Strong demand for makeup drives Estee Lauder's glossy sales forecast

Strong demand for makeup drives Estee Lauder's glossy sales forecast. Estee Lauder Cos Inc forecast fiscal 2022 sales largely above estimates on Thursday, boosted by a rebound in demand for makeup products at its brick-and-mortar stores as people start venturing out following the easing of COVID-19 curbs.

Strong demand for makeup drives Estee Lauder's glossy sales forecast
© Reuters. FILE PHOTO: The Estee Lauder section of the Nordstrom flagship store is seen during a media preview in New York, U.S., October 21, 2019. REUTERS/Shannon Stapleton

(Reuters) -Estee Lauder Cos Inc forecast fiscal 2022 sales largely above estimates on Thursday, boosted by a rebound in demand for makeup products at its brick-and-mortar stores as people start venturing out following the easing of COVID-19 curbs.

Shares of the cosmetics maker, up 20% this year, rose 2% as its makeup division surged 76% to $960 million in the fourth quarter, marking a return to growth for the first time in more than a year.

Sales of makeup products have rebounded after people started returning to offices and stepping out for sporting events and dining. Solid online sales, increased demand in China, and investments in its skincare products also helped the M.A.C brand owner cushion the blow from lower makeup revenue in the pandemic-hit 2020.

"Makeup and hair care are poised to gradually reignite as growth engines ... We anticipate the momentum in makeup will build around the world driven by local reopening," Chief Executive Officer Fabrizio Freda said in an earnings call.

Finance chief Tracey Travis noted that recovery in its brick-and-mortar stores could add to sales of luxury makeup products as people tend to use testers and in-store services before purchasing such items.

Estee projected net sales to increase between 13% and 16% in fiscal 2022, versus Refinitiv IBES estimates of 14% growth. It also forecast adjusted earnings between $7.23 and $7.38 per share, above estimates of $7.14.

The La Mer cosmetics maker's sales in duty-free shops are also expected to benefit from an increase in international travel, while its presence in the recently opened Sephora sections in Kohl's (NYSE:KSS) stores as well as Ulta Beauty (NASDAQ:ULTA) shops inside Target (NYSE:TGT) stores would also boost the topline.

Net sales in the reported quarter rose 62% to $3.94 billion, beating market estimates of $3.75 billion. Excluding items, it earned 78 cents, above estimates.