Estee Lauder Companies, Inc. (The)
EL · NYSE
Sep 2026
Next quarter
Reports Oct 29, 2026.
Consensus is $0.51 EPS for Sep 2026 across 10 estimates, ranging $0.45 to $0.65.
EL Jun 2026
- 21.87%
- $0.32
- $0.39
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Highlights
- Fourth-quarter beat: Adjusted diluted EPS was $0.39, ahead of the $0.32 consensus estimate by 21.9%, versus $0.09 a year earlier.
- Growth returned: Fourth-quarter net sales rose 6% to $3.63 billion, with organic sales up 5%; sales increased across every region and all categories except Hair Care.
- Profitability improved: Fourth-quarter adjusted operating income increased 95% to $267 million, lifting adjusted operating margin to 7.3% from 4.0%.
- Full-year recovery: Fiscal 2026 net sales increased 5% to $15.05 billion, while organic sales rose 3% after a 2% decline in fiscal 2025.
- Margin expansion: Full-year adjusted operating margin expanded 320 basis points to 11.2%, and gross margin increased 150 basis points to 75.5%.
- Fragrance led categories: Full-year organic Fragrance sales rose 10% and adjusted operating income increased 27%, led by Le Labo, TOM FORD and KILIAN PARIS.
- China improved: Mainland China organic sales grew 9% for the year and 7% in the fourth quarter, with full-year adjusted operating income up 92%.
- PRGP completed: The restructuring plan is expected to deliver $1.2 billion of gross benefits and a net reduction of approximately 10,000 positions, with cumulative charges slightly above $1.7 billion.
- Fiscal 2027 outlook raised: Organic sales growth remains forecast at 3% to 5%, while adjusted operating margin guidance increased to 12.7% to 13.5% from the prior 12.5% to 13.0% range.
Analysis
Estée Lauder’s fiscal fourth quarter was a return-to-growth and operating-recovery print. Net sales increased 6% year over year to $3.63 billion, or 5% organically, ahead of the prior quarter’s $3.71 billion and the year-ago quarter’s $3.41 billion. Adjusted diluted EPS of $0.39 beat the $0.32 consensus estimate, while adjusted operating income nearly doubled to $267 million from $137 million and adjusted margin rose to 7.3% from 4.0%. Reported results remained distorted by $306 million of restructuring and other charges: GAAP operating loss narrowed to $39 million from $390 million, and net loss improved to $116 million from $546 million. The prior quarter had reported operating income of $249 million, net income of $89 million and diluted EPS of $0.24.
The quarter’s defining features were broadening sales momentum, especially in Skin Care and Fragrance, and the conversion of the Profit Recovery and Growth Plan into margin gains that funded consumer-facing investment. Full-year organic sales rose 3% to $14.81 billion, adjusted operating income increased 47% to $1.69 billion, and free cash flow nearly doubled to $1.32 billion. Management also raised fiscal 2027 adjusted margin guidance to 12.7% to 13.5%, while maintaining 3% to 5% organic sales growth.
Fourth-quarter recovery
- Sales: Net sales rose 6% year over year to $3.63 billion, while organic net sales increased 5%. Growth was broad-based across regions and categories, excluding Hair Care, and included North America’s return to growth.
- Earnings: Adjusted operating income increased 95% to $267 million from $137 million, despite higher consumer-facing investment. Adjusted diluted EPS rose to $0.39 from $0.09 and was unchanged at $0.39 in constant currency.
- Reported distortion: GAAP operating loss narrowed to $39 million from $390 million, and net loss narrowed to $116 million from $546 million. Current-quarter restructuring and other charges reduced EPS by $0.71, while the year-ago period included $425 million of intangible-asset impairments and other charges.
- Sequential context: Revenue declined from $3.71 billion in the fiscal third quarter, while reported operating income fell from $249 million and net income increased from $89 million to a loss because of fourth-quarter restructuring charges.
Margin recovery plan
- Full-year margin: Adjusted operating margin expanded 320 basis points to 11.2% from 8.0%, with adjusted operating income up 47% to $1.69 billion. Gross margin expanded 150 basis points to 75.5%.
- PRGP benefits: The Profit Recovery and Growth Plan is expected to produce approximately $1.2 billion of gross annual benefits and a net reduction of approximately 10,000 positions. Cumulative restructuring charges are expected to finish slightly above the previously stated $1.5 billion to $1.7 billion range.
- Investment funding: Consumer-facing investments increased 7% for both the quarter and full year, or 5% and 4%, respectively, excluding foreign-currency translation. Operational efficiencies, procurement savings, expense optimization and lower excess and obsolescence funded that reinvestment.
- Remaining execution: Approvals for the restructuring component were completed by June 30, 2026, but actions are expected to be substantially completed in fiscal 2027, when most of the remaining run-rate benefits are expected to be realized.
Category and brand momentum
- Skin Care: Full-year organic sales increased 4% and adjusted operating income rose 52%, driven by La Mer, The Ordinary and Estée Lauder innovation and expanded consumer reach. Fourth-quarter sales increased 7% organically and adjusted operating income reached $331 million versus a $210 million loss a year earlier.
- Fragrance: Full-year organic sales grew 10% and adjusted operating income increased 27%, with broad-based Luxury Brands growth led by Le Labo, TOM FORD and KILIAN PARIS. Fourth-quarter organic sales also rose 10%, and adjusted operating income increased to $67 million from $24 million.
- Makeup: Full-year sales were virtually flat organically, an improvement of more than 500 basis points from the prior year, as M·A·C and TOM FORD growth offset declines at Bobbi Brown and Too Faced. The category remained loss-making on an adjusted basis as investment increased behind launches and distribution expansion.
- Hair Care: Organic sales declined 1% for the year and quarter, primarily because of Aveda’s planned exit from underperforming doors and ongoing salon-channel pressure. Adjusted results improved to income for the year as PRGP savings and expense discipline offset the sales decline.
Regional sales recovery
- Mainland China: Full-year organic sales increased 9%, including 7% growth in the fourth quarter. Annual adjusted operating income rose 92%, reflecting higher sales, consumer activations and a favorable comparison from local government subsidy timing.
- Asia/Pacific: Full-year organic sales increased 4%, supported by Korea, Hong Kong and Hainan travel retail. Adjusted operating income rose 48% as higher sales, lower cost of sales and mix benefits outweighed remaining travel-retail pressure.
- EUKEM: Organic sales increased 1% for the year and 2% in the fourth quarter, with full-year adjusted operating income up 35%. Fourth-quarter sales were affected by a 2% headwind from Middle East conflict-related disruption.
- The Americas: Full-year organic sales increased 1% and adjusted operating income rose 17%. Fourth-quarter organic sales grew 5%, helped by North America’s return to growth, although the quarter included an $18 million one-time benefit from unused gift-card liability reversals.
Fiscal 2027 outlook
- Sales: Management maintained its forecast for 3% to 5% organic net sales growth, with a larger increase expected in the first half because of earlier product launches, improving travel-retail shipments and an easier comparison.
- Profitability: Adjusted operating margin guidance increased to 12.7% to 13.5% from the preliminary 12.5% to 13.0% range, reflecting continued non-consumer-facing operating leverage and modest gross-margin expansion.
- EPS: Adjusted diluted EPS is expected at $3.10 to $3.35, representing 24% to 34% growth from $2.51 in fiscal 2026; constant-currency EPS is projected at $3.06 to $3.31.
- Cash requirements: Operating cash flow is forecast at $1.3 billion to $1.4 billion, below fiscal 2026’s $1.77 billion because of higher restructuring payments and working-capital needs. Capital expenditures are expected to equal approximately 4% of sales.
Cash flow and tariffs
- Cash generation: Fiscal 2026 operating cash flow increased 39% to $1.77 billion, while free cash flow rose to $1.32 billion from $670 million as capital expenditures fell to $457 million from $602 million.
- Balance sheet: Cash and equivalents increased to $3.50 billion from $2.92 billion. The company paid $300 million of deferred TOM FORD consideration and $508 million in dividends during the year.
- Tariff offset: The company received $38 million of IEEPA tariff refunds in the fourth quarter, partially offsetting the $102 million full-year gross impact of incremental tariffs. The refund benefited fourth-quarter adjusted EPS by $0.07, more than offsetting the $0.05 impact from Middle East disruptions.
