Core Insights - The company reported a 3% organic sales growth in Q1 FY26, a significant recovery compared to a 13% decline in the previous quarter, enhancing confidence in its fiscal outlook [2][5] - The net sales for Q1 FY26 reached $3.5 billion, with a 4% increase year-over-year, indicating a positive trend in overall performance [5][6] Group 1: Market Performance - The retail sales in the Chinese market experienced double-digit growth, significantly contributing to the global performance recovery [5] - Emerging markets, particularly Mexico and Turkey, showed high single-digit growth, while travel retail also saw improvements due to a low base from the previous year [5][6] Group 2: Financial Metrics - Gross margin increased by 100 basis points from 72.4% to 73.4%, while adjusted gross margin rose by 60 basis points from 72.7% to 73.3% [5] - Operating profit margin improved to 4.9%, a notable recovery from -3.6% in the same period last year, with adjusted operating profit margin expanding by 300 basis points to 7.3% [5] Group 3: Brand Performance - Seven brands under the company achieved double-digit growth, with Le Labo nearing triple-digit growth, outperforming the high-end beauty market [5] - The company has gained market share in the high-end beauty sector in five out of the last six quarters [5] Group 4: Online Sales Strategy - The company implemented various measures to enhance online consumer reach, resulting in double-digit organic sales growth globally, outperforming the overall high-end beauty industry [6] - The online sales growth was driven by platforms such as Tmall, JD.com, Douyin, and Notino, indicating a successful digital strategy [6] Group 5: Future Outlook - Despite challenges in the Eastern markets, the company remains optimistic about a robust start to the year and a return to growth, supported by consumer confidence improvements [6]

Core Insights - Estée Lauder Group has launched a new breast cancer prevention campaign in Shanghai, continuing its commitment to breast health initiatives in China since 2003 [1] - The campaign and the Estée Lauder Charitable Foundation have raised over $144 million for breast cancer research, education, screening, and treatment [1] - A three-year partnership with the China Women's Development Foundation has been announced, with a total donation of 10 million RMB to support the "Breast Health Care" project [1] Group 1 - The breast cancer prevention campaign aims to enhance public awareness and education regarding breast cancer [1] - The initiative has included various measures such as educational outreach, establishment of special funds, grassroots screening clinics, patient assistance programs, and local research collaborations [1] - The "Breast Health Care" project has already reached multiple regions including Jilin, Yunnan, Guizhou, Heilongjiang, Anhui, and Sichuan over the past two years [1]

Core Insights - The beauty sector on Douyin is experiencing intense competition, leading to accelerated industry reshuffling and the emergence of new wealth stories [1] Group 1: Market Dynamics - The top 10 beauty brands on Douyin for the first three quarters show a strong presence of domestic brands, with 7 out of 10 being local [2][3] - The head brand effect remains prominent, with Han Shu maintaining the top position, while domestic brands like Gu Yu and Natural Hall have rapidly ascended to the top five [2][8] - The ranking fluidity among leading brands has increased, with L'Oreal dropping from 2nd to 7th place, and several white-label brands disappearing from the top 10 [3][11] Group 2: Brand Performance - Baique Ling has made a remarkable rise, moving from 13th in Q1 to 4th in October, showcasing the strength of domestic brands [8][9] - International brands are struggling, with only 7 making it to the Q3 top 20, and L'Oreal falling out of the top 10 entirely [11][12] - VEIRFOO, a new international brand, has quickly entered the top 10, demonstrating the potential for new entrants in the market [12] Group 3: Consumer Behavior and Sales Strategies - The sales strategies of brands like Baique Ling emphasize self-broadcasting and influencer collaborations, significantly boosting their sales [10][21] - The rise of KAZOO and SDX in the neck care segment highlights the growing consumer interest in specialized skincare products [36][40] - The market for neck care products is expanding, with brands focusing on targeted solutions for aging concerns, indicating a shift in consumer awareness and demand [46]

Core Insights - Estee Lauder Companies Inc. reported first-quarter fiscal 2026 results with both net sales and earnings exceeding Zacks Consensus Estimates, showing a year-over-year increase in both metrics [1][11] - Adjusted earnings per share were 32 cents, surpassing the expected 16 cents, marking a 128.5% increase from 14 cents in the same quarter last year [1][11] Financial Performance - Quarterly net sales reached $3,481 million, exceeding the consensus estimate of $3,384 million, reflecting a 4% year-over-year increase [2][11] - Organic net sales grew by 3% to $3,455 million, with increases across most product categories and geographic regions, except for makeup and hair care in the Americas [2] Category-Wise Revenue Results - Skin Care sales rose 3% year over year to $1,575 million, driven by strong sales in Asia travel retail and product innovations [3] - Makeup revenues declined 2% to $1,030 million, primarily due to lower sales of Bobbi Brown and fewer eye product offerings, although operating results improved due to cost savings [4] - Fragrance category revenues increased 13% to $721 million, led by luxury brands such as Le Labo and Jo Malone London [5] - Hair Care sales totaled $129 million, down 7% year over year, impacted by Aveda's strategic pullback on promotions and store closures [6] Regional Revenue Results - Sales in the Americas fell 2% to $1,174 million, while EMEA revenues remained flat at $901 million [7] - Asia-Pacific sales increased by 9% to $873 million, with Mainland China also seeing a 9% increase to $532 million [7] Margin and Operating Performance - Adjusted gross margin expanded by 100 basis points to 73.4%, driven by efficiencies from the Profit Recovery and Growth Plan (PRGP) [8] - Operating earnings were reported at $169 million, a significant recovery from a loss of $121 million in the prior year [9] Financial Health - The company ended the quarter with cash and cash equivalents of $2,219 million and long-term debt of $7,320 million [12] - Net cash flow from operating activities was $340 million, with capital expenditures amounting to $96 million [12] Restructuring and Future Outlook - Estee Lauder's PRGP aims to transform its operating model, with completion expected by fiscal 2027, anticipating annual gross benefits of $800 million to $1 billion [13][14] - The company expects restructuring charges between $1.2 billion and $1.6 billion, with a net reduction of approximately 5,800 to 7,000 positions [14] - For fiscal 2026, the company projects net sales growth of 2-5% and adjusted earnings per share to increase by 26-39% [15][16]

Financial Performance - Net sales for the three months ended September 30, 2025, were $3,481 million, a 3.6% increase from $3,361 million in the same period of 2024[166] - Gross profit margin improved to 73.4% in Q1 2025 from 72.4% in Q1 2024, with gross profit of $2,554 million compared to $2,433 million[166] - Operating income for Q1 2025 was $169 million, a significant recovery from an operating loss of $121 million in Q1 2024[166] - Reported net sales for the three months ended September 30, 2025, increased by $120 million, or 4%, to $3,481 million compared to $3,361 million in the prior year[194] - Adjusted operating income for the same period was $255 million, up 77% from $144 million year-over-year[252] - Net earnings for the three months ended September 30, 2025, were $47 million, a $203 million improvement from a loss of $156 million in the prior year[248] - The effective tax rate increased to 56.9%, a change of 4,360 basis points from the previous year, influenced by losses before income taxes and new U.S. tax legislation[246] Sales Performance by Category - Skin Care product category net sales increased to $1,575 million in Q1 2025 from $1,529 million in Q1 2024, while Fragrance sales rose to $721 million from $630 million[170] - Net sales in the fragrance category increased by $91 million, or 14%, driven by higher sales from Le Labo, TOM FORD, and Jo Malone London[209] - Skin care net sales increased by $46 million, or 3%, primarily due to higher sales from La Mer and Estée Lauder, with a favorable foreign currency translation impact of approximately $7 million[200][202] - Makeup net sales decreased by $8 million, or 1%, reflecting lower sales from Bobbi Brown and Too Faced, partially offset by higher sales from Estée Lauder[203][208] - Hair care net sales decreased by $10 million, or 7%, driven by lower sales from Aveda, with a volume decrease of 14% partially offset by a pricing increase of 6%[211][212] Regional Sales Performance - The Americas region reported net sales of $1,174 million in Q1 2025, down from $1,197 million in Q1 2024, indicating a 1.9% decline[170] - Reported net sales in Asia/Pacific increased by 8%, driven by a volume increase of 4% and a pricing increase of 5%[221] - Reported net sales in Mainland China increased by 9%, driven by a volume increase of 12% and a pricing decrease of 3%[222] - The Americas reported a 2% decrease in net sales, primarily due to a volume decrease of 3%, partially offset by a pricing increase of 2%[219] Restructuring and Cost Management - The company anticipates restructuring and other charges between $1,200 million and $1,600 million, primarily related to employee and asset costs[191] - The restructuring program is expected to yield annual gross benefits of $800 million to $1,000 million, contributing to a return to a double-digit operating margin[192] - A net reduction of approximately 5,800 to 7,000 positions globally is anticipated as part of the restructuring program, representing about 9-11% of total positions[189] - Operating expenses as a percentage of net sales decreased to 68.5% for the three months ended September 30, 2025, down from 76.0% in the prior-year period[228] Challenges and Risks - The company is facing challenges in travel retail and Western Europe, which are expected to impact net sales and profitability[177] - The company is monitoring the impact of new tariffs and expects higher rates to adversely affect profitability and cash flows in fiscal 2026[178] - Global conditions, including inflation and supply chain challenges, could impact consumer purchasing behavior and operational costs[291] - The company faces risks related to changes in foreign investment and trade policies that could impact manufacturing and distribution operations[291] - Fluctuations in foreign currency may affect operational results and the value of foreign assets[291] Cash Flow and Debt Management - Cash and cash equivalents decreased to $2,219 million as of September 30, 2025, down from $2,921 million at June 30, 2025[258] - As of September 30, 2025, total debt amounted to $7,323 million, with long-term debt at $7,320 million and current debt at $3 million[266] - Total debt as a percentage of total capitalization was 65% as of September 30, 2025, unchanged from June 30, 2025[267] - Net cash flows used for operating activities improved to $(340) million for the three months ended September 30, 2025, compared to $(670) million in the same period of 2024[268] - Financing activities resulted in net cash flows of $(239) million, reflecting deferred consideration payments related to the TOM FORD acquisition, partially offset by reduced dividends paid[272] Future Outlook - The company expects inflation to impact operating results and plans to introduce new products at higher prices to offset cost increases[262] - The company believes that cash on hand and generated from operations will be adequate to support its business operations and commitments[259] - The timing and impact of acquisitions and divestitures will be significant for future growth[291] - The company is focused on capitalizing on efficiency improvements and integrating acquired businesses[291]

Core Insights - Estee Lauder exceeded Wall Street expectations for Q1 sales and profit, driven by strong demand for Le Labo and Tom Ford fragrances, alongside a recovery in China demand [1][5] Group 1: Financial Performance - The company reported quarterly sales of $3.48 billion, surpassing analysts' estimates of $3.38 billion [5] - Adjusted profit for the quarter ending September 30 was 32 cents per share, significantly above the estimated 18 cents per share [5] - Organic net sales increased by 3% compared to a 5% decline a year ago [3] Group 2: Market Trends and Consumer Sentiment - There is an improvement in consumer sentiment in China, although it remains subdued and has not fully recovered from historical lows [3] - The fragrance category experienced a 13% growth in organic sales, with a 9% increase in the China and Asia Pacific regions [4] Group 3: Strategic Initiatives - Under CEO Stephane de La Faverie, the company is focusing on luxury launches, streamlining its supply chain, and enhancing innovation and marketing efforts to revive sales [2] - The company is shifting production closer to key markets to adapt to changing trade policies affecting the retail industry [2] Group 4: Industry Context - Other luxury brands, including L'Oreal, LVMH, and Hermes, have also reported improvements in China, indicating a potential revival in the luxury market [4] - Despite the positive trends, sales in the Americas continue to slow down [5]

Financial Data and Key Metrics Changes - The company reported organic sales growth of 3% in the first quarter, a significant improvement from a 13% decline in the previous quarter [4][16] - Gross margin expanded by 60 basis points to 73.3%, driven by sales growth and benefits from the Profit Recovery and Growth Plan (PRGP) [17] - Operating margin increased by 300 basis points to 7.3% compared to 4.3% last year, reflecting operational efficiencies and reduced non-consumer facing expenses [17][19] - Diluted EPS more than doubled to $0.32 from $0.14 last year [19] Business Line Data and Key Metrics Changes - Fragrance category saw double-digit growth, while skincare experienced low single-digit growth [16] - Makeup and hair care categories declined, contributing to a low single-digit decrease in the Americas [16] - Retail sales in skincare grew 8%, outperforming the category growth of 6% [7] Market Data and Key Metrics Changes - Mainland China contributed positively to the return to growth, with double-digit retail sales growth, significantly outperforming the prestige beauty market [5][42] - Emerging markets, particularly Mexico, Turkey, and India, showed double-digit growth [4] - The U.K. market saw nearly 10% industry sales growth, with strong sequential improvement in retail sales trends [8] Company Strategy and Development Direction - The company is focused on its "Beauty Reimagined" action plan, which includes enhancing consumer coverage, driving innovation, and increasing consumer-facing investments [5][12] - A new partnership with Shopify aims to modernize and scale the direct-to-consumer business [14] - The company plans to expand its presence in various channels, including Amazon and TikTok Shop, to better connect with younger consumers [9][78] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fiscal 2024 outlook, aiming for sustainable sales growth and rebuilding operating margins to solid double digits in the coming years [5][24] - The macroeconomic environment remains dynamic, with ongoing challenges and opportunities, particularly in the East [22][44] - The company anticipates a non-linear growth path due to macro volatility and tougher comparisons in the second half of the fiscal year [22][23] Other Important Information - The company opened 14 net new freestanding stores, enhancing its brand portfolio [12] - The fiscal 2025 Social Impact and Sustainability Report highlighted achievements in climate, water, waste, and social investment [15] Q&A Session Summary Question: Volume trends versus price mix - Management noted significant share gains driven by volume, with strategic price adjustments contributing to new consumer acquisition [26][28] Question: Clarity on full-year guidance - Management explained that while Q1 showed strong growth, the full-year guidance remains cautious due to macro volatility and challenging comparisons in the second half [40][46] Question: Margin outlook for the year - Management reaffirmed guidance for gross and operating margins, indicating confidence in maintaining progress despite potential tariff impacts [52][56] Question: Asia travel retail inventory levels - Management confirmed that travel retail inventory is now appropriately sized relative to demand, with positive momentum in certain markets [62][67] Question: Opportunities in new channels - Management emphasized the importance of moving quickly into new channels and enhancing existing ones, with ongoing efforts to expand distribution and consumer engagement [76][80]

Financial Data and Key Metrics Changes - The company reported organic sales growth of 3% in the first quarter, a significant improvement from a 13% decline in the previous quarter [4][16]. - Gross margin expanded by 60 basis points to 73.3%, while operating margin increased by 300 basis points to 7.3% compared to the previous year [17][19]. - Diluted EPS more than doubled to $0.32, up from $0.14 last year [19]. Business Line Data and Key Metrics Changes - Fragrance category saw double-digit growth, while skincare experienced low single-digit growth [16]. - Makeup and hair care categories declined, contributing to a low single-digit decrease in the Americas [17]. - The Ordinary brand drove share gains in skincare, while Aveda contributed to share gains in hair care [7][11]. Market Data and Key Metrics Changes - Mainland China contributed positively to growth, with the company outperforming the prestige beauty market, achieving double-digit growth [5][42]. - High single-digit growth was reported in priority emerging markets, including Mexico, Turkey, and India [4]. - The UK market showed resilience with nearly 10% industry sales growth, while France and Spain also saw share gains [8][10]. Company Strategy and Development Direction - The company is focused on its "Beauty Reimagined" action plan, which includes enhancing consumer coverage, driving innovation, and increasing consumer-facing investments [5][12]. - A new partnership with Shopify aims to modernize and scale the direct-to-consumer business [14]. - The company plans to expand its presence in various channels, including Amazon and TikTok Shop, to better connect with younger consumers [9][78]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fiscal 2024 outlook, emphasizing the importance of sustainable sales growth and rebuilding operating margins [5][24]. - The macroeconomic environment remains dynamic, with ongoing challenges in certain markets, particularly in the East [22][44]. - The company anticipates a non-linear growth path, with potential headwinds from tariffs impacting profitability by approximately $100 million [23]. Other Important Information - The company opened 14 net new freestanding stores and launched several new campaigns to enhance consumer engagement [12][15]. - The fiscal 2025 Social Impact and Sustainability Report highlighted achievements in climate, water, waste, and social investment [15]. Q&A Session Summary Question: Volume trends versus price mix - Management noted significant share gains driven by volume, with strategic price adjustments contributing to new consumer acquisition [26][30]. Question: Clarity on full-year guidance - Management explained that while Q1 results were strong, macro volatility and challenging comparisons in the second half influenced the decision to maintain guidance [40][46]. Question: Margin outlook for the year - Management reaffirmed guidance for gross and operating margins, indicating confidence in sequential improvement despite potential tariff impacts [52][54]. Question: Asia travel retail inventory levels - Management confirmed that travel retail inventory is appropriately sized relative to demand, with positive momentum observed in certain markets [60][66]. Question: Opportunities in new channels - Management emphasized the importance of moving quickly into new channels and enhancing existing ones, with ongoing efforts to expand distribution and consumer engagement [74][78].

Financial Data and Key Metrics Changes - The company reported organic sales growth of 3% in Q1 2026, a significant improvement from a 13% decline in Q4 2025 [4][16] - Gross margin expanded by 60 basis points to 73.3%, while operating margin increased by 300 basis points to 7.3% compared to the previous year [17][19] - Diluted EPS more than doubled to $0.32, up from $0.14 last year [19] Business Line Data and Key Metrics Changes - Fragrance category saw double-digit growth, while skincare grew low single-digit [16][17] - The Ordinary brand contributed significantly to skincare share gains, while Aveda led share gains in hair care [6][17] - The Estée Lauder brand achieved its third consecutive quarter of overall share gain in the U.S. across skincare, makeup, and fragrance [6] Market Data and Key Metrics Changes - Mainland China contributed positively to the return to growth, with double-digit retail sales growth, outperforming the Prestige Beauty market [5][6] - The Americas experienced low single-digit sales decline, driven by makeup and hair care categories [16][17] - Travel retail showed improvement, particularly in Asia Pacific, with double-digit growth in Japan [60] Company Strategy and Development Direction - The company is focused on its "Beauty Reimagined" action plan, which includes enhancing consumer coverage, driving innovation, and increasing consumer-facing investments [5][12] - A new partnership with Shopify aims to modernize and scale the direct-to-consumer business [13] - The company plans to expand its presence in various online channels, including TikTok Shop and Amazon [8][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fiscal 2026 outlook, despite macroeconomic volatility and challenges in certain markets [15][21] - There is optimism regarding consumer sentiment in mainland China, although it remains subdued compared to historical levels [21][43] - The company anticipates a challenging second half of the fiscal year due to tougher comparisons from the previous year [21][22] Other Important Information - The company has achieved several sustainability goals since 2019 and is committed to advancing women's and girls' health, education, and leadership [14][15] - The company recorded $697 million in cumulative restructuring charges primarily related to employee costs [19] Q&A Session All Questions and Answers Question: Volume trends versus price mix - Management noted significant share gains from volume, driven by price adjustments and new product launches, particularly in the U.S. market [24][28] - The focus is on driving unit growth and bringing new consumers to the brand [30][32] Question: Short-term clarity on guidance - Management explained that while Q1 results were strong, the full-year guidance remains cautious due to macroeconomic challenges [39][41] - There is confidence in sustaining share gains in mainland China, with a focus on maintaining momentum [41][43] Question: Margin outlook - Management reaffirmed guidance for gross and operating margins, indicating confidence in achieving targets despite potential tariff impacts [50][52] - The focus remains on consumer-facing investments while managing non-consumer-facing expenses [51][53] Question: Travel retail inventory and demand trends - Travel retail remains volatile, but there are signs of recovery, particularly in Japan and other emerging markets [58][60] - Inventory levels are now aligned with demand, and management is optimistic about future retail activations [63][64] Question: Opportunities in new channels - The company is actively pursuing new distribution channels and enhancing existing ones, including partnerships with platforms like TikTok and Shopify [71][72] - There is a commitment to moving quickly to meet consumer demands across various regions [75] Question: Phasing of margin expansion - Management indicated that while Q1 showed strong performance, it is too early to change the phasing of margin expectations for the year [80][81] - The focus remains on building consistent sales while investing in growth opportunities [82][86]

Core Insights - Estee Lauder exceeded Wall Street expectations for Q1 sales and profit, driven by strong demand for Le Labo and Tom Ford fragrances, alongside a recovery in China [1][4] - The company's shares rose approximately 7% in premarket trading following the announcement [1] Group 1: Financial Performance - Estee Lauder reported quarterly sales of $3.48 billion, surpassing analysts' estimates of $3.38 billion [4] - The adjusted profit for the quarter ending September 30 was 32 cents per share, significantly above the estimated 18 cents per share [4] - Organic net sales increased by 3% after a decline of 5% in the previous year [3] Group 2: Strategic Initiatives - Under CEO Stephane de La Faverie, the company has focused on luxury product launches, supply chain optimization, and enhanced marketing efforts to revive sales [2] - The company is shifting production closer to key markets to adapt to changing trade policies that have impacted the retail industry [2] Group 3: Market Trends - The fragrance category experienced a notable organic sales growth of 13% in the latest quarter [3] - Sales in China and the Asia Pacific regions rose by 9%, indicating a positive trend in these markets [3] - Analysts suggest that the worst of the luxury slump in China may be over, positioning the company for long-term growth [4]