The Estee Lauder Companies Reports Fiscal 2026 Results

Delivers Return to Sales Growth and Improved Profitability with Beauty Reimagined Execution

– As Reported Net Sales Growth of 6% in the Fourth Quarter and 5% for the Full Year
– Organic Net Sales Growth of 5% in the Fourth Quarter and 3% for the Full Year
– Fourth Quarter and Full-Year Net Sales Growth Across All Geographic Regions
– Full-Year Gross Margin and Operating Margin Expansion

Affirms Fiscal 2027 Outlook of Organic Net Sales Growth of 3% to 5%;
Raises Outlook on Adjusted Operating Margin to 12.7% to 13.5%

NEW YORK--(BUSINESS WIRE)--The Estée Lauder Companies Inc. (NYSE: EL) today reported its financial results for its fiscal year ended June 30, 2026.

“I am incredibly proud of our team for delivering fiscal 2026 results ahead of the expectations we had to start the year. We reignited growth with organic sales rising 3%, driven by the breadth of growth across brands, and achieved significant operating margin expansion,” said Stéphane de La Faverie, President and CEO. “We ended the year on a high note, as organic sales growth accelerated to 5% for our fourth consecutive quarter of growth and stronger profitability. We are delivering on all aspects of Beauty Reimagined. Our One ELC operating model is increasingly enabling the entire organization to move at speed and with discipline.”

de La Faverie emphasized, “For fiscal 2027, we are affirming our confidence to accelerate organic sales growth. In addition, we are raising our outlook for an even stronger adjusted operating margin, as we double down on our strengths to further diversify growth across product categories and geographies, including accelerating growth in North America.”

FISCAL 2026 SELECT FINANCIAL RESULTS (unaudited)^1,2

• As Reported Net sales increased 5% to $15.0 billion. Organic net sales increased 3%.
• As Reported and Adjusted Gross margin expanded 150 basis points, to 75.5%, reflecting net benefits from the Company’s Profit Recovery and Growth Plan (“PRGP”) and, to a lesser extent, sales leverage, partially offset by inflation and the impact of incremental tariffs, net of refunds received. The PRGP benefits were driven by operational efficiencies, including a more competitive approach to procurement and expense optimization, as well as lower excess and obsolescence. See page 3 for more information relating to tariff refunds received.
• As Reported Operating margin was 5.2%, an expansion from (5.5)% in the prior year, which was unfavorably impacted by $1,286 million of goodwill and other intangible asset impairments and $159 million of aggregate charges associated with the Talcum litigation settlement agreements³. These impacts were partially offset by the increase in restructuring and other charges of $337 million as well as the unfavorable impact of an $84 million loss contingency, net of funded insurance recoveries, related to the pending settlement of a securities class action recorded in fiscal 2026. Adjusted Operating margin expanded 320 basis points, to 11.2% from 8.0%, driven by operating leverage and gross margin expansion, including net benefits from the Company’s PRGP that provided funding for increased consumer-facing investments⁴. Non-consumer-facing expenses were flat, with the impact of increased employee incentive costs—driven by the Company's better-than-expected fiscal 2026 performance—offset by net benefits from the PRGP.

• During the fiscal 2026 fourth quarter, the Company submitted claims for a portion of its eligible International Emergency Economic Powers Act (“IEEPA”) tariffs paid and began to receive refunds. The Company recorded a $38 million benefit in cost of sales from refunds received during the fiscal 2026 fourth quarter. This partially offset the full-year gross impact of incremental tariffs of $102 million, which was primarily recorded in cost of sales.
• As Reported and Adjusted Effective tax rate was 64.8% and 35.7% compared to (8.9)% and 38.8% in the prior year, respectively. The increase in As Reported Effective tax rate primarily reflects the higher effective tax rate on income from the Company’s foreign operations due to its geographic mix of earnings, including the establishment of new valuation allowances on certain foreign deferred tax assets. The increase also reflects the unfavorable impact of recently enacted U.S. tax legislation as well as changes in unrecognized tax benefits related to transfer pricing matters across multiple tax jurisdictions and the unfavorable impact associated with previously issued stock-based compensation.
• As Reported Diluted net earnings (loss) per common share increased to net earnings of $.50 in fiscal 2026, compared with a net loss of $(3.15) in the prior year, including year-over-year impacts noted above. Adjusted diluted net earnings per common share increased to $2.51, compared with $1.51. The disruptions to the Company’s business from the conflict in the Middle East had a dilutive impact to fiscal 2026 reported and adjusted diluted net earnings per common share of $.03 and $.06, respectively, which were more than offset by the benefit from tariff refunds received of $.04 and $.07, respectively.
• For the year ended June 30, 2026, Cash and cash equivalents increased to $3.50 billion from $2.92 billion, reflecting:
  • Net cash flows provided by operating activities increased 39% to $1.77 billion, compared with $1.27 billion in the prior year, primarily reflecting higher net earnings, excluding non-cash items. The improvement also reflects the favorable change in operating assets and liabilities, despite the increase in restructuring payments.
  • Capital expenditures decreased to $457 million from $602 million in the prior year, reflecting the Company’s strategic focus on optimizing its overall investments, prioritizing consumer-facing—which represented over 75% of total capital expenditures in fiscal 2026—to fuel growth.
  • Free Cash Flow⁵ was $1.32 billion, compared with $0.67 billion in the prior year, reflecting strong cash flows from operations as well as the reduction in capital expenditures. The Company continues to focus on improving Free Cash Flow through operational efficiencies and the optimization of its investments.
  • The Company paid $300 million in deferred consideration associated with the fiscal 2023 acquisition of the TOM FORD brand—which includes a $150 million early payment made in the fiscal 2026 third quarter for an obligation originally due in July 2026—and $508 million in Dividends.

SELECT FISCAL 2026 FOURTH QUARTER AND FULL-YEAR HIGHLIGHTS⁶

Beauty Gains and Achievements

• Achieved prestige beauty share gains in some key markets:
  • Mainland China: Value share gains in the fiscal 2026 fourth quarter and full year, with the full year driven by Fragrance, Skin Care, and Makeup
  • Japan: Value share gains in the fiscal 2026 fourth quarter and full year, with the full year driven by Fragrance and Makeup
  • Korea: Return to value share gain in the fiscal 2026 fourth quarter as retail sales growth accelerated from high single-digit to double-digit, driven by Makeup and Skin Care
  • U.S.⁷: Volume share gains in the fiscal 2026 fourth quarter and full year, with every category contributing to the full year performance
  • Western Europe: Return to value share gain in the fiscal 2026 fourth quarter, including in the U.K., with Skin Care and Fragrance driving the overall gain
• Increased the number of billion-dollar brands to six in fiscal 2026, with the addition of Jo Malone London and TOM FORD
• Ranked highly during the 11.11 and 6.18 key shopping moments in mainland China, winning the #1 positions in Prestige Beauty, Luxury and Prestige Fragrance across a mix of brands and platforms, led by Estée Lauder, La Mer and Jo Malone London
• Honored at the 2026 Fragrance Foundation Awards, with Editions de Parfums Frédéric Malle Portrait of a Lady inducted into the Fragrance Hall of Fame, TOM FORD Oud Voyager Eau de Parfum recognized as Fragrance of the Year - Ultra Luxury and Jo Malone London Beach Blossom Cologne recognized as Fragrance of the Year - Universal Prestige

Operations and Execution

• Expanded consumer coverage in fiscal 2026 on Amazon, reaching 13 brands across 11 markets, and on TikTok Shop, now with 12 brands across nine markets. Opened 33 net new freestanding stores across Fragrance globally, led by Le Labo and Jo Malone London, and launched M·A·C in select U.S. Sephora locations as well as online and in Sephora at Kohl’s in March 2026.
• Boosted consumer-facing investments, increasing 7% in both the fiscal 2026 fourth quarter and full year, or 5% and 4% excluding the impact of foreign currency translation, respectively, with increases in every quarter
• Fully established the Company’s One ELC operating model with leading external partners and concluded PRGP restructuring program approvals as of June 30, 2026, with delivery of the overall PRGP ahead of expectations
• Continued to invest for long-term growth, agreeing to acquire the remaining interest in Forest Essentials (subject to regulatory approval), announcing its minority stakes in XINÚ and 111Skin, and strengthening its U.K. prestige fragrance manufacturing network

Product and Commercial Innovation

• Continued to accelerate speed to market, launching breakthrough, on-trend and commercial innovations across every category with 23% of fiscal 2026 sales from innovation:
  • Strengthened hero franchises with next-generation icons and global commercial innovations, including Estée Lauder Double Wear Stay-in-Place Longwear Matte Foundation supported by its global “Made for More” campaign and Jo Malone London’s “Uniquely You” and “Two Sisters, One Perfect Pear” campaigns, among others
  • Captured and created consumer trends and cultural resonance with launches from M·A·C, including the fiscal 2026 fourth-quarter launch of Skinfinish Colourstruck Blush
  • Advanced high performance skin care with breakthrough science including the launch of La Mer Balancing Infused Emulsion in the fiscal 2026 fourth quarter
  • Priced strategically for new consumer acquisition with launches from The Ordinary including the fiscal 2026 fourth quarter launch of Caffeine Solution 5% + EGCG Eye Serum
  • Cultivated consumer discovery with bold olfactives and distinctive storytelling with launches including TOM FORD Taormina Orange Eau de Parfum in the fiscal 2026 fourth quarter

Social Impact & Sustainability

• Recognized by CDP for the Company’s 2025 disclosures on its environmental impact, securing a place on the Water A List as well as achieving an A- for Climate and a B for Forests
• Achieved GreenCircle Sustainable Energy Practices certification for all Company-owned and operated manufacturing sites, enabling thousands of products to qualify for Amazon’s Climate Pledge Friendly program
• Expanded social impact investments with an anticipated $50 million by 2030 to advance women's health, education, leadership, and entrepreneurship, alongside an expected $10 million for employee giving and volunteerism by 2030

PROFIT RECOVERY AND GROWTH PLAN (“PRGP”)
The PRGP, coupled with Beauty Reimagined, has transformed the Company’s operating model to (i) create greater capacity to invest behind sales growth by streamlining its fixed-cost base, (ii) support the recovery toward a solid double-digit adjusted operating margin and (iii) enhance agility to mitigate external volatility. The Company’s ongoing transformation has fundamentally reshaped the way it operates, creating a faster, more efficient organization with a culture of continuous improvement that drives ongoing operational optimization, process simplification and greater operating leverage as it scales. As of June 30, 2026, the Company concluded approvals relating to the restructuring component of the PRGP.

Key achievements through June 30, 2026:

• Overachieved PRGP restructuring expectations. The Company expects:
  • Total gross benefits of $1.2 billion, at the high-end of the previously communicated range
  • Total net reduction of 10,000 positions, at the high-end of the previously communicated range. This enables a 50% increase in productivity across corporate-function employees.
  • Total cumulative charges slightly above the high-end of the previously communicated range of $1.5 billion to $1.7 billion

See “Restructuring Program Component of the PRGP” below for more information.

• Full-year gross margin expansion of 150 basis points in fiscal 2026—with expansion in each quarter—despite headwinds from inflation and incremental tariffs, driven by net PRGP benefits from operational efficiencies and lower excess and obsolescence, collectively.
• Funded additional consumer-facing investments throughout fiscal 2026:
  • Increased consumer-facing investments 7% in both the fourth quarter and full year, or 5% and 4% excluding foreign currency translation, respectively
  • Reduced non-consumer-facing expenses in each quarter of fiscal 2026, except for the fourth quarter, which reflected higher employee incentive costs driven by the Company's better-than-expected full-year performance.
• Full-year adjusted operating margin expansion of 320 basis points in fiscal 2026, with expansion of nearly 300 basis points or more in each quarter

Actions under the Company’s PRGP are still expected to be substantially completed in fiscal 2027, with a vast majority of the full run-rate benefits still expected to be realized during fiscal 2027.

Restructuring Program Component of the PRGP
Relating specifically to the restructuring program component of the PRGP, through June 30, 2026, the Company has recognized total cumulative charges under the restructuring component of the PRGP of $1.4 billion, consisting primarily of employee-related costs. In fiscal 2026, for the fourth quarter and full-year, the Company recognized charges of $0.3 billion and $0.8 billion, respectively. As noted above, approvals for specific initiatives under this restructuring program were concluded as of June 30, 2026.

Once all approved initiatives are fully implemented, the restructuring program component of the PRGP is expected to result in restructuring and other charges slightly above the high-end of the previously announced range of $1.5 billion and $1.7 billion, before taxes. This consists of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives. The restructuring program is expected to yield annual gross benefits of approximately $1.2 billion, at the high-end of the previously announced range of between $1.0 billion and $1.2 billion, before taxes, to help restore operating margin, offset inflation and fuel increased reinvestments in consumer-facing areas to drive sustainable sales growth.

The Company estimates a final net reduction in positions of approximately 10,000, at the high-end of the previously announced range of 9,000 to 10,000. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas. The restructuring program’s focus includes the (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models, all to help rebuild operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth.

FISCAL 2026 RESULTS BY PRODUCT CATEGORY AND BY REGION

The product category commentary below on net sales reflects organic net sales, excluding the favorable impacts from foreign currency translation, and on operating results reflects adjusted operating results, excluding the adjustments in the preceding table. In addition to the Operational Highlights above, below are the drivers of the Company’s performance.

Skin Care

• Skin Care net sales increased 4%, primarily driven by growth from La Mer, The Ordinary and Estée Lauder.
  • Net sales growth from La Mer benefited from innovation, including The NEW Rejuvenating Eye Cream, and existing product franchises, such as The Treatment Lotion and The Moisturizing Soft Cream, driving strong performance during key shopping moments and holiday
  • The increase in net sales from The Ordinary benefited from targeted expanded consumer reach, key campaigns—including DECIEM’s Abnormal Birthday Party in April 2026—as well as the timing of shipments for key shopping moments
  • Net sales from Estée Lauder increased, primarily due to innovation and existing products across the Advanced Night Repair and Revitalizing Supreme+ product franchises—which helped to drive strong performance during key shopping moments and holiday
• Skin Care adjusted operating income increased 52%, primarily due to the increase in net sales and net benefits from the PRGP—which helped to reduce non-consumer-facing expenses, despite a more normalized level of employee incentive costs, partially offset by the increase in consumer-facing investments to support key activations, new product launches and targeted expanded consumer reach.

Makeup

• Makeup net sales growth improved over 500 basis points compared to prior year, though net sales were virtually flat, primarily driven by growth from M·A·C and TOM FORD, offset by declines from Bobbi Brown and Too Faced.
  • M·A·C net sales increased, primarily due to shipments for the March 2026 launch in select U.S. Sephora locations as well as online and in Sephora at Kohl’s. The growth also reflects continued success from the lip subcategory, fueled by its hero products, including the Powder Kiss Lipstick product franchise and Lip Pencil.
  • Net sales increased from TOM FORD, with Eye Color Quad innovation driving growth in the eye subcategory and Architecture Soft Matte Blurring Foundation and the new Architecture Radiance Hydrating Foundation fueling growth in the face subcategory
  • Bobbi Brown net sales decreased, primarily reflecting continued declines in the lip and eye sub-categories from both retail softness and the Company’s strategic focus on stronger-performing products within the face subcategory
  • Net sales declined from Too Faced, primarily due to continued retail softness for the brand, the unfavorable comparison to higher shipments for innovation in the prior year and the impact of closures of certain specialty-multi retailer-operated shop-in-shop doors
• Makeup adjusted operating results decreased to a loss position, reflecting sales deleverage from the strategic increase in consumer-facing investments to drive future sales growth, including to support key activations, new product launches and distribution expansion.

Fragrance

• Fragrance net sales increased 10%, primarily driven by double-digit growth from the Company’s Luxury Brands—with broad-based growth across brands as well as growth across all geographic regions—led by Le Labo, TOM FORD, and KILIAN PARIS.
  • Net sales growth from Le Labo was primarily driven by its Classic Collection, including innovation such as the fiscal 2026 launches of Violette 30 and perfuming hand creams.

Investors: Rainey Mancini
rmancini@estee.com

Media: Brendan Riley
briley@estee.com