Updated at 4:19 p.m. ET on Oct. 30
The Estée Lauder Cos.’ financial results are starting to improve on both the top and bottom lines.
The beauty company, whose brands include namesake Estée Lauder, Clinique, Bobbi Brown and Tom Ford, reported net sales increased 4 percent to $3.5 billion during the first quarter ended Sept. 30, compared with the same period a year earlier and surpassing estimates of $3.38 billion. At the same time, organic net sales rose 3 percent.
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Net earnings were $47 million, up from a loss of $156 million. Adjusted diluted net earnings per common share increased to 32 cents, beating analysts’ predictions of 18 cents.
“We had a strong start to fiscal 2026 as we execute on our Beauty Reimagined strategy — returning to organic sales growth, gaining prestige beauty share in a few key strategic areas of focus and improving profitability. Encouragingly, we are building momentum across the organization from the significant operational changes we have executed to-date to be faster and more agile,” said Stéphane de La Faverie, president and chief executive officer. “These results reinforce the confidence we have in our fiscal 2026 outlook — a pivotal year — as we restore organic sales growth and expand our operating margin for the first time in four years.”
The company has been working to turn around its fortunes via its new Beauty Reimagined strategy and Profit Recovery and Growth Plan. In February, Lauder revealed plans to ramp up its restructuring program, part of the PRGP, and eliminate between 5,800 and 7,000 positions. Through Oct. 26, the company has approved initiatives totaling cumulative charges of $852 million and a net reduction of more than 4,000 positions.
But despite a better-than-expected set of earnings, the company did not change its full-year outlook.
Providing only an annual forecast for fiscal 2026 in August, Lauder said sales growth is forecast between flat and 3 percent, an improvement from 2025 when annual sales dropped 8 percent. It expects tariff-related headwinds to impact fiscal 2026 profitability by about $100 million.
In an interview with WWD, chief financial officer Akhil Shrivastava said making changes to the outlook at this point would be premature.
“We are confident in our outlook. We are pleased with our quarter one results, which increases our confidence. But it would be premature to start changing guidance, because we are running a long-term play,” he stressed. “We are building credibility with all our stakeholders, employees, investors. We are delivering everything we say, and our goal is to find multiple paths to deliver everything we say. The external environment is challenging. We are controlling the controllables, and we are executing and outperforming our expectations.”
Analysts also appeared confident that this quarter’s growth would not be a flash in a pan. Lauren Lieberman, an analyst at Barclays, said: “With organic sales growth inflecting into positive territory far earlier than we had expected (fiscal third quarter in our model), we will be curious to hear if there were any timing factors at play ahead of the holiday season, but to be frank, there is nothing in this morning’s release as to top-line drivers that would suggest this inflection is expected to prove short-lived.”
A breakdown of the numbers by category showed that skin care net sales increased 3 percent, primarily driven by growth from La Mer and Estée Lauder. The increases from both brands reflected higher net sales from the company’s Asia travel retail business, primarily driven by a low prior-year base due to a challenging retail environment — including lower conversion — as well as the company’s prior-year efforts to improve in-trade inventory.
Elsewhere, fragrance increased 13 percent on the back of double-digit growth from the company’s luxury brands; makeup sales fell 2 percent, primarily driven by Bobbi Brown, and hair care net sales dropped 7 percent.
There was also an improvement in mainland China, which had previously dragged down the company’s performance.
Sales grew 9 percent and Shrivastava said the stronger performance wasn’t just down to comps.
“Our results in China are very broad based. We grew double digits and the market grew mid- to high-single digits. That’s a significant outperformance,” he said, noting that the quarterly performance was diversified. “It’s not one or two brands. In China, it’s across categories, it’s across brands, it’s across channels. We are, of course, never satisfied, so we are always upping the ante on what we want to do and how we want to take this momentum and build upon it.”
This was partially offset by a low-single-digit decline in North America, on the back of continued challenges in department stores — including store closures related to a retailer bankruptcy, softness in certain retailers and elevated inventory levels for some brands that continued through the quarter.
As it works toward diversifying its retail offering in its home market, Lauder announced Wednesday it would be launching MAC Cosmetics at Sephora in early 2026.
“This strategic collaboration is the result of years of successful partnership with Sephora in global markets, and we are proud to debut M·A·C with Sephora in the U.S. for the first time in early 2026,” said Tara Simon, president, the Americas, The Estée Lauder Cos.
At the same time, Lauder continues its push on Amazon, recently launching on Amazon Mexico, a key growth country for the company.
Shrivastava said: “We have returned to growth in North America on retail, and our mission is to continue doing that.”
Its share price closed up 0.26 percent to $97.61.