Estee Lauder, Canada Goose slash annual targets as China recovery falters
By Ananya Mariam Rajesh and Aatrayee Chatterjee
(Reuters) -Estee Lauder and Canada Goose Holdings (NYSE:GOOS) on Wednesday cut their annual forecasts as the U.S. luxury goods companies struggle with weak demand in high-growth market China, sending their shares tumbling more than 10%.
Global companies ranging from L'Oreal to LVMH have indicated that inflation and economic turmoil are curbing a post-pandemic spending spree, mainly in the world's second-largest economy China.
Luxury companies have also flagged a hit from the Chinese government's tighter controls of «daigou» resellers — people who buy items at lower prices abroad and resell them at a discount in the country.
«They are very exposed to the daigou trade and are also big beneficiaries...the Chinese authorities have clearly clamped down on these bigger trade and it might have fundamentally changed the trade from here,» said Javier Gonzalez Lastra, luxury-focused portfolio manager at Tema ETFs.
Canada Goose, whose luxury parkas retail for over $1,000, said sales in China slowed in the second quarter from the preceding quarter, while Estee has struggled with a weaker-than-expected rebound in demand from fliers in Asia, mainly in travel destinations such as Korea and China's Hainan province.
The Asia-Pacific region accounts for more than 30% of the MAC lipstick maker's revenue.
Estee also signaled that a resetting of inventory in Asia travel retail is expected to extend until the end of the third quarter of its financial year 2024.
The company now expects adjusted profit per share between $2.17 and $2.42 for its full year, compared to a prior forecast of $3.50 to $3.75. Estee said disruptions caused by the conflict in the Middle East could have an 8 cents per
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