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Beauty Industry

Cites declining economy and grim retail outlook.

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By: Jamie Matusow

Editor-in-Chief

Standard & Poor’s Ratings Services said Tuesday it revised its outlook on Estée Lauder Cos. to “negative” from “stable” amid a tough economy that has dampened demand for cosmetics.

Last week, Estee Lauder said fiscal second-quarter profit fell 30 percent, hurt by the stronger dollar and weak consumer spending. The company will also cut 2,000 jobs as part of a restructuring.

“The primary drivers of the outlook revision are the very difficult retail environment and the company’s recent results for the fiscal quarter ended Dec. 31, which reflected a very challenging holiday quarter,” said Standard & Poor’s credit analyst Susan H. Ding.

S&P said conditions in the U.S. cosmetics industry have been challenging because of high competition, retailer consolidation and a weak economy that has hurt consumer spending, especially at department stores.

S&P said it might revise the outlook to “stable” if the company can improve credit measures to historical levels and underlying business improves.

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