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]

Core Insights - The Estee Lauder Companies Inc. reported third-quarter fiscal 2025 results with both net sales and earnings declining year over year, primarily due to weak consumer sentiment and reduced conversion rates in China [1][2] Financial Performance - Adjusted earnings were 65 cents per share, surpassing the Zacks Consensus Estimate of 29 cents, but down 33% from 97 cents in the prior year [2] - Quarterly net sales reached $3,550 million, exceeding the Zacks Consensus Estimate of $3,507.2 million, but reflecting a 10% decline year over year [2] - Organic net sales decreased by 9% to $3,605 million [2] Category-Wise Revenue Results - Skin Care sales fell 12% year over year to $1,807 million, impacted by weak consumer sentiment and lower conversion rates among Chinese shoppers [3] - Makeup revenues declined 9% to $1,035 million, primarily due to weaker sales from key brands like M·A·C and Estée Lauder [4] - Fragrance revenues decreased 3% to $557 million, largely due to lower performance from Clinique and Estee Lauder [4] - Hair Care sales totaled $126 million, down 12% year over year, mainly due to Aveda's weaker performance [5] Regional Revenue Results - Sales in the Americas fell 6% year over year to $1,052 million [6] - Revenues in the EMEA region declined 18% to $1,358 million [6] - Asia-Pacific region sales tumbled 3% to $1,140 million [6] Margin Analysis - Adjusted gross margin improved by 310 basis points to 75%, driven by the Profit Recovery and Growth Plan (PRGP) [7] - Adjusted operating margin contracted by 270 basis points to 11.4%, due to increased investments and sales volume deleverage [8] Financial Health - The company exited the quarter with cash and cash equivalents of $2,631 million, long-term debt of $7,298 million, and total equity of $4,345 million [9] - Net cash flow from operating activities for the nine months ended March 31, 2025, was $671 million, with capital expenditures of $395 million [10] Restructuring and Future Outlook - The PRGP aims to transform the operating model, with expected restructuring charges between $1.2 billion and $1.6 billion before taxes [12][13] - The company anticipates a decline in reported net sales of 8-9% for fiscal 2025, with adjusted organic net sales expected to fall by the same percentage [14] - Adjusted EPS is projected to slump by 40-50%, ranging from $1.30 to $1.55 for fiscal 2025 [15]