Estee Lauder’s Profit Falls 33%

Cosmetics maker Estee Lauder Cos. posted a 33% decline in profit Wednesday in the wake of restructuring and other charges and gave a disappointing forecast for the current period.

The New York-based company, whose brands include Clinique, Aveda, M-A-C and Bobbi Brown, blamed the weak forecast on heavier marketing spending and consolidation among the department stores where its cosmetics and fragrances are sold.

Still, the company said, it was optimistic about its prospects for its fiscal year that began last month, citing baby-boomer demand for skin-care products.

“The nation’s 78 million baby boomers are aging,” said Chief Executive William Lauder in a conference call with analysts. “More than half are over 50, and many aren’t happy about reaching middle age. That is good news for our company.”

In the company’s fiscal fourth quarter ended June 30, sales rose 5% to $1.6 billion, helped by new products, including Resilience Lift Extreme firming cream, and strong demand for its M-A-C and Bobbi Brown makeup.

Net income declined to $44.5 million, or 21 cents a share, from $66.6 million, or 30 cents, a year earlier.

Excluding charges totaling $59.7 million, or 28 cents a share, for restructuring and a settlement with the Internal Revenue Service, earnings were $108.8 million, or 51 cents. On that basis, analysts’ average forecast was 48 cents a share, according to Reuters Estimates.

Estee Lauder said its earnings forecast for the new fiscal year of $2 to $2.10 a share looked achievable. Analysts on average expect $2.10, according to Reuters Estimates.

But its fiscal first-quarter forecast for earnings of 15 cents to 20 cents a share was well below Wall Street expectations for 33 cents.

Also

* Columbus, Ohio-based Limited Brands Inc. posted a 39% rise in second-quarter earnings on strong sales at its Victoria’s Secret intimate apparel chain.

The company, which also owns the Limited and Bath & Body Works retail chains, also reiterated its cautious forecast for the rest of the year.

Limited reported earnings of $113.1 million, or 28 cents a share, compared with $81.5 million, or 20 cents, in the year-earlier quarter. Sales rose 7% to $2.45 billion, and sales at stores open at least a year climbed 5%.

* Ross Stores Inc. posted a 7% rise in second-quarter profit that met Wall Street’s expectations, but the off-price retailer cut its earnings forecast for the current period as sales trends slowed.

Net income rose to $45.4 million, or 32 cents a share, from $42.3 million, or 29 cents, a year earlier. Sales rose 12% to $1.31 billion. Sales at stores open at least a year increased 4%.

But Pleasanton, Calif.-based Ross said that same-store sales in the first two weeks of August were below expectations and that it was heading into the fall season with hefty inventory that it would need to clear out at lower prices, hurting margins.

* Big Lots Inc., the largest U.S. seller of discontinued and overstocked merchandise, reported an unexpected second-quarter profit of $4.3 million, or 4 cents a share, contrasted with a loss of $13.8 million, or 12 cents, a year earlier. Sales rose 5.6% to $1.06 billion.