Estée Lauder Cos Inc on Monday forecast full-year revenue and profit above Wall Street expectations, putting to rest concerns of slowing demand in China due to trade tensions and Hong Kong protests as sales of its luxury skin care products soared.
Shares of the company, which reported better-than-expected quarterly results, rose nearly 8% to $193 in premarket trading.
Cosmetics companies like Estée Lauder and L'Oreal are seeing a boom in their business in the Asia-Pacific region, mainly in China, as affluent millennials spend more at beauty retailers as well as duty-free stores at airports.
The M.A.C. brand owner said its sales in the Asia-Pacific region grew 18% in the fourth quarter. It expects full-year sales to grow in the range of 7% to 8% and adjusted profit to be between $5.90 and $5.98 per share in fiscal 2020.
Analysts had expected sales growth of 6.87% and profit of $5.81 per share.
"This impressive sales growth forecast de-risks the quarter ahead," J.P. Morgan analyst Andrea Teixeira said, adding that the lack of a moderation in sales in China "bodes well".
Estée Lauder, which also forecast first-quarter sales growth and profit above expectations, said the outlook took into account the potential impact of Hong Kong protests and escalating U.S.-China trade dispute as well as costs related to Britain's impending exit from the European Union.
"We are a little surprised by Estee's aggressive approach to guidance for the year," RBC analyst Nik Modi said, adding that the forecast suggests no slowdown in sight for the cosmetics maker.
Sales in the skincare business, its biggest and most profitable segment, rose 15% to $1.59 billion in the reported quarter.
Overall, net sales rose 9% to $3.59 billion, beating expectations of $3.53 billion, according to IBES data from Refinitiv.
Excluding items, it earned 64 cents per share, beating the average analyst estimate of 53 cents per share.