The Estée Lauder Companies Inc. (NYSE:EL) Q4 2024 Earnings Call Transcript August 19, 2024 9:30 AM ET

Company Participants

Rainey Mancini - SVP of IR
Fabrizio Freda - President and CEO
Tracey Travis - EVP and CFO

Conference Call Participants

Steve Powers - Deutsche Bank
Bryan Spillane - Bank of America
Lauren Lieberman - Barclays
Filippo Falorni - Citi
Dana Telsey - Telsey Group
Peter Grom - UBS
Rupesh Parikh - Oppenheimer

Operator

Good day, everyone, and welcome to The Estee Lauder Companies Fiscal 2024 Fourth Quarter and Full Year Conference Call. Today's call is being recorded and webcast. For opening remarks and introductions, I’d like to turn the floor over to Senior Vice President of Investor Relations, Ms. Rainey Mancini. Ma'am, you may begin.

Rainey Mancini

Hello. On today's call are Fabrizio Freda, President and Chief Executive Officer; and Tracey Travis, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our report filed with the SEC where you'll find factors that could cause actual results to differ materially from these forward-looking statements. To facilitate the discussion of our underlying business, the commentary on our financial results and expectations is before restructuring and other charges and adjustments disclosed in our press release. Unless otherwise stated, all organic net sales growth also excludes the non-comparable impacts of acquisitions, divestitures, brand closures, and the impact of foreign currency translation. You can find reconciliations between GAAP and non-GAAP measures on our press release and on the investors section of our website.

As a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms. It also includes estimated sales of our products through our retailers' websites. Throughout our discussion, our Profit Recovery and Growth Plan will be referred to as our PRGP. During the Q&A session, we ask that you please limit yourself to one question, so we can respond to all of you within the time scheduled for this call.

And now, I'll turn the call over to Fabrizio.

Fabrizio Freda

Thank you, Rain, and hello to everyone. Today, we will review our results for fiscal year 2024, which represented a difficult year for the company and discuss the implementation of our strategy reset to drive improving performance in fiscal year 2025 and beyond. After a challenging first half, we returned to top line growth in the second half of fiscal year 2024 with organic sales growth accelerating from 6% in the third quarter to 8% in the fourth quarter. And we delivered an adjusted operating margin of 11.6%. This level of profitability was higher than the first half and expanded from the second half of fiscal year 2023. All told, for fiscal year 2024, our organic sales declined 2%, we achieved modest gross margin expansion and adjusted operating margin contracted 120 basis points to 10.2%. These results were in line with the revised outlook we offered in May for sales and better than expected for operating profitability despite the further softening of the prestige beauty industry in China and Asia travel retail. That said, we remain unsatisfied with this performance.