Estee Lauder shares drop on earnings forecast

NEW YORK (AP) — Shares of Estee Lauder Co. fell after the beauty products company issued a fiscal third-quarter earnings forecast well below Wall Street's expectations.

The stock dropped $2.62, or 4.5 percent, to $56.23 in midday trading.

Estee Lauder, which makes namesake cosmetics and skin care as well as products under the Clinique, Bobbi Brown and MAC makeup brands, said it expects to earn between 27 cents and 31 cents per share for the current quarter ending in March, or between 28 and 32 cents per share when excluding restructuring charges.

Analysts polled by FactSet, who usually strip out one-time gains and charges, expected a profit of 41 cents per share.

The company said its forecast assumes some slowdown in sales of more expensive beauty industry overseas, particularly in Europe, Japan and Australia, due to recent economic uncertainty and volatility in the financial markets. The outlook also assumes slower growth of the Chinese economy. Estee Lauder makes more than half of its sales overseas.

The outlook overshadowed the company's strong fiscal second-quarter results.

The company said its net income for the quarter ending Dec. 31 rose 15 percent to $396.7 million, or $1 per share, compared with $343.9 million, or 86 cents per share, a year earlier.

Revenue rose 10 percent to $2.74 billion from $2.49 billion a year ago.

Analysts expected earnings of $1.01 per share on revenue of $2.74 billion.

Sales in the Asia-Pacific region rose the most during the second quarter at 18 percent. Sales in Europe the Middle East and Africa rose 5 percent while U.S. sales rose 8 percent.