Estee Lauder Companies, Inc. (NYSE:EL) published its second-quarter financial results on Thursday, exceeding market expectations with earnings per share of $0.89, compared to analyst consensus estimates of $0.83. The company recorded quarterly revenues of $4.229 billion, reflecting a 6% increase year-over-year and slightly surpassing the expected $4.219 billion. Organic net sales also grew by 4%, bolstered by widespread demand spanning various regions and product categories within its prestige beauty portfolio.
The report highlighted particularly strong retail sales momentum in Mainland China, marking a second consecutive quarter with double-digit growth and category share gains led by brands such as La Mer, TOM FORD, and Le Labo. Additional market share increases were noted in Japan and the United States. In Japan, Makeup and Fragrance categories contributed to share growth, while in the U.S. Skin Care and Hair Care segments posted mid-single-digit gains, with Direct-to-Consumer (DTC) Fragrance also performing well.
Within Western Europe, the Fragrance category achieved share expansion across key markets including France, Spain, and the U.K. Estee Lauder also noted share gains across categories and channels as part of its strategy through fiscal year 2025.
Breaking down product category performance for the quarter, Skin Care advanced 7% to $2.054 billion, Makeup increased by 1% reaching $1.164 billion, and Fragrance saw a 9% rise to $812 million. Adjusted gross profit climbed 6% to $3.235 billion, supported by an expansion in gross margin from 76.1% to 76.5%. The company’s adjusted operating income displayed significant improvement, jumping 32% to $608 million alongside a rise in adjusted operating margin from 11.5% to 14.4%.
Estee Lauder concluded the quarter holding cash and cash equivalents totaling $3.082 billion, providing a solid liquidity position amid ongoing restructuring efforts.
Central to the firm's outlook is its ambitious global restructuring program, part of the “Beauty Reimagined” transformation initiative described by President and CEO Stéphane de La Faverie as the company’s most significant operational, leadership, and cultural overhaul to date. This plan, identified as the PRGP, is focused on consolidating service providers, increasing outsourcing, and leveraging process standardization through advanced technology platforms to improve efficiency and agility.
The restructuring is anticipated to involve pre-tax charges ranging between $1.2 billion and $1.6 billion, with expected annual gross benefits of $0.8 billion to $1.0 billion. Key elements include workforce rightsizing, process simplification, selective outsourcing, and modifications to go-to-market and selling models. The program targets a net workforce reduction of approximately 5,800 to 7,000 positions, with final approvals scheduled by the end of fiscal year 2026. As of late January 2026, over 80% of the forecasted benefits, charges, and job reductions have already received approval.
Regarding shareholder returns, the company declared a quarterly cash dividend of $0.35 per share on both Class A and Class B Common Stock, payable on March 16.
Looking ahead, Estee Lauder revised its fiscal 2026 guidance upward. The adjusted earnings per share forecast was raised to a range of $2.03 to $2.23 from the prior projection of $1.90 to $2.10. This compares to analysts’ consensus estimate of $2.15. Similarly, the sales outlook was increased to a range of $14.756 billion to $15.042 billion, up from $14.613 billion to $15.042 billion, slightly ahead of the anticipated $14.934 billion.
Despite the optimistic projections, the company reaffirmed expectations that tariffs will negatively impact full-year 2026 profitability by approximately $100 million, predominantly during the second half of the fiscal year.
Following the earnings announcement, Estee Lauder’s shares experienced a 12.07% decline in premarket trading, closing at $105.17, reflecting investor concerns possibly related to tariff pressures and restructuring costs despite strong underlying operational performance.