(Nov 2): Estee Lauder Cos reported better-than-expected earnings and raised its outlook, the latest sign the beauty conglomerate’s turnaround effort is winning over consumers.

Organic sales will likely grow by 4% to 5.5% in the fiscal year, the company said Monday, more than the prior 3% to 5% estimate. The adjusted earnings per share outlook range was boosted by 10 US cents. The stock rose 3.9% in trading before US exchanges opened.

Demand for fragrances led the growth, helped by the more affordable line Kilian Paris’ Cocktails Collection, which was the company’s fastest-growing brand last quarter.

Estee Lauder said it benefited from efforts to reconnect with its consumer base and appeal to younger spenders.

Diluted earnings per share grew to 64 US cents in the fiscal first quarter, exceeding the 51-cent analyst estimates compiled by Bloomberg. Sales climbed 7% to $3.7 billion.

The New York-based owner of brands such as Le Labo, Tom Ford and La Mer has worked to turn around the business after an extended period of sluggishness coming out of the pandemic. This includes the elimination of 10,000 jobs and an internal restructuring. The updated guidance suggests CEO Stéphane de La Faverie’s strategy is paying off.

Sales beat estimates in China, where Estee Lauder generated a fifth of its revenue in the latest fiscal year. Company executives are scheduled to hold an event in Shanghai on Wednesday to discuss their strategic plans in the country.

The report underscores that cosmetics spending is on the upswing despite higher inflation in many countries that has eroded purchasing power. In October, French competitor L’Oreal SA reported sales that beat expectations on strong demand for hair products at salons and for premium skincare.

Estee Lauder shares have gained 4.3% this year through last week’s close, short of the 11% advance of the S&P 500 Index over the same period. 

The company also launched Glimmer, a high-end fragrance promoted by actress Hailee Steinfeld, last summer, part of its effort to appeal to a younger shopper base. 

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