While reporting financial results for the fourth quarter on Thursday, Estée Lauder Cos., Inc. (EL) provided earnings and sales growth guidance for the first quarter of fiscal 2021. However, the Company is not providing guidance for the full year 2021, given the uncertainty around the timing, speed and duration of the recovery from the adverse impacts of COVID-19.
For the first quarter, the company expects earnings in a range of $0.77 to $0.83 per share and adjusted earnings in a range of $0.80 to $0.85 per share. Reported net sales are forecasted to decrease between 12 and 13 percent, and forecasted to decline between 14 and 15 percent on a constant currency basis, excluding acquisitions.
On average, analysts polled by Thomson Reuters expect the company to report earnings of $1.22 per share on a sales decline of 11.4 percent to $3.45 billion for the quarter. Analysts’ estimates typically exclude special items.
The Company also announced the declaration of a $0.48 per share dividend on its Class A and Class B Common Stock, payable on September 15, 2020 to stockholders of record as of August 31, 2020.
Additionally, the company announced a two-year initiative to invest in accelerating growth opportunities post-COVID-19, which will begin during the company’s fiscal 2021 first quarter. This program is expected to position the Company to better execute its long-term strategy while strengthening its financial flexibility by aligning brick-and-mortar footprint to improve productivity and invest for growth.
These will include reducing retail footprint, primarily in Europe, the Middle East & Africa and in North America, and increasing digital investments to reflect a dramatic shift in consumer shopping to online and omnichannel capabilities in the more productive brick-and-mortar footprint.
The Company also estimates the closure of between 10 and 15 percent of its freestanding stores globally, as well as certain less productive department store counters that the Company elects to close.
Further, the Company estimates a net reduction in the range of approximately 1,500 to 2,000 positions globally or about 3% of its current workforce, as part of the program.
Once fully implemented, it expects to take restructuring and other charges of between $400 million and $500 million, before taxes. It is also expected to yield annual benefits of between $300 million and $400 million, before taxes.
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