Estée Lauder Faces Significant Stock Decline Amid Various Challenges
Financial difficulties impact share prices and investor confidence.
New York-based The Estée Lauder Companies Inc. (EL) is a global leader in skincare, makeup, fragrance, and hair care products, managing a portfolio of prestigious luxury brands. With a market capitalization of $28.5 billion, Estée Lauder products are available in approximately 150 countries and territories.
As a company classified as “large-cap” for its valuation exceeding $10 billion, Estée Lauder is well-known in the cosmetic industry. Its renowned brands include Estée Lauder, BALMAIN, Clinique, Jo Malone London, TOM FORD, and others.
Despite its strong market position, Estée Lauder stock has experienced a staggering decline of 50.3% from its recent high of $159.75 on February 5. In the last three months, EL stock has dropped 9.4%, significantly underperforming compared to the Dow Jones Industrials Average’s ($DOWI) gain of 10.7% during the same period.
In a broader view, the year-to-date performance showcases a bleak outlook for Estée Lauder. Stock prices have decreased 45.8%, and over the past 52 weeks, the drop stands at 40.5%. This contrasts sharply with the DOWI, which has surged 18.5% in 2024 and recorded 23.8% returns over the past year.
Confirming the downward trend, Estée Lauder has predominantly traded below its 200-day moving average for the past year and its 50-day moving average since mid-April, with minor fluctuations.
Following the release of disappointing Q1 results on October 31, EL stock prices fell by 20.9%. The company incurred a significant $159 million charge due to talcum powder litigation settlements. Additionally, restructuring costs of $97 million contributed to a net loss of $156 million for shareholders, a stark contrast to the $31 million net income reported in the same quarter last year. Net sales also fell by 4.5% year-over-year to approximately $3.4 billion, reflecting declines across all product categories and regions.
Estée Lauder has encountered several hurdles, including weak consumer sentiment in China, inventory pressures stemming from a slowing retail market, and diminished demand for its products. In light of these trends, the company projects an organic sales decline of 6% to 8% for Q2 compared to the previous year, resulting in growing investor concerns.
In comparison, Estée Lauder’s competitor Coty Inc. (COTY) has experienced a 34.1% stock decline over the past 52 weeks.
The stock holds a consensus “Hold” rating among 28 analysts, with a mean price target of $80.48, suggesting a modest 1.5% upside from current levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes. For detailed disclosures, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
