, the strength of our emerging markets, accelerated growth in certain developed markets and solid progress in skin care.”
During the quarter, the Venezuelan government enacted changes to its foreign currency exchange rate regulations, which expanded the use of its existing exchange rate mechanisms and created another mechanism, SICAD II. Based on these changes, the Company evaluated all rate mechanisms made available by the Venezuelan government to determine the most appropriate rate to use. As a result, the Company changed the exchange rate used to remeasure its Venezuelan net monetary assets to a newly enacted SICAD II rate. Accordingly, the Company recorded a remeasurement charge of $38.3 million, both before and after tax, equal to approximately $.10 per diluted share.
Excluding charges, principally related to the Venezuela remeasurement, net earnings for the three months ended March 31, 2014 were $251.7 million, and diluted net earnings per common share were $.64, versus $.45 in the prior-year period.