Estée Lauder Companies Reports Return to Sales Growth

The Estée Lauder Companies has announced a return to sales growth, with reported net sales rising 5% to US$15.05 billion for fiscal 2026. This marks a significant improvement in the company's financial performance, following a period of decline.

## Sales Growth Driven by Fragrance and Skin Care

The company's Fragrance category saw significant growth, with organic sales rising 10% for the year. This was driven by double-digit growth across ELC's Luxury Brands, including Le Labo, TOM FORD, and KILIAN PARIS. The Skin Care category also performed well, with organic sales increasing 4% for the year.

| Category | Organic Sales Growth | | --- | --- | | Fragrance | 10% | | Skin Care | 4% | | Makeup | Flat | | Hair Care | -1% |

In contrast, the Makeup category was virtually flat, while the Hair Care category declined by 1%.

## Profitability Improves

The company's profitability also improved, with full-year gross margin expanding 150 basis points to 75.5%. Adjusted operating margin increased 320 basis points to 11.2%, while adjusted operating income rose 47% to US$1.69 billion. Adjusted diluted EPS increased 66% to US$2.51.

## Expansion of Consumer Reach

The Estée Lauder Companies also expanded its consumer reach, growing its Amazon presence to 13 brands across 11 markets and TikTok Shop to 12 brands across nine markets. The company opened 33 net new fragrance freestanding stores and launched M·A·C in select US Sephora locations, online and at Sephora at Kohl's.

## Beauty Reimagined Strategy Begins to Bear Fruit

The company's Beauty Reimagined strategy and Profit Recovery and Growth Plan (PRGP) are beginning to translate into stronger sales and margins. The PRGP restructuring program is expected to deliver approximately US$1.2 billion in annual gross benefits and a net reduction of around 10,000 positions.

## Outlook for Fiscal 2027

For fiscal 2027, the company expects organic sales growth of 3% to 5% and has raised its adjusted operating margin outlook to 12.7%-13.5%. This suggests expectations for further profitability gains.

The Estée Lauder Companies' return to sales growth and improved profitability are a positive sign for the company, and its Beauty Reimagined strategy and PRGP are beginning to bear fruit. However, the company still faces challenges in the Makeup category, and its Hair Care category declined in the past year.