Friday, January 16, 2009

Make Up is not Recession Proof

This twitter thing is already coming in handy - just heard on the twitter-vine about Elizabeth Arden (RDEN) cutting guidance big time. They are not the only one today - so is Estee Lauder (EL). Rut Roh Raggy - we're going to see the ugly side of people during this recession.... literally.

The Estee Lauder Companies, Inc. engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide.

Elizabeth Arden, Inc. operates as a prestige beauty products company worldwide. It sells fragrance, skin care, and color cosmetic products in the United States primarily to department stores and mass retailers, as well as internationally in prestige department stores, perfumeries, boutiques, and travel retail locations.

This plays into our thesis that earnings guidance that analysts are using REMAIN a figment of their imagination. And in no way shape or form is this market "cheap" or within 6 degrees of Kevin Bacon of cheap. As we entered this earnings season we said we're going to see a continued stream of "oops we're way too high on estimates" and "we have no visibility - holy smoke; the consumer has deserted us - we're pulling guidance; it's all a guess".
  • Cosmetics makers Estee Lauder Cos Inc (EL) and Elizabeth Arden Inc (RDEN) warned of disappointing quarterly profits and slashed their full-year outlooks, citing weak sales over the holiday shopping period.
  • Beauty products company Elizabeth Arden Inc. on Friday cut its full-year profit outlook for a second time and said results in its prestige department store business have been weaker than expected because of a soft economy. Economic conditions in the company's higher margin travel retail and distributor markets "worsened considerably" in November and December, which hurt international results, the company said. (not to worry, everything will be fine "in 6 months"; Baltic Dry Index tells us that)
Again folks, when you start seeing "must haves" (and make up is a must have for women) going, you know we are in a lot bigger trouble than the punditry continue to dream. What's next? Women's shoes????? No! The horror of it all (evades eyes)

Perhaps Obama can put as part of stimulus $400 to each American women for skin care products - Obama will save us. Meanwhile, I'm waiting patiently for the retail bankruptcies to steamroll....

If you've been reading the blog last spring and summer - you can now see how inane the hedge fund thesis of "time to buy consumer discretionary stocks 6 months ahead of the recovery" was. As always, it doesn't matter what reality is; as long as enough people swig Kool Aid - the stocks can dance. And dance they did back then - as we continued to say "keep dreaming".

I don't have these stocks on my radar - since I've been looking more at department stores and the like, but I sure wish I had....

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