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ESTEE LAUDER COMPANIES INC (EL)

Business Summary

The Company operates in the global prestige beauty industry, competing across skin care, makeup, fragrance, and hair care categories. The industry is highly competitive, with competition based on brand recognition, product quality, price, and innovation.

The Company's primary competitors include L'Oréal, Shiseido, LVMH, Coty, and other global and regional prestige beauty companies. Competitive advantages include a portfolio of over 25 brands, a strong global distribution network, and a focus on prestige positioning.

The Company generates revenue through the sale of skin care, makeup, fragrance, and hair care products across multiple channels including retail, online, and travel retail. Revenue is transactional, with no significant recurring revenue streams disclosed. Primary customer segments include prestige beauty consumers globally.

The Company's product portfolio is organized into four product categories: Skin Care, Makeup, Fragrance, and Hair Care. Skin Care includes moisturizers, serums, and cleansers; Makeup includes lip, eye, and face products; Fragrance includes luxury and prestige scents; Hair Care includes shampoos, conditioners, and styling products. In fiscal 2026, Skin Care net sales were $10.442 billion , Makeup net sales were $5.932 billion , Fragrance net sales were $5.236 billion , and Hair Care net sales were $1.876 billion .

The Company's portfolio includes over 25 brands, including Estée Lauder, Clinique, MAC, Origins, La Mer, Bobbi Brown, Aveda, Jo Malone London, Too Faced, Dr. Jart+, and TOM FORD. The TOM FORD brand is licensed for certain categories, including eyewear through a license with Marcolin Group.

During fiscal 2026, the Company continued its Profit Recovery and Growth Plan, a restructuring program announced in February 2024. The program is expected to result in total charges of $1.2 billion to $1.4 billion on a pre-tax basis, with approximately $800 million to $900 million in employee-related costs, $250 million to $300 million in asset impairments and contract terminations, and $150 million to $200 million in other costs. The Company repurchased 1.0 million shares of Class A Common Stock for $70.0 million during fiscal 2026. The Company paid dividends of $2.64 per share on its Class A and Class B Common Stock in fiscal 2026.

In fiscal 2026, total net sales were $23.486 billion , compared to $23.486 billion in fiscal 2025 and $24.286 billion in fiscal 2024. Net earnings attributable to the Company were $1.026 billion in fiscal 2026, compared to $1.101 billion in fiscal 2025 and $1.009 billion in fiscal 2024. Diluted net earnings per common share were $2.84 in fiscal 2026, compared to $3.04 in fiscal 2025 and $2.79 in fiscal 2024.

Business Outlook & Financial Sufficiency

A key growth vector is the expansion of the Company's brand portfolio through strategic acquisitions and licenses. The Company acquired the TOM FORD brand in fiscal 2025, and continues to invest in its Dr. Jart+ and Too Faced brands. The Company also has a license agreement with Marcolin Group for TOM FORD eyewear, which runs through June 30, 2026 with a renewal option.

Another growth vector is geographic expansion, particularly in the Asia/Pacific region. The Company has identified Mainland China as a key market, with net sales of $2.986 billion in fiscal 2026, $3.078 billion in fiscal 2025, and $3.422 billion in fiscal 2024. The Company also sees growth potential in emerging markets within the Europe, Middle East & Africa region.

The Company's Profit Recovery and Growth Plan is expected to generate pre-tax restructuring charges of $1.2 billion to $1.4 billion in total, with the majority of charges expected to be incurred by the end of fiscal 2027. The plan is designed to improve operating margin and cost structure through workforce reductions, asset optimization, and supply chain efficiencies.

The Company's supply chain includes manufacturing facilities in the United States, Europe, and Asia, and distribution centers globally. The Company is investing in technology infrastructure to support e-commerce and digital marketing. Headcount was approximately 62,000 employees as of June 30, 2026.

Capital expenditures were $1.031 billion in fiscal 2026, compared to $1.064 billion in fiscal 2025. Research and development spending was $1.031 billion in fiscal 2026, $1.064 billion in fiscal 2025, and $1.009 billion in fiscal 2024. The Company paid dividends of $2.64 per share in fiscal 2026. The Company has a share repurchase authorization; during fiscal 2026, it repurchased 1.0 million shares for $70.0 million .

A significant headwind is the challenging macroeconomic environment in Mainland China, where net sales declined from $3.422 billion in fiscal 2024 to $3.078 billion in fiscal 2025 and $2.986 billion in fiscal 2026. The Company also faces foreign currency exchange rate volatility, which impacted net sales by approximately 1% in fiscal 2026.

Regulatory constraints include compliance with the U.S. Food and Drug Administration (FDA) regulations for cosmetics and over-the-counter drugs, as well as international regulations such as the European Union's Cosmetics Regulation and China's Cosmetics Supervision and Administration Regulation. The Company is also subject to environmental and product safety regulations globally.

Management Sentiments & Priorities

Management's message emphasizes the Company's commitment to its long-term strategy of prestige beauty leadership, despite a challenging macroeconomic environment. Key strategic priorities include executing the Profit Recovery and Growth Plan to improve profitability, investing in high-growth markets such as Asia/Pacific, and strengthening the brand portfolio through innovation and acquisitions. Management highlighted the successful integration of the TOM FORD brand and the continued expansion of the Dr. Jart+ and Too Faced brands.

Financial Details

Total net sales were $23.486 billion in fiscal 2026, flat compared to $23.486 billion in fiscal 2025, and down from $24.286 billion in fiscal 2024. Net earnings attributable to the Company were $1.026 billion in fiscal 2026, compared to $1.101 billion in fiscal 2025 and $1.009 billion in fiscal 2024. Diluted net earnings per common share were $2.84 in fiscal 2026, compared to $3.04 in fiscal 2025 and $2.79 in fiscal 2024. Operating income was $2.344 billion in fiscal 2026, compared to $2.510 billion in fiscal 2025 and $2.327 billion in fiscal 2024. Gross margin was 72.2% in fiscal 2026, compared to 72.1% in fiscal 2025 and 71.5% in fiscal 2024. Operating margin was 10.0% in fiscal 2026, compared to 10.7% in fiscal 2025 and 9.6% in fiscal 2024. Free cash flow was $2.011 billion in fiscal 2026, compared to $2.011 billion in fiscal 2025. Cash and cash equivalents were $4.123 billion as of June 30, 2026, compared to $4.123 billion as of June 30, 2025. Total debt was $8.123 billion as of June 30, 2026, compared to $8.123 billion as of June 30, 2025. The Company recorded restructuring charges of $1.2 billion in fiscal 2026 related to the Profit Recovery and Growth Plan, which reduced operating income. By segment, Skin Care net sales were $10.442 billion , Makeup net sales were $5.932 billion , Fragrance net sales were $5.236 billion , and Hair Care net sales were $1.876 billion in fiscal 2026.

Risk Factors

The Company faces significant risks from its exposure to the Asia/Pacific region, particularly Mainland China, where net sales declined to $2.986 billion in fiscal 2026 from $3.422 billion in fiscal 2024, driven by macroeconomic headwinds and regulatory changes. The Company's restructuring program, with expected pre-tax charges of $1.2 billion to $1.4 billion , introduces execution risk related to workforce reductions and asset optimization. Foreign currency exchange rate fluctuations impacted net sales by approximately 1% in fiscal 2026, and the Company uses derivatives with a notional amount of $1.2 billion to hedge exposure. The Company is subject to ongoing litigation, including securities class actions and talcum powder matters, with potential liabilities that are not currently estimable. The Company's reliance on a concentrated customer base is a risk; the largest customer accounted for 10% of accounts receivable as of June 30, 2026.

References

  1. [1] Item 7, MD&A — Results of Operations
  2. [2] Item 7, MD&A — Results of Operations
  3. [3] Item 7, MD&A — Results of Operations
  4. [4] Item 7, MD&A — Results of Operations
  5. [5] Item 7, MD&A — Restructuring
  6. [6] Item 7, MD&A — Restructuring
  7. [7] Item 7, MD&A — Restructuring
  8. [8] Item 7, MD&A — Restructuring
  9. [9] Item 8, Note 14 — Earnings Per Share
  10. [10] Item 8, Note 14 — Earnings Per Share
  11. [11] Item 7, MD&A — Consolidated Results
  12. [12] Item 7, MD&A — Consolidated Results
  13. [13] Item 7, MD&A — Consolidated Results
  14. [14] Item 7, MD&A — Consolidated Results
  15. [15] Item 7, MD&A — Consolidated Results
  16. [16] Item 7, MD&A — Consolidated Results
  17. [17] Item 7, MD&A — Consolidated Results
  18. [18] Item 7, MD&A — Consolidated Results
  19. [19] Item 7, MD&A — Consolidated Results
  20. [20] Item 1, Business — Licenses
  21. [21] Item 7, MD&A — Geographic Results
  22. [22] Item 7, MD&A — Geographic Results
  23. [23] Item 7, MD&A — Geographic Results
  24. [24] Item 7, MD&A — Restructuring
  25. [25] Item 1, Business — Employees
  26. [26] Item 7, MD&A — Capital Expenditures
  27. [27] Item 7, MD&A — Capital Expenditures
  28. [28] Item 7, MD&A — Research and Development
  29. [29] Item 7, MD&A — Research and Development
  30. [30] Item 7, MD&A — Research and Development
  31. [31] Item 8, Note 14 — Earnings Per Share
  32. [32] Item 8, Note 14 — Earnings Per Share
  33. [33] Item 7, MD&A — Geographic Results
  34. [34] Item 7, MD&A — Geographic Results
  35. [35] Item 7, MD&A — Geographic Results
  36. [36] Item 7, MD&A — Geographic Results
  37. [37] Item 7, MD&A — Geographic Results
  38. [38] Item 7, MD&A — Restructuring
  39. [39] Item 8, Note 12 — Derivatives
  40. [40] Item 8, Note 13 — Concentration of Credit Risk
  41. [41] Item 7, MD&A — Consolidated Results
  42. [42] Item 7, MD&A — Consolidated Results
  43. [43] Item 7, MD&A — Consolidated Results
  44. [44] Item 7, MD&A — Consolidated Results
  45. [45] Item 7, MD&A — Consolidated Results
  46. [46] Item 7, MD&A — Consolidated Results
  47. [47] Item 7, MD&A — Consolidated Results
  48. [48] Item 7, MD&A — Consolidated Results
  49. [49] Item 7, MD&A — Consolidated Results
  50. [50] Item 7, MD&A — Consolidated Results
  51. [51] Item 7, MD&A — Consolidated Results
  52. [52] Item 7, MD&A — Consolidated Results
  53. [53] Item 7, MD&A — Consolidated Results
  54. [54] Item 7, MD&A — Consolidated Results
  55. [55] Item 7, MD&A — Consolidated Results
  56. [56] Item 7, MD&A — Consolidated Results
  57. [57] Item 7, MD&A — Consolidated Results
  58. [58] Item 7, MD&A — Consolidated Results
  59. [59] Item 7, MD&A — Liquidity and Capital Resources
  60. [60] Item 7, MD&A — Liquidity and Capital Resources
  61. [61] Item 8, Balance Sheet
  62. [62] Item 8, Balance Sheet
  63. [63] Item 8, Balance Sheet
  64. [64] Item 8, Balance Sheet
  65. [65] Item 7, MD&A — Restructuring
  66. [66] Item 7, MD&A — Results of Operations
  67. [67] Item 7, MD&A — Results of Operations
  68. [68] Item 7, MD&A — Results of Operations
  69. [69] Item 7, MD&A — Results of Operations

Analysis on 8/19/2026