Core Insights - The cosmetics company's restructuring program has significantly impacted its financial performance, resulting in a reduction of approximately 50% of its quarterly profit [1] Financial Performance - The restructuring program has led to a substantial decrease in profitability, indicating potential challenges in the company's operational efficiency and cost management [1]

Estee Lauder (EL) came out with quarterly earnings of $0.89 per share, beating the Zacks Consensus Estimate of $0.84 per share. This compares to earnings of $0.62 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +5.95%. A quarter ago, it was expected that this beauty products company would post earnings of $0.16 per share when it actually produced earnings of $0.32, delivering a surprise of +100%.Over the last four quarters, th ...

Financial Performance - Net sales for the second quarter increased by 6% to $4.229 billion, with organic net sales rising by 4%[6] - Gross profit reached $3.235 billion, resulting in a gross margin of 76.5%, an increase of 40 basis points from the previous year[8] - Operating income improved significantly to $401 million, with an operating margin of 9.5%, up from a loss of $580 million in the prior-year period[6] - Diluted net earnings per share increased to $0.44, compared to a net loss of $(1.64) in the prior-year period, while adjusted diluted net earnings per share rose by 43% to $0.89[8] - Free cash flow for the six months ended December 31, 2025, was $581 million, a substantial increase from $114 million in the prior-year period[8] - Net earnings for Q2 2025 were $162 million, a significant recovery from a loss of $(590) million in Q2 2024, representing over 100% growth[51] - Adjusted operating income (Non-GAAP) for the six months ended December 31, 2025, was $863 million, a 42% increase from $606 million in 2024[55] - Net cash flows provided by operating activities for the six months ended December 31, 2025, were $785 million, up from $387 million in 2024[68] - Total assets as of December 31, 2025, were $19,634 million, slightly down from $19,760 million in 2024[66] - Total equity increased to $4,031 million as of December 31, 2025, compared to $4,169 million in 2024[66] Sales Performance by Category - Skin Care net sales grew by 6%, driven by strong performances from La Mer and Estée Lauder during key shopping moments[16] - Makeup net sales decreased by 1%, primarily driven by Estée Lauder, while M·A·C net sales increased due to initial shipments for the March 2026 launch[19] - Fragrance net sales increased by 6%, driven by high-single-digit growth from Luxury Brands, with TOM FORD, Le Labo, and KILIAN PARIS leading the growth[19] - Hair Care net sales returned to growth, increasing by 5%, primarily driven by distribution expansion and the success of Multi-Peptide Serum for Hair Density from The Ordinary[25] - Net sales from The Ordinary increased, benefiting from targeted expanded consumer reach and existing distribution growth, with successful activations including the launch of Volufiline 92% + Pal-Isoleucine 1% Targeted Plumping Serum[19] - The Americas region reported a 1% decline in net sales to $2,392 million, while the EUKEM region saw a 7% increase to $2,084 million[58] - Mainland China net sales increased by 11% to $1,460 million, contributing to overall growth in the Asia/Pacific region[58] Strategic Initiatives - The Company announced a strategic partnership with Shopify to modernize its digital infrastructure and improve consumer experiences[11] - A minority investment in the Mexican luxury fragrance brand XINÚ was made, emphasizing the Company's commitment to local entrepreneurship[11] - New product innovations included the launch of Re-Nutriv Ultimate Lift Rejuvenating Oil and La Mer's New Lip Treatment, enhancing the product portfolio[10] Outlook and Projections - The Company raised its fiscal 2026 full-year outlook, tightening the range on net sales and raising its outlook for adjusted diluted net earnings per common share and adjusted operating margin[36] - The Company expects tariff-related headwinds to impact fiscal 2026 profitability by approximately $100 million, mostly in the second half[39] - Organic net sales growth for fiscal 2026 is anticipated to be between 1% and 3%, with mid-single-digit growth expected in Mainland China, while The Americas is projected to remain flat[43] - Adjusted Non-GAAP EPS is expected to range from $2.05 to $2.25, reflecting a growth of 36% to 49% compared to $1.51 in 2025[43] - Forecasted GAAP EPS for fiscal 2026 is projected to be between $0.98 and $1.22, a significant recovery from a loss of $(3.15) in 2025, indicating over 100% growth[43] - Adjusted operating margin is forecasted to be between 9.8% and 10.2%, with a contraction of about 50 basis points expected in Q3 due to consumer-facing investments and tariff headwinds[43] - Capital expenditures are expected to be approximately 4% of projected sales, reflecting a more efficient level of expenditures[43] Restructuring and Charges - The restructuring program component of the PRGP is expected to yield annual gross benefits of between $0.8 billion and $1.0 billion, before taxes[32] - The Company has recognized total cumulative charges under the restructuring component of the PRGP of $904 million through December 31, 2025[34] - The company expects to continue incurring charges similar to those presented, which may impact future results[60] - The company recorded a $159 million charge in Q1 fiscal 2025 related to talcum litigation settlement agreements[54] - In Q2 fiscal 2025, TOM FORD brand and Too Faced reporting unit experienced lower-than-expected growth, leading to $773 million and $75 million impairment charges for TOM FORD and Too Faced trademarks, respectively[53] - For the six months ended December 31, 2024, total charges related to goodwill and other intangible asset impairments amounted to $861 million, impacting earnings by $1.87 per common share[54] Tax and Financial Metrics - Effective tax rate for the three months ended December 31, 2025, was 51.4%, compared to 9.2% in 2024[64] - Operating margin for the three months ended December 31, 2025, was 9.5%, a significant improvement from (14.5)% in 2024[64]

Core Insights - Estee Lauder has raised its adjusted earnings outlook for the year, indicating a positive adjustment in financial expectations [1] - The company anticipates that tariff-related challenges will negatively impact its profits by approximately $100 million, primarily affecting the second half of the year [1] Financial Outlook - The adjusted earnings outlook has been lifted, suggesting improved performance expectations for the fiscal year [1] - The expected profit reduction due to tariffs highlights ongoing external economic pressures that could affect overall profitability [1]

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Group 1 - Estee Lauder has raised its annual sales forecast, indicating confidence in improving sales in China and the effectiveness of CEO Stephane de La Faverie's turnaround plans [1]

NEW YORK--(BUSINESS WIRE)--The Estée Lauder Companies Inc. (NYSE: EL) today reported its financial results for the second quarter ended December 31, 2025. "We delivered excellent second quarter results to solidify a strong first half of fiscal 2026,†said Stéphane de La Faverie, President and CEO. "In this pivotal year, Beauty Reimagined has invigorated our business as we execute the biggest operational, leadership, and cultural transformation in our history. On its one-year anniversary, we rai. ...

Core Insights - The company is experiencing a significant transformation, focusing on long-term growth and cultural change, with a strong emphasis on building a consumer-centric beauty brand [2][5] - Despite positive retail sales growth in mainland China at 13% and a slight increase in the Americas by 1%, the company's stock price fell nearly 20% due to lower-than-expected earnings forecasts [1][3] - The company has adjusted its full-year net sales forecast to a range of 1% to 3%, up from a previous outlook of flat to 3% [3] Geographical Performance - Mainland China reported a second consecutive quarter of double-digit retail sales growth at 13% [1] - The Americas saw a modest increase in retail sales of 1% [1] - In Europe, consumer sentiment remains subdued, particularly in France and Germany, while Spain and Italy showed strong performance [4] Strategic Initiatives - The company is implementing the "Beauty Reimagined" strategy and a Profit Recovery and Growth Plan to improve its market position [4][5] - The CEO highlighted the importance of diversifying distribution channels, including partnerships with Amazon and TikTok, and entering Sephora U.S. with the MAC brand [7][8] Market Challenges - The company anticipates tariff-related headwinds to impact profitability by approximately $100 million in fiscal 2026, primarily in the second half [2] - There has been a slowdown in consumer consumption in Latin America recently, attributed partly to tariffs [5] Department Store Dynamics - Department stores remain a crucial channel for luxury brands, accounting for around 30% of retail, although this varies by brand [6][8] - The company is actively supporting department stores like Saks during their transition, which owes Lauder $16 million [6][7]