The Estée Lauder Companies Inc. reported a 10% drop in net sales to $1.70 billion for its fiscal third quarter ended March 31, 2009.

William P. Lauder, chief executive officer of the company, said, “The confluence of lower consumer spending and continuing macroeconomic conditions resulted in our third quarter performance being lower than the prior-year period. However, the strategy we announced last quarter was developed to navigate our Company through the medium- and long-term challenges and to capitalize on the opportunities we are pursuing. Whether in good times or bad, we are properly balancing investing for growth with the goal of improving and sustaining profitability. We expect to deploy our strategy with excellence and already have begun making progress towards achieving our goals.”

During the quarter, each of the company’s product categories and geographic regions continued to be adversely impacted by the challenging and volatile global economic conditions. The worldwide economic downturn has negatively affected consumer demand, resulting in weak retail sales and inventory destocking by certain key retailers, said Estée Lauder in the report. These conditions are reflected in sales and operating results and was foremost in the Americas and Europe, as well as the Middle East & Africa regions. In the Asia/Pacific region, the company generated a strong performance, reporting double-digit sales growth in constant currency and a solid gain in operating income. Estée Lauder believes it gained share globally in its distribution, despite the current economic climate.

For the nine months ended March 31, 2009, Estée Lauder reported a 4% drop in net sales to $5.64 billion.

For fiscal 2009, net sales are forecasted to decrease 1-3% in constant currency. On a product category basis, in constant currency, sales in skin care are expected to increase modestly. Makeup and hair care are projected to decrease slightly. Fragrance is expected to decline. Geographic region net sales are expected to be led by Asia/Pacific, where the company expects sales gains in the low teens. Estée Lauder is forecasting constant currency sales to decline mid-single digits in Europe, the Middle East & Africa and in the Americas.