Estee Lauder has reported a decline in sales for the first quarter of FY25, mainly due to low consumer sentiment in the Chinese market.

The company’s net sales for the quarter ended September 30 dropped 4 per cent year-on-year to $3.52 billion. 

Management attributed the decrease to worsened consumer sentiment in China, which drove further softening in overall prestige beauty in Mainland China and low conversion rates in Hong Kong. Lower replenishment orders in Asia travel retail, including inventory pressure, also impacted sales.

By region, net sales in Apac fell 11 per cent led by mainland China and Hong Kong, partially offset by double-digit growth in Japan.

Sales in the Americas decreased 1 per cent, reflecting challenges in North America, partially offset by growth in Latin America. Europe, the Middle East & Africa saw a 4 per cent decline.

“Our first quarter results are largely aligned with our outlook on an adjusted basis, despite the fact that the expected headwinds in China and Asia travel retail were greater than anticipated,” said Fabrizio Freda, president and CEO.

“Our Profit Recovery and Growth Plan drove gross margin expansion, which was partially offset by operating deleverage. Other pillars of our strategic reset also delivered promising initial results.”

On the bottom line, Estee Lauder reported net loss of $156 million, compared with net earnings of $31 million in the prior year. This was primarily due to charges associated with talcum litigation settlement agreements of $159 million. Excluding restructuring and other charges, net income for the quarter was $52 million.

The company only provided its outlook for the second quarter, with sales forecast to decrease 6-8 per cent as challenging market conditions continue. There was no full-year guidance due to the “complex industry landscape” and the ongoing leadership transition.