Amazing Makeup.Com

As the recession ends, the beauty products industry is one of the ‘unsuspecting’ sectors which have surprised analysts this earnings season, with better-than-expected results. Estee Lauder Co. is the latest to report results for its first quarter which trumped analysts’ estimates of US$0.34 per share, with a profit of US$140.7M or US$0.71 per share, up from US$51.1M or US$0.26 per share a year earlier.

Estee Lauder boasted higher earnings across all of its segments, which were helped by improved demand in Asia.

After swinging to a loss in its fourth quarter ended June 30, 2009, the bad news keeps coming in for The Estee Lauder Companies Inc. The beauty products company was added to Goldman Sachs Group Inc.’s “Conviction Sell” list earlier this week – on concerns that its shares are overvalued.

According to an analyst at Goldman Sachs, “Estee Lauder has overshot its fundamental value on optimism around the company’s restructuring plan and the potential for a return to solid sales growth as the economy recovers.” As a consequence, Estee Lauder’s share price fell 2.39% to close at US$ 38.73 on this news.

French cosmetics maker L’Oreal appears to be no different from other make up companies, as it posted a 14% fall in profits, as the recession hindered spending on non-essential items. Net income for the 6-month period ending June 30, 2009 fell to EUR 1.08B (US$ 1.5B) from EUR 1.26B a year ago.

L’Oreal, the maker of Armani makeup and Lancome scents stated that the decrease in earnings was primarily the result of shoppers switching to cheaper brands. This in turn affected the company’s operating margin at its luxury division, shrinking 7.7% to 11.9% of total sales.

It seems as though the ladies have chosen to cut back on cosmetics and fragrances as one of the “unnecessary luxuries” during this extended recession that the U.S. and the rest of the world is experiencing. Unfortunately, this move translates into weak sales for popular beauty-products maker Estee Lauder which swung into a loss for its fourth quarter.

Estee Lauder reported a loss of US$17.9 million, drastically down from a profit of US$120.2 million a year ago. The Company has stated that in addition to feeble demand, restructuring costs further depressed its bottom line.

Sad but true – a woman who worked for a restaurant in Mission Valley, San Diego, California, was fired recently for because she refused to wear makeup on the job. She reportedly said “I have never worn makeup in my life. I just don’t like it. When (the boss) told me I need to dress like I am going out with the man of my dreams, that did it for me.”

To top it off, it seems her employer may be within his legal right to fire her for this reason, this despite a 9th U.S. Circuit Court of Appeals ruling several years ago that it is not discriminatory for employers to require women wear makeup. The woman is reportedly looking into her legal options at this time.