Estee Lauder Guides Lower

It slashes first-quarter numbers but maintains full-year guidance.
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Estee Lauder

(EL) - Get Report

dropped 7% in late action Monday after trimming first-quarter guidance.

The company said weak sales would keep earnings "significantly below the same prior-year period."

The New York cosmetics retailer said that net sales for the first quarter "are expected to grow in the low-single digits in constant currency," below the company's 6% goal and short of the 7.2% Wall Street estimate. Lauder said the shortfall "reflects soft sales primarily in the Americas, where the company has recently been impacted by weakness at certain retailers, the general consumer response to higher oil and gas prices, softness in the Southeast region due to the effects of Hurricane Katrina and lower than expected sales from promotional programs."

Estee Lauder said that as a result, it expects to make about 90 cents a share for the first half, below the $1.02-a-share Reuters Research estimate. The company confirmed its $1.95-$2-a-share full-year guidance, though.

"The Company believes that with the product launches and programs in place for the fiscal second half it will be able to recoup the expected first half sales and earnings shortfall," Lauder said. "Risks to the Company's current estimates include the continued negative impact on its business resulting from Hurricane Katrina, as well as the economic effect on raw material prices, consumer spending and the retail environment in the U.S. caused by sustained high oil and gas prices."

Late Monday, Estee Lauder dropped $2.73 to $37.75.