[caption id="attachment_70848" align="aligncenter" width="641"] Source: Company reports/Coresight Research[/caption]   2Q19 Results Estée Lauder reported fiscal 2Q19 Non-GAAP EPS of $1.74, up from $1.52 in the year-ago quarter. Total revenues were $4.0 billion, up 7.0% year over year and beating the $3.9 billion consensus estimate. By Category Estée Lauder posted sales growth in nearly all product categories and geographic regions. Skincare, the company’s largest category comprising 43% of its sales, rose 16% on a reported basis (as opposed to constant currency basis) to $1.73 billion from $1.49 billion in the same quarter last year. The company credited the gains in skincare mainly to its Estée Lauder, La Mer, Clinique and Origins brands. Specifically, its Estée Lauder brand launched new product innovations in its Advanced Night Repair Eye Supercharged Complex, driving higher sales, and La Mer also launched new products including The Treatment Lotion Hydrating Mask and The Luminous Lifting Cushion Foundation. The company’s second largest category, makeup, accounted for 39% of sales in 2Q19, growing 3.0% from $1.51 billion in 2Q18 to $1.56 billion in 2Q19 on a reported basis. The growth was driven by increases in its Estée Lauder, Tom Ford Beauty and BECCA brands, and partially offset by lower makeup sales from Clinique and Smashbox. Estée Lauder’s strongest makeup sales were in its Double Wear line, and MAC makeup showed strong performance with double digit growth across Asia Pacific and the Middle East (which includes Turkey and Italy). Tom Ford sales increased by double digits driven by lip and eye shadow collections. BECCA’s growth was driven by the BFF Collection and the Ultimate Lipstick Love product launches. Fragrance declined 5% in 2Q19, from $565 million to $537 million on a reported basis. The fragrance category comprises 13% of the company’s sales. Estée Lauder attributed the decline in its fragrance category to a change in its holiday fragrance promotional strategy and lower sales of designer fragrances. The decreases were partially offset by growth in luxury fragrances, including Jo Malone London, Le Labo, Tom Ford Beauty and By Kilian. Hair care, the company’s smallest category comprising 4% of sales, grew 6.9% from $144 million in 2Q18 to $154 million in 2Q19 on a reported basis. The increase was due to higher net sales from Aveda. By Geographic Region The Asia Pacific region saw the strongest growth, rising from $874 million in 2Q18 to $1.0 billion in 2Q19 on a reported basis. Estée Lauder reported the growth was broad-based, with nearly half the markets in the region growing double digits. China, Hong Kong and Japan delivered strong growth (with prestige beauty accelerating in China), while sales in Korea also accelerated. Europe, the Middle East and Africa grew 13% on an as reported basis, from $1.56 billion to $1.76 billion. The company reported strong sales were due to travel retail in the Middle East, led by double digit sales growth from brands including Estée Lauder, La Mer, MAC, Tom Ford and Origins. Sales in Russia grew by double digits in constant currency, which were offset by lower sales in the U.K. Growth in the Middle East was driven by the company’s MAC brand. In the Americas, sales declined 7% from $1.3 billion in 2Q18 to $1.2 billion in 2Q19 on an as-reported basis. The company attributed lower sales to the impact of lost sales to Bon Ton. Outlook The company forecast 3Q19 revenue growth to be 5%–6%, compared to the consensus estimate of 2.5%. This guidance includes a 5% negative impact from currency exchange rates and a 2% benefit from the adoption of ASC 606, a new revenue recognition standard with which publicly held companies must comply. Excluding these items, the company expects net sales to increase 8%–9%. The company expects diluted earnings per share to be between $1.26 and $1.28 for 3Q19. The company raised its full year EPS guidance to $4.92-5.00, versus the prior guidance of $4.73–4.82, compared to the consensus estimate of $4.86.