The Estée Lauder Companies reported fiscal 2026 fourth-quarter and full-year results on August 19 that beat Wall Street's expectations, and its stock rose nearly 8% in premarket trading as the beauty giant's multiyear turnaround effort showed clearer signs of paying off.
Fourth straight quarter of growth
Fourth-quarter net sales reached $3.63 billion, above the $3.54 billion analysts had forecast. Organic net sales grew 5% in the quarter, marking the fourth consecutive quarter of organic growth after a stretch of post-pandemic sales declines. For the full fiscal year ended June 30, net sales climbed 5% to $15.0 billion, also with 5% organic growth, and adjusted diluted earnings per share jumped to $2.51 from $1.51 the prior year. Full-year adjusted operating margin expanded 3.2 percentage points to 11.2%.
We delivered results ahead of the expectations we had to start the year, with accelerating growth in the fourth quarter.
Fragrance leads, makeup lags
Fragrance was the standout category, with full-year organic net sales up 10%, led by luxury brands Le Labo, Tom Ford and Kilian Paris. Skin care grew 4% organically for the year. Makeup sales were roughly flat, with mixed results across the company's brand portfolio. Mainland China delivered 9% organic growth, and all four of the company's geographic regions posted growth for both the quarter and the full year.
The cost of the turnaround
The results cap off Estée Lauder's Profit Recovery and Growth Plan, a multiyear restructuring effort the company said delivered $1.2 billion in gross cost savings and included approximately 10,000 position reductions — both at the high end of the company's prior guidance. Tariffs remained a headwind: the company absorbed a $102 million gross charge from incremental tariffs over the full year, partly offset by a $38 million refund benefit in the fourth quarter.
Looking ahead
For fiscal 2027, Estée Lauder guided to adjusted EPS of $3.10 to $3.35, with a midpoint above the $3.18 Wall Street had expected. The company projected organic net sales growth of 3% to 5% and raised its adjusted operating margin guidance to a range of 12.7% to 13.5%.
By the numbers
Q4 net sales: $3.63B (vs. $3.54B expected). Full-year net sales: $15.0B, up 5%. Full-year adjusted EPS: $2.51, up from $1.51. Restructuring: $1.2B in gross savings, about 10,000 positions cut.
