The Estée Lauder Companies (EL) Q4 2026 earnings summary

Executive summary

• Achieved 5% reported and 3% organic sales growth for FY26, signaling a return to growth after prior declines, with broad-based brand and category performance across all regions.

• Operating margin expanded 320 basis points, and diluted EPS grew 66% year-over-year, significantly exceeding initial outlooks.

• Strategic transformation initiatives, including Beauty Reimagined and the One ELC operating model, delivered faster innovation, streamlined costs, and empowered teams.

• Travel retail, online channels, and emerging markets were key growth drivers, with notable share gains in China, the U.S., and the U.K.

• The number of billion-dollar brands increased to six, with Jo Malone London, TOM FORD, and The Ordinary joining the list.

Financial highlights

• Gross margin expanded 150 basis points to 75.5%, and adjusted operating margin rose to 11.2%, up from 8.0% in FY25.

• Net cash flows from operations reached $1.8 billion, up from $1.3 billion last year, with cash and cash equivalents at $3.5 billion.

• Capital expenditures were $457 million, down from $602 million, with over 75% directed to consumer-facing investments.

• Adjusted diluted EPS for the year was $2.51, up 66% year-over-year.

• Free cash flow more than doubled to $1.32 billion.

Outlook and guidance

• Fiscal 2027 organic net sales growth expected at 3%-5%, with stronger growth in the first half.

• Adjusted operating margin guidance raised to 12.7%-13.5%, with continued SG&A optimization and modest gross margin expansion.

• Adjusted diluted EPS expected between $3.10 and $3.35; effective tax rate projected at 33%-34%.

• Net cash flows from operations expected between $1.3 billion and $1.4 billion, with capital expenditures at ~4% of sales.

• No material impact from Middle East conflict expected in fiscal 2027.