Estée Lauder Reports 4% Net Sales Increase to $3.481 Billion in Q1 Fiscal 2026

The Estée Lauder Companies Inc. reported a net sales increase of 4% for the first quarter of fiscal 2026, reaching $3.481 billion, compared to $3.361 billion in the same period last year. The company's gross profit also rose to $2.554 billion, resulting in a gross margin of 73.4%, up from 72.4% in the prior year. Operating income improved significantly to $169 million, a turnaround from a loss of $121 million in the previous year, while net earnings were $47 million, compared to a loss of $156 million in the same quarter of fiscal 2025. This translates to earnings per share of $0.13, compared to a loss of $0.43 per share in the prior year.

The financial performance reflects several strategic developments, including the implementation of the Profit Recovery and Growth Plan (PRGP), which aims to enhance profit margins through restructuring and operational efficiencies. The company has initiated a two-year restructuring program, which is expected to result in a net reduction of approximately 5,800 to 7,000 positions globally, representing about 9-11% of its workforce. The restructuring is anticipated to yield annual gross benefits of between $800 million and $1 billion, before taxes.

Operationally, the company saw varied performance across its product categories. Skin care sales increased by 3% to $1.575 billion, driven by strong performances from brands like La Mer and Estée Lauder, particularly in the Asia travel retail market. Fragrance sales surged by 14% to $721 million, bolstered by successful product launches from brands such as Le Labo and Jo Malone London. However, makeup sales declined by 1% to $1.030 billion, primarily due to lower sales from Bobbi Brown and Too Faced. Hair care sales fell by 7% to $129 million, reflecting strategic reductions in promotional activities.

Geographically, net sales increased in Asia/Pacific and Mainland China, while The Americas experienced a decline of 2% to $1.174 billion, attributed to challenges in department stores and elevated inventory levels. The company reported a cash and cash equivalents balance of $2.219 billion as of September 30, 2025, down from $2.921 billion at the end of the previous fiscal year. The outlook remains cautious, with ongoing challenges in various markets, including travel retail and Western Europe, expected to impact future sales and profitability. The company continues to monitor macroeconomic factors, including inflation and potential tariff impacts, as it navigates its strategic initiatives.