Estee Lauder Cuts Earnings Outlook by $100M Due to Tariffs

Estee Lauder Co. Inc. warned that tariffs will reduce its earnings by approximately $100 million in fiscal 2026, as outlined in its recent earnings report and outlook [2]. The company stated that it may need to raise prices to offset the increased costs stemming from new trade policies. This impact is a central factor behind the company’s downward revision of its full-year financial forecast, which now falls below Wall Street expectations [1].

For the quarter ended June 30, Estee Lauder reported adjusted earnings per share of $0.09, in line with forecasts. Revenue for the period reached $3.41 billion, exceeding the $3.39 billion analysts had anticipated. However, underlying sales trends were mixed. The fragrance segment saw a modest 2% growth, driven by brands such as Le Labo and Jo Malone, but this was offset by declines in skincare, makeup, and hair care categories [2].

Looking ahead, the company projected full-year adjusted earnings per share to range between $1.90 and $2.10, well below the $2.20 analysts had expected. It also forecast organic net sales growth of between 0% and 3% for fiscal 2026 [2]. This weaker outlook sent shares tumbling 9% in pre-market trading, reflecting investor concerns over the company’s ability to manage rising trade costs, weak demand in core product lines, and intensified competition from digital retail platforms like Amazon and TikTok Shop.

The estimated $100 million impact from tariffs highlights the growing financial challenges for multinational corporations navigating evolving trade policies. Estee Lauder is not alone in this struggle—other firms, such as Target, have also issued warnings about the potential negative effects of tariffs on future earnings [3]. As global supply chains face increasing friction, companies must adapt their strategies to maintain profitability and investor confidence.

The company’s performance reflects broader trends in the beauty sector, where traditional brick-and-mortar retailers are increasingly competing with fast-moving digital brands and shifting consumer preferences. The cost of compliance with new trade measures adds another layer of complexity to these challenges.

Sources:

[1] Estee Lauder Outlook Disappoints as Losses Widen (https://www.wsj.com/business/earnings/estee-lauder-loss-widens-as-sales-fall-d88fb08e?gaa_at=eafs&gaa_n=ASWzDAjT3J1GjYtk6LYQdLXykAie_xkNlx9uaUNScJExRYTLCx_UpLb2UgCJ&gaa_sig=sbFC4JsnIG2U-fqWIwVyMXMukcuR57V8kZs_V7De1s_fiA8ZISWVwYLViHJd6hBagNn8VvmZGs08sHX3eusPug%3D%3D&gaa_ts=68a5f89e)

[2] Estée Lauder delivers Q4 beat, but disappointing guidance ... (https://sherwood.news/markets/estee-lauder-delivers-q4-beat-disappointing-guidance-shares-fall/)

[3] Earnings live: Target stock dives, Lowe's returns to sales ... (https://ca.finance.yahoo.com/news/earnings-live-target-stock-dives-lowes-returns-to-sales-growth-estee-lauder-forecast-disappoints-120540698.html)