Earnings Call Excerpt
Estee Lauder Companies Inc. (EL)
Q2 2006 Earnings Conference Call
January 26th 2006, 9:30 AM.
Executives:
Dennis D'Andrea, VP, IR
William Lauder, President, Chief Executive Officer
Richard Kunes, EVP, Chief Financial Officer
Cedric Prouve, Group President
Analysts:
Bill Pecoriello, Morgan Stanley
Wendy Nicholson, Citigroup Investment Research
Amy Chasen, Goldman Sachs
Bill Schmitz, Deutsche Bank
Linda Bolton Weiser, Oppenheimer
John Faucher, J.P. Morgan
Alice Longley, Buckingham Research
Sandy Beebee, HSBC
Chris Ferrara, Merrill Lynch
Amy Chasen, Goldman Sachs
Javier Escalante, Morgan Stanley
Kathleen Reed, Stanford Financial
Presentation
Operator
Good day everyone and welcome to the Estee Lauder Companies Fiscal 2006 Second Quarter Conference Call. Today's call is being recorded and webcast. For opening remarks and introductions, I would like to turn the call over to the Vice President of Investor Relations, Mr. Dennis D'Andrea. Please go ahead, sir.
Dennis D'Andrea, VP, IR
Good morning everyone. On today's call is William Lauder, President and Chief Executive Officer, and Rick Kunes, Executive Vice President and Chief Financial Officer. Also with us today is Patrick Bousquet, Group President responsible for sales and profits in all markets outside of North America. Dan Brestle, our Chief Operating Officer is also here and he will be available for the Q&A session. Since many of our remarks today contains forward-looking statements, let me refer you to our press release where you will find factors that could cause actual results to differ materially from these forward-looking statements.
I’ll turn the call over to William.
William Lauder, President, Chief Executive Officer
Thank you, Dennis. Good morning everyone and thank you for joining us. I am happy to report that overall the quarter sales came in within our expected range while the bottom line was better than anticipated. We told you we will quickly act at our strategic imperatives and some of the cost containment efforts we started are paying off. I’ll talk in more detail about these actions shortly but first let me recap the holiday season.
On the international front where we now derive almost half of our sales and more than half of our profits, the holiday period was strong. Stronger retail sales during the quarter grew double-digits. The U.K had a terrific Christmas. Japan and Korea are starting to rebound and the emerging markets of China and Russia have seller growth. Some of the Western European countries remain challenging due to a relatively weak retail environment and de-stocking by several retailers. But overall the international business was solid. Those of you who follow the U.S. retail sector know that much of the department store traffic materialized just before the holidays. Our sales followed a similar pattern showing strong double-digit gains at retail during the week prior to Christmas. Once again the largest retail sales growth was in specialty department stores like Neiman Marcus in Nordstrom with more temperate increases elsewhere. Estee Lauder’s Annual Blockbuster Promotion grew 11% at retail despite a small price increase. The brands in other holiday sets also proved popular.
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