Estée Lauder Companies Inc. reported fiscal 2026 second‑quarter results that included net sales of $4.23 billion, a 6% year‑over‑year increase, and an adjusted earnings per share of $0.89, beating the consensus estimate of $0.83. Adjusted operating income rose to $401 million, giving an adjusted operating margin of 14.4%, a 2.9‑percentage‑point lift over the prior year quarter.
The company’s strongest performers were skin‑care and fragrance. Skin‑care sales reached $2.05 billion, up 7% from the same period last year, while fragrance sales climbed 9% to $812 million. Makeup sales, however, slipped 1% year‑over‑year, reflecting a modest decline in legacy product demand. The results were driven in part by the Profit Recovery and Growth Plan, which has accelerated cost‑control initiatives and streamlined the supply chain, allowing the company to preserve margin while investing in consumer‑facing channels.
Compared with the prior year’s second quarter, adjusted EPS jumped from $0.62 to $0.89, a 43% increase, and net sales grew 6% versus a 4% increase reported in the same period last year. The company’s operating income growth was largely attributable to the margin expansion, which offset the modest decline in makeup sales and the higher cost of raw materials. The 14.4% operating margin represents a 290‑basis‑point improvement, underscoring the effectiveness of the company’s operational leverage and pricing power in its core categories.
Management raised its fiscal 2026 full‑year adjusted EPS guidance to $2.05 to $2.25, up from the previous range of $2.00 to $2.20 (or $1.90 to $2.10 in some reports). The guidance reflects confidence in sustained demand in China, the continued success of the Beauty Reimagined transformation, and the expectation that the company’s cost‑control program will continue to deliver margin expansion. The company also cautioned that the second half of the fiscal year will face headwinds, including incremental tariffs and softness in travel retail, which could temper growth momentum.
Investors reacted negatively to the earnings release, citing the revenue miss relative to consensus and the acknowledgment of near‑term headwinds. The market’s response highlighted concerns about the company’s ability to maintain top‑line growth while executing its transformation agenda, despite the earnings beat and margin improvement.
Stéphane de La Faverie, President and CEO, said the quarter “solidified a strong first half of fiscal 2026” and that the company’s Beauty Reimagined strategy “has invigorated our business as we execute the biggest operational, leadership, and cultural transformation in our history.” He added that the company remains confident in its turnaround, even as it anticipates headwinds in the second half of the year.
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