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Estee Lauder Shares Slip on Disappointing Profit, Outlook

Cosmetics maker Estee Lauder reported lower-than-expected quarterly profit on Thursday and forecast earnings for the current quarter and fiscal year well below Wall Street estimates.

Estee Lauder shares slipped $2.77, or 6.42 percent, at $40.38 in Thursday morning trade on the New York Stock Exchange.

Net income in the fiscal fourth quarter ended June 30 nearly doubled to $88.6 million, or 45 cents per share, but fell short of analysts' average forecast of 50 cents per share, according to Reuters Estimates.

In the year-earlier quarter, Estee Lauder earned $44.5 million, or 21 cents per share, including a charge of 28 cents per share on cost-saving initiatives and a tax-related matter.

Fourth-quarter sales rose 10 percent to $1.76 billion, boosted by higher sales in Europe and Asia, and in its hair-care, perfumes, makeup and skin-care businesses.

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For the current quarter -- the first quarter of fiscal 2008 for the New-York based company -- Estee Lauder said it expects earnings from continuing operations of 5 cents to 11 cents per share. Net sales are expected to increase 5 percent to 7 percent, it said.

Analysts' average earnings forecast is 33 cents per share for the first quarter, according to Reuters Estimates.

Bank of America analyst April Scee wrote in a research note that the weak guidance for the quarter could mean the company is suggesting it might take special charges in that period.

Estee Lauder forecast fiscal 2008 earnings from continuing operations of $2.28 to $2.40 per share on a sales increase of 7 percent to 9 percent. Analysts expect $2.48 per share.

The company said hair care and skin care would be the highest growth categories in fiscal 2008, adding that sales are expected to be highest in Europe, the Middle East and Africa.