Key Takeaways

• Estée Lauder reports a 4% increase in net sales for Q1 fiscal 2026, reaching $3.48 billion.
• Adjusted operating income jumped 77% to $255 million, with earnings per share doubling.
• Fragrance sales grew by 13%, while Makeup and Hair Care saw declines; the Asia/Pacific region showed the strongest performance.

Sales and Profit Growth

The Estée Lauder Companies has announced a strong performance in the first quarter of fiscal 2026, reflecting a return to positive sales and profit growth. This quarter marks the first expansion in operating margins in the last four years, indicating significant improvement in the company’s financial health.

Net sales climbed by 4% year-over-year to reach $3.48 billion, while organic sales rose by 3%. This growth is accompanied by an increase in gross margin, which rose by 100 basis points to 73.4%. These favorable results are attributed to the company’s Profit Recovery and Growth Plan (PRGP), designed to enhance cost efficiencies and decrease promotional spending.

Financial metrics showed a remarkable improvement, with adjusted operating income skyrocketing by 77% to $255 million. Adjusted diluted earnings per share doubled from $0.14 to $0.32, reflecting the success of the initiatives implemented in recent years.

Performance by Segment

Sales growth was primarily driven by the Fragrance segment, which saw a 13% increase. Skin Care also contributed positively with a 3% growth. However, both Makeup and Hair Care experienced declines, with Makeup down 2% and Hair Care down 7%.

Regionally, the Asia/Pacific sector performed the best, achieving a 9% organic growth rate. This performance was supported by demand in travel retail and a resurgence in Mainland China. Conversely, the Americas faced a slight downturn, influenced by softness in department store sales and challenges related to retailer inventory.

Future Outlook

Estée Lauder continues to focus on its restructuring plans through the PRGP, aiming for annual savings between $0.8 billion and $1 billion by fiscal year 2027. This plan includes a potential reduction of up to 7,000 positions within the workforce, underscoring the company’s commitment to streamlining operations.

The organization has reaffirmed its outlook for fiscal 2026, projecting organic net sales growth between 0% and 3% and adjusted earnings per share in the range of $1.90 to $2.10.

Stabilization Efforts

These results illustrate Estée Lauder’s ongoing efforts to stabilize its business following several challenging years marked by market fluctuations. Through a combination of cost restructuring, supply chain optimization, and strong market performance—particularly in luxury segments and Asian markets—the company is positioned for continued growth.

Source: The Estée Lauder Companies

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