The shares of Estee Lauder After the company reduced its guidance for the entire year, (NYSE:) stocks are now down over 9%

EL EPS is expected to be $1.90/share, which easily exceeds the $1.67/share expectation. Due to the poor performance in Americas and Asia Pacific regions, revenue came in at 4.25 billion. This was lower than the consensus of $4.32Billion.

“In the Asia/Pacific region, several markets prospered, led by Japan while our China results were pressured by COVID restrictions,” the management commented.

EL stock suffered especially after the company cut its guidance. Now, it expects adjusted EPS to be between $7.05 to $7.15. This compares with the previous guidance, $7.43- $7.58 and is lower than the $7.57 estimate.

Now, the company wants sales of +7% to +9% to replace +13% or +16% previously.

“Given our outstanding performance year-to-date, we expect to deliver a record year in fiscal 2022 despite temporary COVID-driven headwinds that reduced our fourth quarter outlook. We are confident that our business in China will rebound when COVID abates and accelerate our momentum.”

Barclays analyst Lauren Lieberman is “deeply” surprised by the big guidance cut.

“To be sure, with a major distribution center in Shanghai, we probably should have been braced for more short-term pressure on the business but even still, the implied magnitude of organic sales declines in F4Q (expected to be down -10-18% by our math) is striking,”

“While others may well have been better prepared for today’s release, we don’t expect anyone will have expected a shock to EPS of this degree,” she added.

Stifel analyst Mark Astrachan said the results were “worse-than-feared.”

“We anticipate EL shares to meaningfully underperform, partly reflecting weak F3Q22 sales relative to peers and limited visibility on timing of improvement in China,” he told clients.

By Senad Karaahmetovic