Market Overview - U.S. equities faced a challenging day on February 5, 2026, with significant sell-offs in technology stocks and negative job market reports impacting investor sentiment [1] - The S&P 500 fell 1.2% to close at 6,798.40, marking its sixth decline in seven trading days since reaching an all-time high [2] - The Nasdaq Composite dropped 1.6% to 22,540.59, while the Dow Jones Industrial Average decreased by 1.2% to 48,908.72 [2] - Bitcoin prices fell below $64,000, reaching their lowest level since October 2024, further exacerbating the downturn [2] Major Market Movers and Corporate News - Alphabet (GOOGL) saw a decline of 0.8% despite stronger-than-expected sales, as investors were concerned about projected capital expenditures for AI infrastructure, estimated at $175 billion to $185 billion for 2026, nearly double the $91.45 billion spent in 2025 [3] - Qualcomm (QCOM) experienced an 8.5% drop due to a disappointing outlook, citing a tightening global memory shortage affecting the smartphone market [4] - Advanced Micro Devices (AMD) fell sharply by 17.3% on a weak outlook, contributing to the semiconductor sector's struggles [4] - Uber Technologies (UBER) declined by 5.2% after missing earnings expectations, while Amgen (AMGN) surged 8.2% on positive earnings results [5] - Eli Lilly (LLY) jumped 10.3% due to strong sales of its drugs, and McKesson (MCK) soared 16.5% after exceeding profit and revenue expectations [5] - Peloton Interactive (PTON) plummeted 28% after reporting weaker-than-expected results, while Estee Lauder (EL) and Snap (SNAP) retreated by 19% and 12%, respectively [6] Job Market Developments - Amazon (AMZN) announced plans to cut approximately 16,000 corporate roles, while UPS revealed 30,000 job cuts [7] - Dow (DOW) reduced its workforce by 4,500 jobs, with Home Depot (HD) and Nike (NKE) also making cuts [7] Economic Indicators - Initial jobless claims for the week ending January 31 rose to 231,000, exceeding economists' estimates [9] - U.S. employers announced over 108,000 layoffs in January, the highest for that month since 2009, with job openings falling to 6.5 million in December, the lowest since 2020 [9] - The Consumer Price Index rose 2.7% over the year in December, indicating persistent inflation despite potential interest rate cuts by the Federal Reserve [10] Upcoming Market Events - Investors are awaiting the release of January U.S. Non-Farm Payrolls, Unemployment Rate, and Average Hourly Earnings data on February 6, which will provide further insights into the labor market [8]

Core Viewpoint - Estée Lauder's stock fell 18.4% following the release of its earnings report, which, despite showing some progress, did not meet investor expectations after a significant prior increase in stock value [1]. Financial Performance - In the latest quarter, Estée Lauder reported a revenue growth of 5.8%, reaching $4.23 billion, and adjusted earnings per share (EPS) increased by 43% to $0.89 [2]. - The revenue growth of 5.8% marked an acceleration from the previous quarter's growth of 3.5%, but still fell short of market expectations [3]. Market Dynamics - Estée Lauder has successfully regained market share while implementing cost-cutting measures, with a notable recovery in China contributing to a 13% growth in that market last quarter. All regions reported positive growth, with Europe and the Middle East up 9%, and the U.S. and Asia Pacific (excluding China) each up 1% [4]. Future Outlook - The company's forward guidance for the fiscal year ending June 2026 indicates a growth expectation of only 3% to 5%, which is a deceleration from previous forecasts. Adjusted EPS is projected to be between $2.05 and $2.25. The company has already achieved $1.21 in adjusted EPS in the first two quarters of fiscal 2026, leading to potential investor disappointment regarding full-year guidance [5]. - Management anticipates a $100 million negative impact from tariffs in the current fiscal year [5]. Valuation Concerns - Estée Lauder's stock valuation remains high at 44 times this year's adjusted EPS estimates, suggesting that investors may have overly optimistic expectations for continued growth and profit recovery [8]. - Despite some positive trends in recent quarters, management does not express confidence in significant acceleration of results in the near term, particularly given the premium nature of its products which rely on a strong global consumer base [9].

Core Viewpoint - Estée Lauder's stock is experiencing a significant decline, heading towards its worst day ever, as the company's profit outlook raised is not sufficient to meet high investor expectations despite beating earnings estimates [1] Earnings Results - Estée Lauder reported fiscal second-quarter results, raising its full-year profit outlook, but this was not enough to satisfy investors [1] - The company is facing challenges such as tariffs and increased investments in its turnaround plans, which have contributed to the stock's decline [1] Management Commentary - CEO Stéphane de La Faverie expressed optimism regarding the company's turnaround efforts, which include cost-cutting measures, layoffs, and initiatives to enhance operational agility [1] - He described the current changes as "the biggest operational, leadership, and cultural transformation in our history" [1]

Financial Performance Highlights - Estée Lauder reported a mixed quarter, beating earnings expectations with an operating income of $401 million, a significant improvement from the $(580) million loss in the prior year, which included $861 million in impairments [3] - Gross margin increased by 40 basis points to 76.5%, and first-half free cash flow surged to $581 million from $114 million a year earlier [3] Revenue Breakdown - Makeup sales declined 1% organically to $1.16 billion, affected by an accrual for returns ahead of the Double Wear relaunch [4] - Skin care sales grew 6% organically to $2.05 billion, driven by brands like La Mer, Estée Lauder, and The Ordinary [4] - Fragrance sales also rose 6% to $812 million, supported by TOM FORD and Le Labo [4] China Market Performance - Sales in Mainland China increased by 13%, marking the second consecutive quarter of double-digit growth, which helped mitigate weaknesses in Northern Asian travel retail [5] Guidance and Outlook - Management raised full-year guidance, projecting organic sales growth of 1% to 3% and adjusted EPS of $2.05 to $2.25 [6] - The company anticipates approximately $100 million in tariff-related headwinds in the second half, which may temper growth expectations [6] - CEO Stéphane de La Faverie highlighted the ongoing transformation of the company, emphasizing the impact of the "Beauty Reimagined" initiative [6] Strategic Initiatives - The company plans to expand M·A·C into Sephora US stores by March 2026 and enhance its digital presence on platforms like Amazon and TikTok Shop [7] Stock Market Reaction - Despite the raised guidance, shares fell 18.7% due to revenue miss and anticipated tariff headwinds, with a forward P/E ratio of 58x [8] - Adjusted operating margin improved by 290 basis points to 14.4% from the prior year [8] - EPS was reported at $0.89, beating estimates of $0.86, while revenue was $4.23 billion, in line with estimates [8]

Estée Lauder delivered a mixed quarter, beating earnings expectations while revenue met estimates. ...

Shares of Estee Lauder ( EL ) have recovered solidly over the past year, gaining over 40%, though its earnings on Thursday reminded investors this is not a linear recovery by any means. While the company beat its Q2 earnings, the updated outlook provided alongsideOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an ...

Core Insights - The Estee Lauder Companies Inc. (EL) reported strong second-quarter fiscal 2026 results, with both revenue and earnings exceeding expectations and showing year-over-year growth [1][2]. Financial Performance - Adjusted earnings per share were 89 cents, surpassing the Zacks Consensus Estimate of 84 cents, and increased 43% from 62 cents in the same quarter last year [3]. - Quarterly net sales reached $4,229 million, beating the Zacks Consensus Estimate of $4,226 million, and increased by 6% year over year. Organic net sales rose 4% to $4,155 million [3]. Category-Wise Revenue Results - Skin Care sales increased by 6% year over year to $2,054 million, driven by brands like La Mer and Estée Lauder [4]. - Makeup revenues declined by 1% year over year to $1,164 million, primarily due to Estee Lauder's performance, although operating performance improved [5]. - Fragrance category revenues rose by 6% to $812 million, led by luxury brands such as TOM FORD and Le Labo [6]. - Hair Care sales totaled $168 million, up 5% year over year, supported by strong demand for The Ordinary [7]. Regional Revenue Results - Sales in the Americas were stable at $1,218 million, while revenues in the EUKEM region increased by 2% to $1,183 million. Asia-Pacific sales rose by 2% to $900 million, with Mainland China seeing a 13% increase to $928 million [8]. Margin Insights - Adjusted gross margin expanded by 40 basis points year over year to 76.5%, aided by the Profit Recovery and Growth Plan (PRGP), despite challenges from tariffs and inflation [9]. - Operating earnings were reported at $401 million, a significant improvement from a loss of $580 million in the prior year [10]. Restructuring and Future Outlook - The company is advancing its PRGP, which is expected to generate annual gross benefits of $0.80-$1.00 billion, with a net workforce reduction of 5,800-7,000 positions [14]. - EL raised its fiscal 2026 outlook, now forecasting net sales growth of 3-5% and adjusted earnings per share of $2.05-$2.25, reflecting strong first-half performance [15][16].

In this photo illustration the Estee Lauder Companies Inc. logo seen displayed on a smartphone with Estee Lauder Companies Inc. logo in the background.Estée Lauder said Thursday it's expecting a $100 million hit to its full-year profitability because of tariff impacts. The beauty company's stock tumbled more than 20% in midday trading.The company is currently in the midst of a turnaround plan, dubbed "Beauty Reimagined," that's expected to cost between $1.2 billion and $1.6 billion and is aimed at revitaliz ...

Financial Performance - Net sales for the three months ended December 31, 2025, were $4,229 million, a 5.6% increase from $4,004 million in the same period of 2024[186]. - For the six months ended December 31, 2025, net sales reached $7,710 million, reflecting a 5% increase from $7,365 million in the previous year[210]. - Net sales for the three months ended December 31, 2025, were reported at $4,229 million, a 6% increase from $4,004 million in the prior year[210]. - Total revenue for the six months ended December 31, 2025, was $7,710 million, an increase of 5% compared to $7,365 million in the same period of 2024[291]. - The Americas region generated net sales of $1,218 million in Q2 2025, slightly up from $1,209 million in Q2 2024[188]. - Reported net sales in The Americas decreased 1% for the six months ended December 31, 2025, driven by a 2% decrease from pricing[245]. Profitability - Gross profit margin improved to 76.5% in Q2 2025 from 76.1% in Q2 2024, with gross profit reaching $3,235 million[186]. - Operating income for the three months ended December 31, 2025, was $401 million, compared to an operating loss of $580 million in the same period of 2024[186]. - Reported operating income for the three months ended December 31, 2025, was $401 million, a $981 million increase from the prior-year period[255]. - Operating income for the six months ended December 31, 2025, was $570 million, a significant increase of $1,271 million from a loss of $701 million in the prior year[287]. - The effective tax rate increased to 51.40% for the three months ended December 31, 2025, from 9.20% in the prior year, primarily due to losses before income taxes and the impact of goodwill impairment[277]. Product Category Performance - Skin Care product category net sales increased to $2,054 million in Q2 2025, up from $1,921 million in Q2 2024, representing a 6.9% growth[188]. - Skin care net sales increased by $133 million, or 7%, for the three months ended December 31, 2025, and by $179 million, or 5%, for the six months ended December 31, 2025[217]. - Fragrance net sales rose by $68 million, or 9%, for the three months ended December 31, 2025, and by $159 million, or 12%, for the six months ended December 31, 2025[231]. - Reported makeup net sales increased slightly by $14 million, or 1%, for the three months ended December 31, 2025[224]. - Reported hair care net sales increased $9 million, or 6%, for the three months ended December 31, 2025, primarily due to higher sales from The Ordinary and the launch in Amazon's U.S. Premium Beauty store[235]. Challenges and Risks - The company anticipates continued volatility and uncertainty in its business environment, particularly in Western Europe and the U.S. department store sector[194]. - The company continues to face challenges from inflationary pressures and supply chain issues, which may impact consumer preferences and overall profitability[198]. - The company expects to continue facing challenges related to foreign currency translation and restructuring charges in future periods[281]. - The company is monitoring the effects of tariffs and expects higher rates to adversely affect fiscal 2026 profitability and cash flows[195]. Strategic Initiatives - The strategic vision "Beauty Reimagined" aims to enhance consumer engagement and drive sustainable growth through operational efficiencies[197]. - The introduction of new products is expected to impact sales, with ongoing innovation and marketing efforts to support both new and existing products[191]. - The restructuring program is expected to result in charges totaling between $1,200 million and $1,600 million, before taxes[207]. - The restructuring program aims to achieve annual gross benefits of between $800 million and $1,000 million, before taxes, once fully implemented[208]. Cash Flow and Debt Management - The company had cash and cash equivalents of $3,082 million as of December 31, 2025, compared to $2,921 million at June 30, 2025[297]. - Net cash flows provided by operating activities for the six months ended December 31, 2025, were $785 million, compared to $387 million in the same period of 2024[308]. - Total debt as of December 31, 2025, was $7,322 million, with long-term debt comprising $7,319 million and current debt of $3 million[304]. - Total debt as a percentage of total capitalization was 64.5% at December 31, 2025, down from 65.4% at June 30, 2025[307]. Market Performance - The increase in net sales from La Mer and Estée Lauder was primarily driven by higher sales in Mainland China and Asia travel retail, reflecting key shopping moments and holiday campaigns[218][219]. - Reported net sales in Mainland China increased 13% for the three months ended December 31, 2025, driven by a 9% increase from pricing and a 4% increase from volume[244]. - Operating income in Mainland China increased by $73 million, or 97%, for the three months ended December 31, 2025, and $101 million, or over 100%, for the six months ended December 31, 2025, driven by higher net sales[272].

Core Viewpoint - Estée Lauder Companies Inc experienced a nearly 22% drop in share price due to mixed signals on growth and profit pressures, despite a solid quarterly performance and an increased earnings forecast for the year [1]. Financial Performance - Q2 revenue reached $4.23 billion, slightly surpassing analysts' expectations of $4.22 billion, with adjusted earnings per share (EPS) of $0.89, exceeding forecasts of $0.83 [2]. - Organic sales grew by 4% year-on-year, an acceleration from a 3% increase in Q1, driven by a 13% surge in Mainland China [2]. Strategic Initiatives - The Profit Recovery and Growth Plan (PRGP) contributed to a 290 basis point increase in adjusted operating margin to 14.4%, helping to mitigate some tariff pressures [3]. - Management reported progress in cost-cutting, workforce reductions, and operational improvements, indicating that the most severe inventory and travel retail volatility is behind them [3]. Future Outlook - For fiscal 2026, the company expects adjusted EPS between $2.05 and $2.25, slightly below the Street consensus of $2.19 [4]. - Projected organic net sales growth is anticipated to be between 1% and 3%, with modest growth expected in Mainland China and flat performance in the Americas [4]. - Tariff-related costs are projected to reduce operating profit by approximately $100 million [4]. Segment Performance - Skincare led sales with $2.05 billion, a 7% year-on-year increase, followed by fragrance at $812 million (+9%), makeup at $1.16 billion (+1%), and hair care at $168 million (+6%) [5]. - Geographically, sales contributions were $1.22 billion from the Americas, $1.18 billion from Europe/Kem, $900 million from Asia/Pacific, and $928 million from Mainland China [5]. Market Reactions - Jefferies noted that while Q2 sales and EPS exceeded expectations, the full-year EPS guidance fell short of Street models, indicating investor caution [6]. - Investors are expected to focus on commentary regarding travel retail consumption in Asia, operating margin levers, cash flow allocation, and ongoing innovation initiatives across Estée Lauder's brands [6].