Estee Lauder Cos Inc (EL.N) reported its first sales beat in four quarters, helped by strong demand for its makeup brands and its recent acquisitions of youth-favorite cosmetics makers Too Faced and BECCA.
Shares of Estee Lauder were up 3.9 percent at $90.90 in morning trading on Wednesday, tapping a more than 8-month high of $91.89.
Estee Lauder, which has been hurt in recent quarters by U.S. consumers opting to shop online rather than in department stores, has been pushing to increase its appeal to younger consumers and grow its presence in emerging markets, particularly China.
The 71-year old company, which owns the Clinique and MAC brands, bought Too Faced, a make-up brand popular among millennials, for $1.45 billion last year, hoping to increase its appeal to younger consumers. Estee Lauder also bought BECCA Cosmetics last year for an undisclosed sum.
Chief Financial Officer Tracey Travis said the company expects fourth-quarter sales to rise 9-10 percent in constant currency, boosted by Too Faced and BECCA.
Helped by sales of Tom Ford, Smashbox and La Mer cosmetics, Estee Lauder's net sales rose 7.5 percent to $2.86 billion in the third quarter ended March 31, topping the average analyst estimate of $2.81 billion - the company's first sales beat in four straight quarters.
Net earnings attributable to Estee Lauder increased to $298 million, or 80 cents per share, from $265 million, or 71 cents per share, a year earlier.
Excluding items, the company earned 91 cents per share, handily beating analysts' average estimate of 73 cents, according to Thomson Reuters I/B/E/S.
"We see investor concerns over the rapid deceleration in mall traffic trends at U.S. department stores along with planned store closures as largely overblown," J.P. Morgan analyst Andrea Teixeira said.
Teixeira pointed to Estee Lauder's large distribution network and ties with specialty retailers such as ULTA Beauty Inc (ULTA.O) and LVMH's (LVMH.PA) Sephora, which are popular with millennials.
Estee Lauder's sales in the Americas region, which accounted for about 41 percent of total sales, rose 5.3 percent to $1.17 billion. Five years ago, the business accounted for more than 43 percent of total revenue.
(Reporting by Jessica Kuruthukulangara and Richa Naidu in Bengaluru; Editing by Supriya Kurane)