Estée Lauder Reports 6% Revenue Growth and Positive Operating Income in Q2 Fiscal 2026

The Estée Lauder Companies Inc. reported a significant improvement in its financial performance for the second quarter of fiscal 2026, ending December 31, 2025. The company achieved net sales of $4.229 billion, a 6% increase from $4.004 billion in the same period last year. For the first half of the fiscal year, net sales rose to $7.710 billion, up from $7.365 billion, marking a 5% increase. The gross profit for the quarter was $3.235 billion, representing a gross margin of 76.5%, compared to 76.1% in the prior year. The operating income turned positive at $401 million, a substantial recovery from an operating loss of $580 million in the previous year.

The company noted several strategic developments contributing to this performance. Notably, the skin care and fragrance categories drove the sales increase, with skin care net sales rising by 7% to $2.054 billion and fragrance sales increasing by 9% to $812 million. The Americas region saw a modest increase of 1% in net sales, while the Europe, United Kingdom, and Emerging Markets (EUKEM) region experienced a 9% rise. Mainland China was a standout performer, with sales up 13%, reflecting successful campaigns and new product launches.

Operationally, Estée Lauder is undergoing a significant restructuring initiative as part of its Profit Recovery and Growth Plan (PRGP), which aims to enhance profitability and streamline operations. The company anticipates a reduction of approximately 5,800 to 7,000 positions globally, representing about 9-11% of its workforce. This restructuring is expected to incur charges between $1.2 billion and $1.6 billion, but it is projected to yield annual gross benefits of $800 million to $1 billion once fully implemented.

The company also reported a net earnings figure of $162 million for the quarter, a stark contrast to the net loss of $590 million recorded in the same quarter last year. The diluted earnings per share were $0.44, compared to a loss of $1.64 per share in the prior year. The effective tax rate for the quarter was notably high at 51.4%, influenced by the loss before income taxes and the impact of recent tax legislation. Looking ahead, Estée Lauder anticipates continued volatility in its markets, particularly in Western Europe and the U.S., and is closely monitoring the effects of tariffs and other economic factors on its operations.