Urban Outfitters, Inc. (URBN), Estee Lauder Companies Inc (EL): These 2 Retail Stocks Are Bucking the Trend

The company expects its current quarter sales to rise 5% to 7%, although profit is expected to come in below Wall Street expectations for $0.90 per share. Estee Lauder Companies Inc (NYSE:EL) attributes the slower growth to weakness in south Europe, South Korea and the United States, exacerbated by higher promotional and advertising costs. Investors, however, weren’t too concerned about that cautious outlook, instead focusing on its impressive top and bottom line growth in the fourth quarter. Estee Lauder is also expanding heavily into emerging markets, most notably in Africa, to offset its weakness in developed markets.

Analysts noted that the company appears immune to both an economic slowdown and competition. Morningstar analyst Erin Lash stated, “Estee Lauder Companies Inc (NYSE:EL) has not been swayed by slowing global economic growth or competitive pressures, as evidenced by its continued top-line growth and margin expansion.”

Estee Lauder forecasts that the global prestige beauty market, which includes L’Oreal and Coty, will grow 3% to 4% — a slow but steady pace that still might be an attractive alternative to the current volatility in other retail stocks.

Don’t throw out the babies with the bathwater

Macro-focused investors might believe that the fall of Wal-Mart and Macy’s are ominous precursors to a market plunge, but more adventurous investors should really refrain from tossing out the babies with the bathwater.

Urban Outfitters, Inc. (NASDAQ:URBN) is showing remarkable growth as its primary rivals are marking down prices in their desperation to reduce inventories and generate revenue. Estee Lauder, on the other hand, is showing slow and steady growth, which shows that beauty products should be considered necessary, rather than a discretionary, purchases.

The article These 2 Retail Stocks Are Bucking the Trend originally appeared on Fool.com and is written by Leo Sun.

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Urban Outfitters.

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