Estée Lauder Companies (EL) Q3 2026 earnings summary

Executive summary

• Fiscal 2026 outlook was raised following strong Q4 and year-to-date results, including 2% organic sales growth and 40% adjusted EPS growth in Q4, with margin expansion for the first time in four years.

• Net sales increased 5% year-over-year to $3.71 billion for the quarter, driven by double-digit growth in fragrance and strong performance in Mainland China and EUKEM regions.

• The Profit Recovery and Growth Plan (PRGP) and Beauty Reimagined initiatives drove operational improvements and margin expansion.

• The company expanded its restructuring program, targeting $1.5–$1.7 billion in charges and a net reduction of 9,000–10,000 positions globally.

• A securities class action litigation settlement resulted in an $84 million charge, and the company continues to manage talcum litigation exposures.

Financial highlights

• Q3 gross margin expanded 140 basis points to 76.4%, with gross profit up 7% to $2.8 billion.

• Adjusted operating income rose 38% to $557 million, with adjusted operating margin up to 15%.

• Diluted EPS grew 40% to $0.91 adjusted, while reported EPS fell to $0.24 due to litigation charges.

• Net cash from operating activities for the nine months reached $1.2 billion, up from $671 million last year.

• Capital expenditures for nine months were $304–$306 million, down year-over-year.

Outlook and guidance

• Fiscal 2026 organic net sales growth expected at 3%, at the high end of prior guidance.

• Adjusted operating margin forecasted at 10.7–11%, with adjusted diluted EPS expected between $2.35 and $2.45.

• Fiscal 2027 preliminary outlook: organic sales growth of 3–5%, operating margin of 12.5–13%.

• Ongoing geopolitical and macroeconomic uncertainty, including Middle East disruptions, expected to impact Q4 and full-year results.