Today, The Estée Lauder Companies Inc. reported a solid start to fiscal 2026, with results for the first quarter ended September 30, 2025, showing both sales growth and improved profitability. Net sales rose 4% year-over-year to $3.481 billion, while organic net sales increased 3%, reflecting early success from the company’s “Beauty Reimagined” strategy.
President and CEO Stéphane de La Faverie said the quarter marked an encouraging beginning to a pivotal year for Estée Lauder as it continues to restore organic growth, gain share in prestige beauty, and expand margins for the first time in four years.
He added that the company is building momentum across its organization thanks to significant operational changes aimed at making it faster and more agile.Profitability improved notably during the quarter.
As reported, gross margin expanded 100 basis points to 73.4%, while adjusted gross margin rose 60 basis points to 73.3%. These gains were largely attributed to Estée Lauder’s Profit Recovery and Growth Plan (PRGP), which focused on greater operational efficiency, more competitive procurement, and reduced promotional activity.
As a result, the company was able to offset the unfavorable impacts of inflation and foreign exchange. Operating margin reached 4.9%, compared with a loss of 3.6% a year earlier, when results were negatively impacted by charges associated with talcum litigation settlements.
By category, skin care delivered a 3% sales increase, led by growth from La Mer and Estée Lauder. Both brands benefited from stronger performance in Asia travel retail, helped by a low prior-year base and inventory improvements, as well as innovation across key franchises such as Revitalizing Supreme+, Re-Nutriv and Advanced Night Repair.
Makeup sales declined 1%, mainly due to Bobbi Brown, reflecting a tough comparison against last year’s launches and a strategic reduction in color palettes. Nevertheless, makeup operating results improved, supported by cost savings under the PRGP and lower promotional spending.
Fragrance was the standout performer, with sales surging 14% on double-digit growth from the company’s luxury brands. Le Labo saw continued momentum from its Classic Collection and City Exclusives, including Another 13 and Santal 33, while Tom Ford Beauty was boosted by the success of Oud Voyager and Black Orchid Reserve. Jo Malone London also contributed, driven by the popularity of Wood Sage & Sea Salt and new holiday editions like Ginger Biscuit and Raspberry Ripple.
Hair care sales fell 7%, primarily reflecting strategic adjustments at Aveda, including reduced promotions and store closures. Despite the decline, the segment’s profitability improved thanks to disciplined expense management.
Regionally, organic net sales growth was led by Asia/Pacific, where the company benefited from a rebound in travel retail and stronger results in Mainland China, driven by innovation, expanded consumer reach, and key activations. Europe, the Middle East and Africa also posted growth, particularly in fragrance, supported by brands such as Tom Ford, Jo Malone London, and Kilian Paris. North America saw a slight decline due to ongoing softness in department stores, store closures tied to a retailer bankruptcy, and high inventory levels at some retailers, although growth from Amazon’s Premium Beauty stores in the U.S. and Canada helped offset the weakness.
Looking ahead, Estée Lauder reaffirmed its full-year fiscal 2026 outlook, expressing confidence in its recovery trajectory. The company continues to monitor global trade policy developments and has implemented various measures to mitigate tariff impacts, including optimizing its manufacturing footprint and leveraging trade programs to bring production closer to key markets. Tariff-related headwinds are expected to reduce profitability by approximately $100 million this fiscal year, but the company plans to counteract these effects through ongoing PRGP initiatives and potential pricing adjustments. Overall, Estée Lauder’s first-quarter results mark a meaningful step forward in its turnaround, underscoring renewed growth momentum, stronger margins, and disciplined execution across its global portfolio.
