Estée Lauder Reports 8% Decline in Net Sales and $1.1 Billion Net Loss for Fiscal Year 2025

The Estée Lauder Companies Inc. reported a significant decline in financial performance for the fiscal year ending June 30, 2025, with net sales of $14.3 billion, down 8% from $15.6 billion in the previous year. The decrease was primarily driven by a 12% drop in skin care sales, which accounted for $7 billion, largely due to lower demand for flagship brands like Estée Lauder and La Mer, particularly in the Asia travel retail market. The company also experienced declines in makeup and hair care categories, with makeup sales falling to $4.2 billion and hair care to $565 million. The overall operating loss for the year was reported at $785 million, a stark contrast to the operating income of $970 million in fiscal 2024.

In addition to the drop in sales, Estée Lauder faced substantial restructuring and impairment charges totaling approximately $1.3 billion, which included goodwill impairments related to the TOM FORD and Too Faced brands. The company recorded a net loss of $1.1 billion, compared to a net profit of $390 million in the prior year. This loss translated to a diluted net loss per share of $3.15, compared to earnings of $1.08 per share in fiscal 2024. The company attributed these financial challenges to a combination of reduced consumer spending, particularly in key markets like mainland China and North America, and ongoing supply chain issues.

Strategically, Estée Lauder has initiated a comprehensive restructuring program as part of its Profit Recovery and Growth Plan (PRGP), which aims to enhance profitability and streamline operations. This plan includes a significant reduction in workforce, with estimates suggesting a net reduction of 5,800 to 7,000 positions globally, representing about 9-11% of the total workforce. The company is also focusing on improving procurement strategies and enhancing supply chain efficiencies to mitigate costs. The restructuring is expected to yield annual gross benefits of between $800 million and $1 billion once fully implemented.

Operationally, Estée Lauder continues to expand its geographic reach, with products sold in approximately 150 countries. The company operates around 1,600 freestanding stores and has a strong online presence, particularly in markets like mainland China, the United States, and the United Kingdom. However, the company has faced challenges in maintaining customer engagement and sales growth, particularly in the travel retail sector, which has been adversely affected by geopolitical tensions and changing consumer behaviors.

Looking ahead, Estée Lauder anticipates continued volatility and uncertainty in the market, particularly in light of potential tariff impacts and economic conditions. The company is committed to its long-term strategy of delivering high-quality products while adapting to shifts in consumer preferences and shopping behaviors. Despite the challenges, Estée Lauder remains focused on leveraging its brand portfolio and operational strengths to drive future growth and profitability.