Estee Lauder Shares See Modest Decline

Estee Lauder Cos. will see only a modest impact from a recent slowdown in duty-free sales due to stringent airport security measures implemented after last week’s alleged foiling of a plot to bomb trans-Atlantic airliners, according to an HSBC analyst. “We believe the market has overreacted to news that recently implemented airport security measures are negatively impacting travel retail beauty sales in the U.S. and U.K.,” said HSBC Global Research analyst Sandy Beebee. Beebee said she expects Estee Lauder to see an up to 4% annual profit decline due to the “short-term dip in travel retail sales.” “It’s true that consumers have slowed purchases of beauty products and fragrances at airport retailers over the past two days to avoid delays at the boarding gate,” noted Beebee. But she believes the impact on high-end cosmetics manufacturers will be “modest, at worst.” About 7% of Estee Lauder’s sales are from duty-free airport stores, although only 25% of these sales occur at U.K. or U.S.-based airports. Airports in other nations are operating normally.