The luxury sector is in a downtrend. elf Beauty (ELF) lost 5.35% to close at $88.44 on Tuesday. Similarly, Estée Lauder (EL) shares dropped. EL stock lost 16.07% to close below $70.
Estée Lauder reported non-GAAP earnings of $0.62 a share. It easily beat expectations, but revenue dropped by 6.1% Y/Y to $4.02 billion. Investors may prefer to hold LVMH (LVMHF) instead since shares rebounded from their $600 low. It closed at $723.25.
Estée blamed consumer sentiment in China and South Korea for the weak global performance. To offset weak China sales, the firm is launching Beauty Reimagined. Markets are doubtful that the firm will pivot its business back to growth.
The firm will cut jobs to align weak revenue with its operating costs.
In the food and beverage industry, Pepsi (PEP) closed down by 4.51% on Feb. 4. Despite hiking its dividend by 5% to $5.69 annually and posting sequential seasonal growth, shares declined.
Pepsi earned $1.96 in EPS (non-GAAP). Revenue was flat (-0.3% Y/Y) to $27.78 billion. On the conference call, the company said it would work hard to get its business momentum in the Frito business. Unfortunately, consumers are likely to cut back on snacks to offset the many years of inflation.
Pepsi said that it is starting to get its pricing power back. It views the away-from-home category as a big opportunity.
