Mei Ri Jing Ji Xin Wen·2025-08-21 10:26Core Viewpoint - Estée Lauder is experiencing a challenging period in its reform and adjustment phase, with a reported net sales decline of 8% for the fiscal year 2025, marking the third consecutive year of sales decline, while the gross margin has improved [1][2][4]. Financial Performance - For the fiscal year 2025, net sales reached $14.33 billion, down from $15.61 billion in 2024 and $15.91 billion in 2023 [3]. - The operating loss amounted to $785 million, with a net loss of $1.13 billion (approximately 81 billion RMB) [2][3]. - Gross margin increased by 2.3 percentage points to 74%, attributed to improved operational efficiency and inventory management [4]. Market Analysis - The decline in net sales is significantly influenced by the global travel retail market, which accounted for two-thirds of the organic sales decline, with a 28% drop in this segment [1][8]. - The Asia travel retail business has had a notable impact on overall performance, contributing to a 21% decline in net sales for the Asia-Pacific market [7][8]. Regional Insights - The net sales in the China market were $2.741 billion, reflecting a 6% decline, which constitutes nearly 20% of the company's total sales [5]. - The company is optimistic about the recovery of the China market, expecting organic sales growth in fiscal year 2026, with signs of improvement noted in the latter half of fiscal year 2025 [5][6]. Strategic Adjustments - Estée Lauder has restructured its management to emphasize the importance of the China market, establishing it as a separate reporting segment [5]. - The company plans to enhance its product innovation efforts, aiming for innovative products to account for over 25% of sales in fiscal year 2026 [6]. Future Outlook - The CEO expressed confidence in achieving organic sales growth in fiscal year 2026, following three years of decline, and aims for a robust double-digit operating profit margin in the coming years [4][10]. - The company anticipates that the global travel retail business will see a recovery in organic net sales in fiscal year 2026, particularly in the second half of the year [10].