Organic Net Sales Growth: Reached 6%, sitting at the higher end of expectations.
Earnings Per Share (EPS): Achieved at $0.97, surpassing expectations due in part to accelerated skin care sales and tighter expense management.
Gross Margin Increase: Improved by 280 basis points from the previous year, aided by a change in category mix leaning towards skin care and reduced obsolescence charges.
Operating Income: Rose 75% to $554 million with an operating margin expansion of 570 basis points to 14.1%.
Effective Tax Rate: Decreased to 30.5% from the previous year’s 43.1%, primarily because of a lower rate on foreign operations.
Future Guidance
Second Half Fiscal Year 2024 Outlook: Confidence in an inflected path toward renewed sales growth and improved profitability.
Profit Recovery Plan: Targeting to yield $1.1 billion to $1.4 billion of incremental operating profit in fiscal years 2025 and 2026, with savings anticipated to be reinvested in brand and consumer initiatives.
Advertising and Promotional Expenses: Expected shift of some spending to Q4 to support innovation launches and key holiday moments.
Capital Expenditures: Reached $702 million over nine months, with ongoing investments aligned with strategic growth initiatives.
Operating Cash Flow: Reported at $1.5 billion in the nine-month period, reflecting efficiency improvements.
Trends, Market Conditions, Sentiment
Asia Travel Retail: Seeing an improvement with targeted inventory levels and returning retail sales growth, contributing positively.
Innovation and Consumer Reach: Highlighted as key drivers for future growth across all regions, with significant emphasis on skin care, makeup innovations, and leveraging technology for market execution.
Sustainability Initiatives: Recognition of efforts through inclusion in the CDP’s Climate A list for 2023, emphasizing a commitment to environmental responsibility.
Market Sentiment: Reflects an optimistic view toward the second half of Fiscal Year 2024, focused on strategic recovery and growth plans, despite underlying challenges in certain geographical markets.
Notable Quotes
Fabrizio Freda: “We are at an inflection point in our company performance, primed for a strong second half of organic sales growth and improved profitability.”
Fabrizio Freda: “With our profit recovery plan, we are well positioned to meaningful rebuild our profitability in fiscal year 2025 and ‘26.”
Tracey Travis: “Our third quarter organic net sales increased 6% at the higher end of our expectations.”
Tracey Travis: “The reduction in our tax rate was largely driven by the shift in our geographical mix of business.”
