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The Estee Lauder Companies Inc. (EL) 1

Any business with a retail element has gone through a difficult time due to the coronavirus pandemic. Estee Lauder, often counted as one of the top cosmetics stocks, has also been through a challenging time. It has also announced a reduction in its headcount by 1,500 to 2,000 workers and closure of 10% to 15% of its physical retail stores.

This announcement came as the company reported its Q42020 earnings on August 20th, 2020. Revenues fell from $3.59 billion in the same quarter the prior year to $2.43 billion in Q42020. That represents a drop of almost 33% year-over-year. Meanwhile, the bottom line went from a positive net income of $157 million in Q42019 to a net loss of $462 million in the 4th quarter of 2020. Both revenue and net income missed analyst estimates. All business segments were down except skincare, which rose 13% on a Y-o-Y basis. Geographically, the Asia-Pacific region was up 15% while the Americas and the EMEA regions were down.

Company CEO Fabrizio Freda wasn’t too pessimistic with the results. He said, “Fiscal year 2020 was truly a year with our parallel as we delivered one of our strongest first half on record and navigated with agility through an unprecedented pandemic in the second half.” He further added, “Despite extensive temporary store closures worldwide in the second half as COVID-19 pandemic took hold, sales fell only 20% and we were profitable as we quickly pivoted to online to capture consumption and adjust our cost structure. Our multiple engines of growth strategy, which has powered our success for over a decade, continues to be highly effective.”

Investors looking to buy cosmetics stocks can look Estee Lauder as one of the options. Its stock has outperformed well-known brands like Revlon and L’Oreal. Estee Lauder’s stock has returned more than 53% since the March market crash and might just turn out to be the top choice among cosmetic stocks 2020.


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