What were the key takeaways from The Estee Lauder's earnings call?

What is the market's earnings forecast for The Estee Lauder next quarter?

What does The Estee Lauder do and what are its main business segments?

What is The Estee Lauder's gross profit margin?

Did The Estee Lauder beat or miss consensus estimates last quarter?

What guidance did The Estee Lauder's management provide for the next earnings period?

What factors drove the changes in The Estee Lauder's revenue and profit?

What is the revenue and EPS growth rate for The Estee Lauder year over year?

- **Revenue Recovery**: Q1 organic sales +3% vs. Q4 decline, driven by China (+double-digit) and emerging markets. Fragrance and skin care led growth.
- **Margin Expansion**: Operating margin +300bps to 7.3%, gross margin +60bps to 73.3%. Unit growth in U.S. and China highlights consumer acquisition success.
- **Strategic Momentum**: New channel partnerships (Shopify, TikTok Shop), Travel Retail expansion, and innovation pipeline support long-term growth.
- **China Resilience**: Despite macro challenges, China outperformed Prestige Beauty with 7 brands in double-digit growth. Consumer confidence improving but cautious.

**【CEO Opening Remarks】**
- **Organic Sales Growth**: 3% year-over-year, up from a 13% decline in Q4, driven by double-digit growth in China and high single-digit growth in emerging markets (Mexico, Turkey, India). Travel Retail rebounded on a low base.
- **Market Performance**: China outperformed Prestige Beauty with 7 brands in double-digit growth, including Le Labo (+100%). U.S. Prestige Beauty grew 8%, with Estée Lauder gaining share in skin care, makeup, and fragrance. Europe showed slow growth, but France and the U.K. saw sequential improvements.
- **Strategic Initiatives**: Accelerated consumer coverage via Amazon, TikTok Shop, and Shopify partnerships. Expanded fragrance distribution in Travel Retail and freestanding stores (e.g., TOM FORD, Jo Malone). Innovation pipeline includes new launches in skin care, makeup, and fragrance.
- **Consumer Acquisition**: Unit growth in the U.S. and China, driven by price adjustments and new launches (e.g., M·A·C in Sephora, The Ordinary on TikTok). Fragrance category outperformed with new sizing strategies.

**【CFO Financial Commentary】**
- **Top Line**: Q1 organic net sales +3%, with fragrance (+double-digit) and skin care (+low single-digit) leading. Asia Pacific and Mainland China grew high single-digit, offsetting Americas decline.
- **Margins**: 
  - **Gross Margin**: +60bps to 73.3%, driven by sales growth, reduced promotions, and inventory management.
  - **Operating Margin**: +300bps to 7.3%, reflecting 3% reduction in non-consumer-facing expenses and 4% increase in consumer-facing investments.
- **Earnings**: Diluted EPS $0.32 (vs. $0.14), doubling year-over-year. Full-year guidance reaffirmed: organic sales flat to +3%, operating margin expansion to solid double-digit over next few years.
- **Cash Flow**: Operating cash use $340M (vs. $670M), CapEx $96M (down 32% YoY), with $150M paid in deferred TOM FORD consideration.
- **Tariffs**: $100M headwind expected, partially offset by PRGP initiatives.

**【Q&A Highlights】**
- **Volume Trends**: CEO emphasized unit growth in U.S. and China, driven by price adjustments and innovation (e.g., M·A·C, The Ordinary). Fragrance category saw strong sizing strategy success.
- **Sales Guidance**: Full-year flat to +3% growth, with stronger first half (favorable Travel Retail and China comps) and tougher second half (anniversarying 2025 recovery). China consumer confidence improving but still subdued.
- **Margins**: Gross margin expected to hold despite tariffs; operating margin expansion to solid double-digit via SG&A leverage and consumer-facing investments.
- **Travel Retail**: East Asia inventory rightsized, West showing momentum. Golden Week (China) saw double-digit growth, but conversion still lagging.
- **Channel Expansion**: New partnerships (Shopify, TikTok Shop) and Sephora distribution (M·A·C) driving new consumer acquisition. Focus on high ROI media and freestanding stores.
- **Tax Rate**: 40.5% Q1 rate expected to improve in second half. Long-term opportunities through PRGP restructuring and geographical mix optimization.

The Estée Lauder Companies Inc. (EL) Q1 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

EL

EL fundamentals

You can ask Aime