Greater than three years after the worldwide COVID-19 pandemic began, the Estée Lauder Cos. continues to be reeling from its impact.

The wonder giant and latest owner of Tom Ford has once more slashed its full-year forecasts for each the highest and bottom lines attributable to a slower-than-expected recovery in travel retail in Asia, its executive team revealed Wednesday, causing the corporate’s share price to tumble around 18 percent to $202.70.

The lowered forecast comes despite an easing in lockdowns in mainland China, with sales within the region returning to growth within the third quarter.

Lauder’s overall net sales for the total yr are actually forecast to diminish between 10 percent and 12 percent, greater than the previously expected 5 percent to 7 percent drop. Adjusted diluted earnings per common share are anticipated to slip between 50 percent and 51 percent, compared with the previous forecast for a 27 percent to 29 percent decline.

“Because the shape of recovery from the pandemic for Asia travel retail comes into higher focus, it’s proving to be each way more volatile than we expected and more gradual relative to what we experienced in other regions,” said Fabrizio Freda, president and chief executive officer. “While we work through the intense — but we consider temporary — headwinds facing Asia travel retail, we’re encouraged by the strong momentum in the remainder of our business.”

Lauder, which has a much larger travel retail business than a few of its competitors, saw its Asia travel retail business proceed to be pressured by the slower-than-anticipated recovery from the COVID-19 pandemic, with global travel retail organic sales declining 45 percent within the third quarter, compared with a yr earlier.

In South Korea, in addition to in Asia more broadly, the travel retail recovery was challenged by the slower-than-expected resumption of international flights, granting of visas, and arranged group tours. And in Hainan, a well-liked vacation spot in China, while traffic into the island exceeded prior-year levels, this didn’t result in a surge in prestige beauty sales.

At the identical time, Lauder continued to be pressured by the strong U.S dollar, historically high inflation and recession concerns, it said.

Consequently, for the third quarter ended March 31, net sales got here in at $3.75 billion, a decline of 12 percent from $4.25 billion within the prior-year period, but beating Wall Street estimates of around $3.72 billion. Organic net sales fell 8 percent, primarily driven by Asia travel retail in Hainan and South Korea.

Of the outcomes, Tracey Travis, Lauder’s chief financial officer and executive vp, said: “We’re actually not satisfied with our results this fiscal yr and can address plans to progressively rebuild margin accretive areas of our business beyond this fiscal yr from the present yr’s level.”

While travel retail will remain a crucial a part of the business, Travis told WWD that she is expecting growth to develop into more balanced, with the recovery in brick-and-mortar retail.

Olivia Tong, an analyst at Raymond James, noted: “While management has seen mainland China sales return to year-on-year growth within the quarter as a soft January was greater than offset by double-digit increases in February and March and traffic into Hainan improved, overall travel retail has been slower to get better than expected, as has conversion of travelers into shoppers. That is resulting in a lower-than-expected 4Q guide, as management can also be addressing elevated retail inventories.”

A breakdown of the numbers showed that skincare net sales declined 17 percent. Inside that, declines from La Mer, Estée Lauder and Dr.Jart+ were partially offset by growth from The Strange and MAC. Specifically, the latter saw net sales greater than double, fueled by its latest skincare line Hyper Real, which launched earlier this yr with a cleansing oil, serum and moisturizer priced from $48 to $55, and a $37 application brush as makeup brands expand into skincare.

Makeup sales were virtually flat, while fragrance grew double digits, reflecting strong performances in every region and from Tom Ford Beauty, Le Labo and Estée Lauder. Hair care, meanwhile, increased 3 percent.

On a geographical basis, net sales rose 6 percent within the Americas, but declined 24 percent in Europe, Middle East and Africa. Sales grew 7 percent in Asia Pacific, driven by the continued recovery from eased COVID-19-related restrictions in comparison with the prior-year period, led by Hong Kong, Australia, Japan and mainland China. This was somewhat offset by South Korea.

Net sales in mainland China returned to growth, reflecting double-digit increases in February and March, partially offset by the decline in January attributable to the impact from the rise within the variety of COVID-19 cases.

The corporate reported net earnings of $156 million, compared with net earnings of $558 million within the prior-year period. Adjusted diluted net earnings per common share declined 75 percent to 47 cents, beneath analysts’ predictions for 51 cents.

Last week, the group accomplished its acquisition of Tom Ford, appointing Guillaume Jesel president and CEO of the brand, while Peter Hawkings has been tapped as creative director. The deal, which valued the brand at $2.8 billion, was funded by money available and proceeds from the issuance of business paper, in addition to $250 million received from Marcolin. A further aggregate amount of $300 million in deferred payments from Estée Lauder to the sellers becomes due starting in July 2025.

Tom Ford Beauty is anticipated to realize $1 billion in net sales annually over the following couple of years, in keeping with Lauder.

“We’re thrilled to have enriched our brand portfolio last week, once we acquired Tom Ford, an influence player in luxury with promising growth opportunities ahead. The deal is an excellent end result of our successful journey with the brand, which began once we collaborated with Tom Ford Beauty over 15 years ago,” said Freda during a post-earnings call with analysts.