Opening the filing
Exhibit 99.1
Investors: Rainey Mancini rmancini@estee.com Media: Brendan Riley briley@estee.com THE ESTÉE LAUDER COMPANIES REPORTS FISCAL 2026 THIRD QUARTER RESULTS Raises Full-Year Fiscal 2026 Outlook on Organic Net Sales and Adjusted Profitability, Reflecting Strong Year-to-Date Results:
– Double-Digit Net Sales Growth in Fragrance – Net Sales Growth in Three of Four Geographic Regions, Led by Mainland China – Beauty Reimagined Execution on Track, PRGP Ahead of Expectations Shares Preliminary View on Fiscal 2027:
– Net Sales Growth of 3% to 5%; Adjusted Operating Margin of 12.5% to 13.0% New York, May 1, 2026 - The Estée Lauder Companies Inc. (NYSE: EL) today reported its financial results for the third quarter ended March 31, 2026.
“Our third quarter results extend strong year-to-date performance, driven by Beauty Reimagined,” said Stéphane de La Faverie, President and CEO. “In the first nine months of fiscal 2026, organic sales for Fragrance rose double-digits, while three of four regions grew, led by high single-digit growth in Mainland China where we outperformed prestige beauty to gain share. With momentum across all five action plan priorities of Beauty Reimagined, today we raised our fiscal 2026 outlook, now expecting organic sales growth at the high-end of the prior range and adjusted operating margin expansion to approach 300 basis points, bolstered in part by adjusted gross margin expansion.”
de La Faverie emphasized, “Fiscal 2026 is promising to be the pivotal year we intended, one in which we restore organic sales growth and expand our adjusted operating margin for the first time in four years. Looking ahead to fiscal 2027, we are confident in our improving trajectory and realizing the benefits of One ELC, especially its One Operating Ecosystem which will be fully deployed. Our preliminary view is to accelerate organic sales growth and for adjusted operating margin to approach 13%, albeit in an uncertain geopolitical and macroeconomic environment.”
Diluted Net Earnings Per Common Share .24 .44 (45)
Adjusted Diluted Net Earnings Per Common Share, Non-GAAP 1,3 .91 .65
• As Reported Net sales increased 5% to $3.7 billion. Organic net sales increased 2%.
• As Reported and Adjusted Gross margin expanded 140 basis points, to 76.4% from 75.0%, reflecting net benefits from the Company’s Profit Recovery and Growth Plan (“PRGP”), which helped to offset the unfavorable impacts from incremental tariffs and inflation. This also reflects a favorable comparison to the prior-year period—which included an in-period charge for under-absorbed manufacturing overhead costs—as well as improved sales leverage.
• As Reported Operating margin contracted 190 basis points, to 6.7% from 8.6% in the prior-year period, reflecting the increase in restructuring and other charges of $127 million as well as the unfavorable impact of an $84 million loss contingency, net of the estimated probable insurance recoveries, related to a potential settlement of a securities class action recorded in the fiscal 2026 third quarter. Adjusted Operating margin expanded 360 basis points, to 15.0% from 11.4%, driven by gross margin expansion and operating leverage, including net benefits from the Company’s PRGP—which helped to reduce non-consumer-facing expenses, despite a more normalized level of employee incentive costs, and provided funding for increased consumer-facing investments 4 .
• Effective tax rate was 50.3%, compared with 34.0% in the prior-year period. The increase was primarily driven by the estimated unfavorable impact of recently enacted U.S. tax legislation. Adjusted effective tax rate was 31.8%, compared with 30.8%.
1 See pages 20 - 22 for reconciliation between GAAP and Adjusted Non-GAAP measures.
4 Consumer-facing investments includes co-operative advertising, selling, advertising and promotional expenses, as well as store operating costs.
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• As Reported Diluted net earnings per common share decreased to $.24, or 45%, compared with $.44 in the prior-year period. Adjusted diluted net earnings per common share increased to $.91, or 40%, compared with $.65. The disruptions to the Company’s business from the conflict in the Middle East had a dilutive impact to fiscal 2026 third quarter reported and adjusted diluted net earnings per common share of $.01 and $.02, respectively.
• For the nine months ended March 31, 2026:
◦ Net cash flows provided by operating activities increased to $1.2 billion, an improvement compared to $0.7 billion in the prior-year period, primarily reflecting higher net earnings, excluding non-cash items. The improvement also reflects the favorable change in operating assets and liabilities, despite the increase in restructuring payments.
Page 10 of 24 Once all initiatives are approved and fully implemented, the restructuring program component of the PRGP is now expected to result in restructuring and other charges totaling between $1.5 billion and $1.7 billion, before taxes, an increase from $1.2 billion and $1.6 billion. This consists of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives. The restructuring program is now expected to yield annual gross benefits of between $1.0 billion and $1.2 billion, before taxes— an increase from $0.8 billion and $1.0 billion—to help restore operating margin, offset inflation and fuel increased reinvestments in consumer-facing areas to drive sustainable sales growth.
The Company now estimates a final net reduction in positions of 9,000 to 10,000, an increase from 5,800 to 7,000. Over 70% of the increase is attributable to the reduction in point-of-sale demonstration roles at select unproductive doors in its department store and freestanding store channels, as the Company continues to evolve its focus towards high-growth channels. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas. Approvals for specific initiatives under this restructuring program, in total, are still expected to be completed by the end of fiscal 2026. The restructuring program’s focus includes the (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models, all to help rebuild operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth.
OUTLOOK FOR FISCAL 2026 FULL YEAR The Company is raising its fiscal 2026 full-year outlook while remaining cautious amid ongoing geopolitical and macroeconomic uncertainty, including business disruptions in the Middle East and continued headwinds in key markets, particularly in the West.
Reflecting the Company’s strong performance through the nine-months-ended March 31, 2026, its fiscal 2026 full-year outlook now assumes:
• Organic net sales growth of approximately 3%, at the high-end of its prior range
• Adjusted operating margin to range between 10.7% to 11.0%
• Adjusted diluted net earnings per common share to range between $2.35 and $2.45 The Company continues to closely monitor evolving trade policies and enacted tariffs, actively evaluating developments and mitigation strategies to reduce the potential impacts of tariffs. The Company has implemented a range of actions, including leveraging available trade programs and further optimizing its regional manufacturing footprint to bring production closer to the consumer—including through its facility in Japan. These efforts, combined with increased supply chain agility, are helping to offset more than half of the expected impacts and better position the Company to adapt quickly as trade policies continue to evolve.
Based on information available and net of planned mitigation actions through April 24, 2026, the Company continues to expect tariff-related headwinds to impact fiscal 2026 profitability by approximately $100 million. The Company capitalizes product costs, including tariffs, in inventory and defers their recognition in cost of sales until the related inventory is sold—currently a deferral period of approximately six months. Accordingly, tariff rate reductions in the second half of fiscal 2026 are not expected to benefit fiscal 2026. This assumption does not reflect any subsequent or future changes, including potential refunds. The Company continues to evaluate additional strategies, including further PRGP initiatives.
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• Capital expenditures to be approximately 4% of projected sales, reflecting a more efficient and normalized level of expenditures, along with the Company’s focus on optimizing its investments overall as it prioritizes consumer-facing investments to fuel growth
• No deterioration in the geopolitical landscape or related impacts, including tariffs and consumer sentiment as well as business disruptions in the Middle East beyond May 2026
PRELIMINARY VIEW FOR FISCAL 2027 FULL YEAR The Company is encouraged by strong progress across Beauty Reimagined and its PRGP, as its execution continues to transform its operating model, enabling better cost leverage and driving efficiencies across the organization. Together with the revised expectations for fiscal 2026, this progress is reflected in the Company’s preliminary view on full-year fiscal 2027. While the Company is currently in the process of finalizing its plan, its preliminary view on fiscal 2027 assumes the following:
• Global prestige beauty growth to accelerate
• As Reported and Organic net sales growth to range between 3% to 5%, with share gains for the Company at the mid- to high-end; no impact from foreign currency translation 8
• Adjusted operating margin of 12.5% to 13.0%, excluding potential tariff refunds
• No business disruptions from the conflict in the Middle East
• No deterioration in the geopolitical landscape or related impacts, including tariffs and consumer sentiment The Company plans to provide additional details on its full-year fiscal 2027 view in August 2026, when it reports its fiscal 2026 results, including any revisions to the above-noted assumptions based on changes in the geopolitical and macroeconomic environment, as well as movements in foreign currency exchange rates.