Estee Lauder Cos. Inc - Class A
Q3 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +4.66%.
Did EL Beat Earnings? Q3 2026 Results
Estée Lauder delivered a stronger-than-expected fiscal third quarter, posting adjusted earnings per share of $0.91 against a Wall Street consensus of $0.65, a beat of 40.43%, while net sales of $3.71 billion edged past the $3.69 billion estimate and grew 4.6% year over year. The primary engine behind the profit outperformance was the company's Profit Recovery and Growth Plan, which drove gross margin expansion of 140 basis points to 76.4% and adjusted operating margin improvement of 360 basis points to 15.0%, more than offsetting roughly $100 million in tariff headwinds. Fragrance was the standout category, with organic sales rising 10%, led by luxury brands including Le Labo, KILIAN PARIS, and TOM FORD, while Mainland China posted mid-single-digit organic growth for a third consecutive quarter of outperforming prestige beauty. The company also announced an expansion of its restructuring program targeting up to 10,000 total position reductions, with expected annual savings climbing to as much as $1.20 billion. Looking ahead, Estée Lauder raised its full-year fiscal 2026 adjusted EPS guidance to $2.35 to $2.45 and offered a preliminary fiscal 2027 view of 3% to 5% net sales growth with adjusted operating margin of 12.5% to 13.0%.
- Double-digit Fragrance net sales growth driven by luxury brands Le Labo, KILIAN PARIS, BALMAIN Beauty, and TOM FORD
- Gross margin expansion of 140 basis points to 76.4% from PRGP benefits
- Adjusted operating margin expansion of 360 basis points to 15.0%
- Mid-single-digit organic growth in Mainland China, outperforming prestige beauty for three consecutive quarters
- PRGP delivering ahead of expectations, reducing non-consumer-facing expenses
- Improved sales leverage and favorable comparison to prior-year under-absorbed manufacturing overhead
- La Mer high single-digit net sales growth driven by hero products and innovation
- Strong prestige beauty share gains in U.S., Japan, Korea, and Western Europe
“Our third quarter results extend strong year-to-date performance, driven by Beauty Reimagined. In the first nine months of fiscal 2026, organic sales for Fragrance rose double-digits, while three of four regions grew, led by high single-digit growth in Mainland China where we outperformed prestige beauty to gain share. With momentum across all five action plan priorities of Beauty Reimagined, today we raised our fiscal 2026 outlook, now expecting organic sales growth at the high-end of the prior range and adjusted operating margin expansion to approach 300 basis points, bolstered in part by adjusted gross margin expansion.”
Estee Lauder Companies CEO, on the earnings call
Forward Guidance & Outlook
The company raised its fiscal 2026 full-year outlook: organic net sales growth of approximately 3% (high-end of prior 1%-3% range), adjusted operating margin of 10.7%-11.0%, adjusted diluted EPS of $2.35-$2.45 (up from $2.05-$2.25), and operating cash flows of $1.4-$1.5 billion. Tariff-related headwinds are expected to impact FY2026 profitability by approximately $100 million. Middle East disruptions expected to have a dilutive impact of $0.07 to full-year EPS and approximately 2% Q4 sales headwind. Preliminary fiscal 2027 view: net sales growth of 3%-5%, adjusted operating margin of 12.5%-13.0%, with global prestige beauty growth expected to accelerate. Adjusted effective tax rate of approximately 36% for FY2026.
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Figures from SEC filings and company reports. Not investment advice.