Estee Lauder earnings on deck with China recovery, U.S. demand in focus

Estee Lauder  (EL) - Get Free Report shares nudged higher in pre-market trading ahead of the luxury group's fourth quarter earnings prior to the opening bell with investors likely focused on the group's near-term prospects in a struggling Asia economy.

Estee Lauder, which focuses on the higher-end of the cosmetics market, is expected to post a fourth quarter loss of 4 cents per share, with revenues down 2.5% from last year to around $3.47 billion.

The group, which has lost market share to its France-based rival, L'Oreal, in the U.S. over the past five years, has focused on growth in Asia, where China's uneven post-Covid recovery has hammered consumer spending and triggered a spike in unemployment over recent months.

Earlier this spring, Estee Lauder lowered its full-year profit forecasts for a third time, warning investors that sales for its 2023 fiscal year are likely to fall between 10% and 12%, nearly double its prior estimate. 

The ongoing surge in summer travel, however, could support Estee Lauder's retail unit, which capitalizes on spending in airports and other duty-free zones.

U.S. sales will also be in focus after Tapestry  (TPR) - Get Free Report, the parent company of Coach which recently unveiled plans to buy luxury house Capri Holdings  (CPRI) - Get Free Report for $8.5 billion, forecast muted 2024 revenues amid weakening demand from cash-strapped American consumers. 

Estee Lauder shares were marked 0.15% higher in pre-market trading to indicate an opening bell price of $162.30 each.

• Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.