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The Estée Lauder Companies Inc. reported results for the fiscal first quarter (ended Sept. 30, 2009) that were significantly higher than the prior-year period and the company's original expectations for the quarter.
For the first quarter, the company had net sales of $1.83 billion, a 4% decrease compared with $1.90 billion reported in the prior-year period. Excluding the impact of foreign currency translation, net sales decreased slightly from the year-ago period. The company reported net earnings, including charges associated with restructuring activities, for the quarter of $140.7 million, compared with $51.1 million last year.
"Our strong performance this quarter is an encouraging start to our fiscal year and to achieving our long-term strategy and financial goals," said Fabrizio Freda, president and CEO, the Estée Lauder Companies. "We capitalized on our solid pipeline of innovative products, initial improvements in certain areas of our business and increased cost discipline, which led to a significant improvement in operating margin. We believe we gained share globally in much of our distribution this quarter.
"While satisfying, these strong results should not mask the challenges and uncertainties we still see in the global economic environment. Additionally, we are at the beginning of our four-year strategic plan, which involves significant cultural changes and multiple initiatives, and we still have a lot of work ahead to achieve our goals. However, we will continue to focus on opportunities that are in our control, namely reducing our cost structure and building our brands."
The company's business in each of its product categories and geographic regions continued to be affected by challenging and volatile economic conditions. Despite these conditions, the company was able to outperform its original expectations because of better-than-anticipated sales and lower spending levels in each of the company's product categories and geographic regions. The better-than-anticipated sales stemmed, in part, from strong sell-in of higher-margin product launches, greater passenger traffic in the company's travel retail business and improved foreign currency translation. The lower spending reflects caution in many of the company's businesses given the extent of the global economic downturn and the potential risks in the near term.