The shares of Estee Lauder plummeted 3% in premarket trade on Tuesday, as supply chain issues and a resurgent coronavirus in key countries caused the cosmetics company to decrease its full-year guidance.
Higher transportation and logistics costs, according to the firm, might have an impact on sales and operational expenses in the second half of the fiscal year.
At the midpoint, the creator of La Mer beauty products now anticipates annual net sales to climb by 13.5%, down 100 basis points from its previous prediction. One-tenth of a% is equal to one basis point.
Sales of skincare, makeup, and fragrances increased in the first quarter but would have been higher if several key countries had not imposed new limits owing to the Delta variation. Some Eastern markets, as well as areas of Europe and South America, were among them.
The company stated that it will try to offset higher costs by raising prices, improving product mix, and using air freight and less congested ports. This time, the gross margin was down 90 basis points.
In the first quarter, net revenues increased by 23% to $4.39 billion, compared to the same period the previous year. As economies reopened and people spent more on grooming to look and feel better, every region saw growth.
The adjusted earnings per share were $1.89, which was better than expected, as were sales.