Estée Lauder Shares Plunge 20% Despite Earnings Beat as Tariff Risks Cloud Outlook

Core Insights - Estée Lauder Companies experienced a significant drop in share price, falling over 20% intra-day due to quarterly results and tariff concerns [1] - The company reported second-quarter earnings per share of $0.89, exceeding analyst expectations of $0.83, and a 43% increase from the previous year [1] - Revenue for the quarter rose 6% year over year to $4.23 billion, slightly above the consensus estimate of $4.22 billion [1] Sales Performance - Net sales in skin care and fragrance increased by 6%, while hair care returned to growth with a 5% increase [2] - Makeup sales declined by 1%, primarily due to weakness in the Estée Lauder brand, although MAC showed strength [2] - Mainland China exhibited strong performance with 13% organic sales growth, while Europe, the UK, the Middle East, and Africa posted 2% organic growth; the Americas reported flat organic sales [2] Profitability Outlook - Despite raising its full-year outlook, Estée Lauder warned that tariff-related pressures would reduce fiscal 2026 profitability by approximately $100 million, mainly in the second half of the year [3] - The company highlighted tariffs, including a 39% rate on Swiss imports and a 35% rate on Canadian imports into the U.S. [3] - Reported and adjusted gross margin expanded by 40 basis points to 76.5%, benefiting from the Profit Recovery and Growth Plan, although offset by tariffs, inflation, and changes in product mix [4] Future Projections - Estée Lauder raised its fiscal 2026 outlook, now expecting organic net sales growth of 1% to 3% and adjusted earnings per share of $2.05 to $2.25 [4]