The Estée Lauder Companies (EL) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 was challenging, with organic net sales down 2% year-over-year to $15.61B, mainly due to softness in China and Asia travel retail, but the second half saw a return to top-line growth.

• Net earnings fell to $0.39B from $1.01B, with diluted EPS down 61% to $1.08; adjusted diluted EPS declined 25% to $2.59.

• The company is implementing a strategy reset and the Profit Recovery and Growth Plan (PRGP) to drive improved performance and profitability in fiscal 2025 and beyond.

• Leadership transitions were announced, with both the CEO and CFO planning retirements and succession plans underway.

Financial highlights

• Q4 organic net sales increased 8% year-over-year, driven by EMEA (up 32%) and strong Asia travel retail, but offset by declines in Mainland China and North America.

• Full-year organic net sales declined 2%, with net earnings of $935 million and diluted EPS of $2.59, both down 25% from last year.

• Gross margin expanded to 71.7% for the year, up from 71.3%, and Q4 gross margin reached 71.8%.

• Operating income for the year declined 13% to $1.6 billion, with operating margin contracting to 10.2%.

• Net cash flows from operating activities rose to $2.4 billion, with $947 million returned to shareholders via dividends.

Outlook and guidance

• Fiscal 2025 organic net sales are forecasted to range from a 1% decline to a 2% increase.

• Adjusted diluted EPS is expected between $2.75 and $2.95 before restructuring and other charges, with constant currency EPS growth of 7%-15%.

• Q1 2025 organic net sales are expected to fall 3%-5%, with diluted EPS of $0.02-$0.10.

• PRGP expected to deliver $1.1B–$1.4B in operating profit net savings through FY25–26, with more than half realized in FY25.

• Full-year effective tax rate expected at approximately 32%.