Here is yet another sign of global economic deterioration.
November 7 (King World News) – Gerald Celente: On 31 October, the share price of cosmetics giant Estée Lauder plunged 21 percent after the company reported revenue fell 4 percent in its most recent quarter, year over year, due largely to poor sales in China.
Sales overall will be off by 6 to 8 percent in the current quarter, it warned.
The company posted a loss of $156 million in its fiscal first quarter, compared to a $31-million profit a year earlier.
Lauder also withdrew its financial guidance for the current fiscal year and whacked its dividend by 47 percent to 35 cents, saying it needed the cash to fund an ongoing turnaround effort.
In addition, the company took $159 million in charges related to lawsuits over its talcum powder, which allegedly contained asbestos and caused cancer in some users. The company that supplied Lauder with the talcum has since filed for bankruptcy.
Lauder had staked a large share of its future on a strategy of promoting beauty products in China and selling its creams and lotions at airport shops in Asia. Both tactics have failed to produce the revenues expected.
Fabrizio Freda, the current CEO, began a rescue effort to dump leftover inventory and promised sales would turn upward this fiscal year.
Speaking with analysts recently, Freda said Lauder will avoid “future overexposure to areas of the global world that are becoming too volatile and uncertain.”
Now Freda is out on 31 December.
Members of the Lauder family, which still owns the company, have been quarreling about whether to hire an outsider to lead a turnaround effort or promote from within.
The latter faction has won. Long-time Lauder executive Stéphane de la Faverie will assume the top job. Also, the company announced that Jane Lauder is leaving after being passed over for the CEO’s job and William Lauder will shift from executive chair to nonexecutive chair.
For the first time, no Lauder will have a senior leadership role in the company.
While Lauder faces unique difficulties, the luxury market in general remains troubled by the loss of sales, especially in China. Perfumer Coty foresees sales slowing in Asia and North America and L’Oréal reported disappointing third-quarter sales. Its share price has shrunk by 23 percent this year.
MONCLER PROFITS DROP IN THIRD QUARTER
Moncler, the Italian fashion house selling $1,375 ankle boots and $2,450 down jackets, posted third-quarter revenue 3 percent below that of a year earlier.
Demand has softened in Asia and Europe, the company said.
The quarter’s revenue of €635.5 billion was roughly in line with analysts’ average estimate of €635.3 billion in a FactSet poll.
The period’s revenue was down 2 percent in Asia and 3 percent in Europe.
Consumer confidence in several markets had weakened, CEO Remo Ruffini said in a statement explaining the quarter’s result.
TREND FORECAST:
The luxury market is signaling economic danger ahead.
The fact that luxury sales are continuing to fall indicates that the economy in China is months from turning around, at least. The U.S. is recovering reasonably well but Europe and the U.K. are still perilously close to recession.
Therefore, the luxury market will remain hobbled at least through the first half of 2025 and probably longer.
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