EL – Market expectations are for record-high Uniform ROA, but management may have concerns about their online business, margins, and stores

• The Estée Lauder Companies Inc. (EL:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 39.8x Uniform P/E, implying bullish expectations for the firm. However, management may have concerns about their online business, gross margins, and unproductive stores
• Specifically, management may lack confidence in their ability to sustain consumer traffic on their site, continue online business growth, and maintain stockholder value. Furthermore, they may be overstating the potential of their product launches in skincare and makeup, the sustainability of their productive stores in the long-run, and the strength of their trial and discovery online. Meanwhile, they may be concerned about the continued decline of gross margins, the continued constraints from unproductive stores, and coronavirus headwinds. They may also be exaggerating the durability of new online shopping habits of consumers