Estee Lauder shares fall as pandemic curbs makeup usage

Shares of global cosmetics maker Estee Lauder Companies Inc. tumbled Monday as the pandemic took some gloss off of its sales.

The stock fell more than 7% at the close of Monday trading to 288.93 after the company posted fiscal third quarter revenue of $3.86 billion. That missed the $3.92 billion revenue forecast of analysts polled by Zacks.

In its earnings report, the Manhattan company with facilities in Melville said the COVID-19 pandemic "continued to disrupt" its operations.

Disruptions included "intermittent closures" of retail stores around the world, reduced consumer traffic in stores and fewer opportunities to wear makeup.

'Lipstick Index' and COVID

Smeared lipstick and smudged makeup have been a common pandemic annoyance among women who chose to use beauty products with a face mask.

Strong lipstick sales has been seen as an indicator of consumer resilience in the face of economic slowdowns.

Leonard Lauder, son of company founder Estee Lauder and the company's chairman emeritus, famously coined the term "lipstick index" for the tendency of lipstick sales to spike in hard times as women sought inexpensive indulgences.

That phenomenon, seen during the Depression and other downturns, has been upended by the pandemic and its restrictions on social and work gatherings.

In a conference call, chief executive Fabrizio Freda said future results will hinge on reopening economies.

"The question is the makeup recovery, and the makeup is very linked to the comeback of the brick-and-mortar experience," he said.

The company reported adjusted earnings per share of $1.62 per share, beating analysts' consensus estimate of $1.29.

— Ken Schachter, with The Associated Press

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.