Estee Lauder (EL)

01:38 PM Eastern Standard Time, 01/21/2010 (MidnightTrader) -- Dow Jones U.S. Consumer Services Index: -2.68 (-0.95%) at 278.49

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Consumer shares are lower in mid-day trading. Blockbuster (BBI) plummets following disappointing Q4 expectations late on Wednesday. Estee Lauder (EL) is sharply higher after reporting late on Wednesday that it expects Q2 financial results will exceed its previous expectations. Starbucks (SBUX) is higher on stronger earnings results for Q1.

Janney Montgomery Scott downgraded Blockbuster to Neutral from Buy. The company said Wednesday that its performance during the holidays was well below expectations and anticipated adjusted EBITDA was affected, specifically in the month of December where as much as 30% of its full-year EBITDA has historically been generated.

Estee Lauder said late on Wednesday that it expects Q2 financial results will exceed its previous expectations. The company sees reported sales growth of 10% to 11% and EPS of $1.23 to $1.30. Charges associated with restructuring activities are expected to be minimal for the quarter. A Thomson Reuters analyst poll, which usually excludes one-time items, expects EPS of $0.89.

Estee Lauder cited its favorable product mix, positive effect of continued cautious spending and strong growth in Asia for the results. The company also said its travel retail business and the holiday season in the U.S. helped results.

The company sees Q2 impairment charges related to two of its underperforming business units. For the remainder of the fiscal year, the company plans to accelerate investment spending well above first-half levels.

Starbucks reported its first quarterly rise in U.S. same-store sales in two years late on Wednesday and raised its earnings forecast for 2010. U.S. store sales rose 4% from a year ago, while Q1 EPS rose to $0.32 and revenue rose 4.1% to $2.7 billion. Meanwhile, Starbucks plans to open about 100 stores in the United States and 2010 worldwide. Since the economic downturn, the company had closed about 900 stores and slashed employee numbers, that resulted in total savings of $580 million for 2009.