Estée Lauder's Q2 2025: Diverging Strategies on Investments, Costs, and Channel Dynamics

These are the key contradictions discussed in The Estée Lauder Companies Inc.'s latest 2025Q2 earnings call, specifically including: Portfolio Strategy and Investment Prioritization, Cost Management and Reinvestment, Strategic Focus, Investment Strategy, and Channel Shifts:



Challenging Performance and Sales Decline:
- The Estée Lauder Companies reported a 6% decline in organic net sales for Q2 2025.
- This was primarily driven by a 11% decline in Asia Pacific, with double-digit declines in Mainland China, Korea, and Hong Kong SAR, due to subdued consumer sentiment in China pressuring the prestige beauty industry.

Gross Margin Expansion and PRGP Impact:
- Gross margin expanded by 310 basis points compared to last year, reflecting net benefits from the company's Profit Recovery and Growth Plan (PRGP).
- The expansion was driven by addressing excess and obsolescence, realizing strategic pricing, and improving operational efficiencies.

Innovation and Consumer Facing Investments:
- The company plans to triple the percentage of innovation launched in less than a year to boost consumer-facing investments and accelerate new consumer acquisition.
- This strategy aims to better align with trends and enhance consumer engagement.

Organizational and Structural Changes:
- The Estée Lauder Companies announced a significant organizational restructuring, including a reduction of 5,800 to 7,000 positions globally.
- This expansion of the restructuring program is part of an operational transformation aimed at realigning expenses to better align with prestige beauty growth drivers.