Oct. 30 (Bloomberg) -- Estee Lauder Cos., the maker of Clinique and Bobbi Brown cosmetics, rose the most in two weeks in New York trading after reporting first-quarter profit that topped analysts’ estimates.

Excluding costs for restructuring, profit totaled 85 cents a share, the New York-based company said today in a statement. Analysts predicted profit on that basis of 34 cents a share. Revenue in the three months ended Sept. 30 declined 3.7 percent to $1.83 billion. Analysts estimated $1.81 billion, on average.

Chief Executive Officer Fabrizio Freda is focused on cutting costs by $450 million to $550 million during the next four years by reducing headcount, the number of products it sells and the cost of goods. The company, which outlined the strategy in February, reported an operating margin of 14.2 percent, excluding certain items, in the quarter. That’s 9.4 percentage points higher than a year earlier.

“They cut back dramatically on spending,” said John Faucher, an analyst at JPMorgan Chase & Co. in New York. He estimated a 6 percent operating margin and rates the shares “neutral.” “If this type of spending restraint is sustainable, then their guidance looks far too conservative.”

Full-year profit will be $1.95 to $2.10 a share, excluding restructuring costs, the company forecast. That’s higher than its previous prediction of $1.55 to $1.70. Analysts estimated $1.80 a share.

Estee Lauder rose $1.36, or 3.3 percent, to $42.50 at 4:15 p.m. in New York Stock Exchange composite trading, the largest gain since Oct. 16. The shares have added 37 percent this year.

Focus on Opportunities

The cost of sales declined 11 percent to $445.1 million, while selling, general and administrative expenses fell 12 percent to $1.15 billion.

“We will continue to focus on opportunities that are in our control, namely reducing our cost structure and building our brands,” Freda said in the statement.

Net income climbed to $140.7 million, or 71 cents a share, from $51.1 million, or 26 cents, a year earlier.

Second-quarter profit excluding restructuring costs will be 80 cents to 87 cents a share, Estee Lauder said today. Analysts predicted profit of 86 cents, the average of 16 estimates compiled by Bloomberg.

Tough Holiday Season

Estee Lauder anticipates a tough U.S. holiday shopping season, Freda said today on a conference call. The company is expecting competitors to offer aggressive discounts. In response, it will offer some of its best-selling fragrances for a suggested retail price of $29.50, slicing $10 off the regular price, he said.

“Consumers are still risk adverse in their purchases and very sensitive to value and looking for deals,” Freda said today in a telephone interview. “We are trying to prepare ourselves for this kind of holiday season in the U.S.”

Freda, 52, became CEO in July, taking over from William Lauder, who became chairman.

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net

Last Updated: October 30, 2009 16:19 EDT