02:01 PM EDT, 10/31/2024 (MT Newswires) -- Estee Lauder ( EL ) on Thursday withdrew its fiscal 2025 guidance and slashed its dividend as its first-quarter sales fell more than expected amid headwinds in China and Asia travel retail.

The cosmetics company said the decision to withdraw the outlook comes amid "incremental uncertainty" on the timing of stabilization in the China market and Asia travel retail, as well as in the context of the upcoming leadership changes.

On Wednesday, Estee Lauder ( EL ) said Stephane de La Faverie will become chief executive at the start of next year, succeeding Fabrizio Freda, who is retiring.

The company reduced its quarterly dividend to $0.35 per share from $0.66, payable Dec. 16 to stockholders of record at the close of business Nov. 29.

Net sales for the quarter through Sept. 30 fell 4% year over year to $3.36 billion amid declines across all product categories, compared with a Capital IQ-polled consensus of $3.37 billion. Asia-Pacific sales declined 11%, led by mainland China and Hong Kong, while the Americas and Europe, the Middle East and Africa also logged declines. First-quarter adjusted earnings rose to $0.14 a share from $0.11 a year earlier, topping Wall Street's $0.10 view.

"As the quarter evolved and through October, it became increasingly apparent that we are facing greater macro headwinds for fiscal year 2025 than we expected in August," Freda said on an earnings conference call, according to a Capital IQ transcript.

Estee Lauder ( EL ) shares were sliding nearly 21% in Thursday afternoon trade, and have lost 52% in value so far this year.

Prestige beauty industry retail sales in China weakened from a 10% drop in the fourth quarter to a mid-teens percentage decline in the just-ended quarter, while consumer sentiment deteriorated further, Freda said. "While we believe (China's) new economic stimulus measures present medium- to long-term potential for stabilization and then ultimately growth in prestige beauty, we anticipate still-strong declines near term for the industry."

For its second quarter, Estee Lauder ( EL ) projects adjusted EPS to plunge between 60% and 77% to a range of $0.20 to $0.35. The Street is looking for $1.06. Net sales for the quarter are expected to fall between 6% and 8% year over year.

The company said it doesn't expect China's stimulus measures to benefit its performance in the quarter. "In the rest of its business, the company continues to expect the ongoing normalization of growth in the prestige beauty industry, most notably in North America," Estee Lauder ( EL ) said in a statement.

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