Copyright Benzinga
Estée Lauder Companies Inc. (NYSE:EL) jumped in premarket trading Thursday after posting stronger-than-expected first-quarter results and reaffirming its 2026 sales outlook. The company reported first-quarter adjusted earnings per share of 32 cents, beating the analyst consensus estimate of 17 cents. Quarterly sales of $3.481 billion (+4% year-over-year) outpaced the analyst consensus estimate of $3.378 billion. Also Read: Estée Lauder Partners With Shopify For Digital Makeover Organic net sales (non-GAAP) soared 3% year-over-year to $3.455 billion. Segment Performance The company posted a mixed performance across its key beauty categories, with gains in fragrance and skin care partially offset by softness in makeup and haircare. Skin Care sales rose 3% year-over-year to $1.58 billion, reflecting steady consumer demand for premium skincare lines. Makeup, however, slipped 2% to $1.03 billion, driven primarily by weaker performance at the Bobbi Brown brand. Fragrance remained a standout performer, surging 13% to $721 million as consumers continued to favor prestige scents across major markets. The category's momentum helped cushion declines in haircare, which fell 7% to $129 million. Margins and Restructuring Efforts Adjusted gross profit in the quarter under review increased by 4% year-over-year to $2.551 billion. Adjusted gross margin rose 60 basis points to 73.3%, supported by the company's Profit Recovery and Growth Plan (PRGP), which improved procurement efficiency and reduced promotions and inventory obsolescence. Adjusted operating margin widened 300 basis points to 7.3% from 4.3%, driven by lower non-consumer-facing expenses, which freed up funds for consumer-focused investments. Through September 30, the company incurred $697 million in cumulative restructuring charges under PRGP, primarily related to employee costs. Of that amount, $87 million was recognized in the fiscal first quarter of 2026. The company expects a net workforce reduction of approximately 5,800 to 7,000 positions, including approvals to date. PRGP initiatives are expected to be largely completed by fiscal 2027, with most of the full run-rate benefits anticipated during that year. Market Share Gains Across Key Regions In the first quarter of fiscal 2026, the company achieved prestige beauty share gains across key markets. In Mainland China, growth continued across all categories, led by La Mer, Le Labo, and TOM FORD, with both brick-and-mortar and online channels outperforming. In the United States, share gains were driven by Skin Care, led by The Ordinary and Estée Lauder, as well as Hair Care. The Estée Lauder brand delivered its third consecutive quarter of overall share gains across Skin Care, Makeup, and Fragrance. In Western Europe, fragrance growth remained strong in France and Spain. The company exited the quarter with cash and equivalents worth $2.219 billion. Net cash flows used for operating activities decreased to $340 million, an improvement compared to $670 million in the prior year. CEO Stéphane de La Faverie said Estée Lauder began fiscal 2026 with strong momentum, driven by its Beauty Reimagined strategy, renewed organic sales growth, and improved profitability. He added that operational changes are making the company faster and more agile, reinforcing confidence in achieving sales growth and margin expansion for the first time in four years. Dividend The firm announced a quarterly dividend of 35 cents per share on its Class A and Class B Common Stock, payable in cash on December 15. Outlook Estée Lauder affirmed fiscal 2026 adjusted earnings per share guidance of $1.90 to $2.10, compared with the $2.06 consensus estimate. Estée Lauder lowered its fiscal 2026 GAAP EPS guidance to a range of $1.39 to $1.65, down from its prior outlook of $1.63 to $1.87. The updated forecast compares with the $1.77 consensus estimate. The firm reaffirmed fiscal 2026 sales guidance of $14.613 billion to $15.042 billion, versus the $14.761 billion estimate. After planned mitigation actions, the company still expects tariff-related headwinds to reduce fiscal 2026 profitability by about $100 million. New Regional Reporting Structure Looking ahead, Estée Lauder announced a new reporting structure to take effect in the first quarter of fiscal 2026. The company will organize results into four geographic regions: The Americas; Europe, the United Kingdom and Ireland and Emerging Markets (EUKEM); Asia/Pacific, which will include global travel retail; and Mainland China. Price Action: EL shares are trading higher by 5.51% to $102.72 premarket at last check Thursday. Read Next: Nancy Pelosi Ditches Apple Stock Right Before Q4 Earnings – But There's A Catch Photo by salarko via Shutterstock
