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Estée Lauder Reaches New Highs

November 26, 2013

Stock rises more than 24% on the year.

Helped along by a booming travel retail business, shares of Estee Lauder Companies Inc. reached a new 52-week high of $75.02 on Nov 22, following the release of solid first quarter fiscal 2014 results on Oct 31. The stock closed at $74.32 yesterday. Net sales climbed 6% on the back of higher sales across most geographic regions and major product categories. In the quarter under review, the Hair Care category was strongest with 10% growth followed by fragrance (6%), skin care (5%) and Makeup (4%). Gross margin inflated 80 basis points (bps) to 79.7% in the first quarter of fiscal 2014 owing to higher sales.

Analysts are bullish on Lauder's growth potential, encouraged by its booming travel retail business. Rising air traffic is expected to boost sales in the travel retail segment in the upcoming quarters. The company has also witnessed a rise in online sales. Furthermore, the company continues to roll out winning products. Lauder's new Modern Muse fragrance brand debuted in selected countries in September, and became a bestseller at Harrods in the UK and was among the top 10 women prestige fragrances in the US Other successful fragrances launched during the quarter include the Michael Kors Collection, Tory Burch and Zegna Uomo, all of which were well received.

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