Estée Lauder Companies Reports Major Net Loss and Asset Impairment, Reaffirms Guidance for 2026

Estée Lauder Companies reported a net loss of $1.13 billion and a $425 million intangible asset impairment for FY22, despite meeting revenue expectations. The company reaffirmed guidance for 2026, projecting 2-5% net sales growth and $1.63-$1.87 EPS. Investors are scrutinizing the brand's value and margin pressures, but a recovery in global travel retail is seen as a key catalyst for a turnaround.

Estee Lauder Companies (ELC) reported a net loss of $1.13 billion and an impairment of $425 million in intangible assets for the fiscal year 2022 (FY22), despite meeting revenue expectations. The company's adjusted earnings per share (EPS) for FY22 were $1.60, which was in line with market expectations [1].

ELC's FY22 revenue totaled $13.1 billion, representing a 1% increase year-over-year (YoY). The company's revenue guidance for FY26 remains at 2% to 5% net sales growth, with an adjusted EPS projection of $1.63 to $1.87. Despite the challenges faced in FY22, ELC is optimistic about the recovery in global travel retail, which is expected to be a key catalyst for a turnaround [2].

The company's shares tumbled over 10% on Wednesday after the earnings forecast was announced, reflecting the market's disappointment with the company's guidance. ELC's stock price fell by approximately 4% on the day the earnings report was released [3].

The cumulative impact of these unfavorable factors could result in the company's performance and stock price underperforming even the current expectations set by Morgan Stanley. If demand for high-end beauty products in China and North America remains weak, or if the global travel retail business does not recover as expected or worsens, it will continue to weigh on the company's sales. Additionally, if the company loses market share in key categories or markets, or faces execution challenges in implementing the "Beauty Reimagined" transformation plan, it could negatively impact earnings [2].

References:
[1] https://www.marketscreener.com/news/estee-lauder-sets-fiscal-2026-earnings-guidance-below-street-views-sees-100-million-hit-from-tarif-ce7c51d2de80ff20
[2] https://www.ainvest.com/news/estee-lauder-2025-net-sales-decline-8-earnings-beat-2508/
[3] https://finance.yahoo.com/news/estee-lauder-falls-sharply-cutting-104937049.html