THE FACT THAT? The Estée Lauder Companies has reported a return to positive sales and profit growth for the first quarter of fiscal 2026, marking its first operating margin expansion in four years and reaffirming its full-year outlook.
THE DETAILS Net sales increased 4% to $3.48 billion, and organic sales increased 3%. Gross margin increased 100 basis points to 73.4%, supported by the company’s Profit Recovery and Growth Plan (PRGP), which generated cost efficiencies and reduced promotional spend. Adjusted operating income rose 77% to $255 million, and adjusted diluted earnings per share doubled to $0.32 from $0.14.
Growth was led by Fragrances (+13%) and Skin Care (+3%), while Makeup (-2%) and Hair Care (-7%) declined. The Asia/Pacific region posted the strongest results, with an organic increase of 9%, driven by travel retail and demand in mainland China. The Americas experienced a modest decline, impacted by weakness in department stores and retailers’ inventory challenges.
Operationally, the company continued to execute its restructuring program under the PRGP, with the goal of saving between $800 million and $100 million annually by fiscal year 2027 and a workforce reduction of up to 7,000 positions. Estée Lauder reaffirmed its outlook for fiscal 2026, projecting organic net sales growth of 0% to 3% and adjusted EPS of between $1.90 and $2.10.
THE WHY? The results highlight Estée Lauder’s progress in stabilizing its business through cost restructuring, supply chain optimization and strong performance in the Asian and luxury markets after several challenging years.
Fountain: The Estée Lauder Companies
