PresentationUnknown Analyst Good morning. It's my pleasure to welcome L'Oreal back to CAGNY. L'Oreal has one of the leading brand portfolios in global beauty, covering all facets of beauty, including color cosmetics, skin, hair and fragrance operating across the luxury, mass, dermatology and professional channels. L'Oreal operates 40 global brands, which are sold in 150 countries, generating EUR 44 billion in sales. In 2025, the company delivered strong financial performance despite the volatile environmen ...

Core Insights - L'Oréal is focusing on innovation in skin care and aims to bridge health and beauty, with a strong emphasis on longevity science as a growth opportunity [1][6][20] - The company's skin care segment, despite being its largest category at 16.4 billion euros, showed minimal growth of 0.4% year-on-year, contrasting with stronger growth in makeup and hair care [2][5] - E-commerce has become a significant growth driver for L'Oréal, with sales reaching 13 billion euros, accounting for over 30% of total group sales, marking a substantial increase from previous years [9][11] Skin Care Performance - Skin care sales were flat in 2025, which is a concern for L'Oréal as it represents a major category [2] - The company is adjusting its strategies to enhance performance in skin care, particularly through innovation and media engagement [1][5] Regional Performance - North Asia's sales declined by 5% on a reported basis, despite a slight gain in like-for-like terms [4] - The travel retail market in Asia has been soft, particularly in Korea and mainland China, impacting overall sales [3][5] Strategic Partnerships and Acquisitions - L'Oréal announced a strategic partnership with Kering, acquiring the House of Creed and gaining exclusive licenses for Gucci, Bottega Veneta, and Balenciaga, valued at 4 billion euros [12][13] - The acquisition of a larger stake in Galderma will enhance L'Oréal's involvement in dermatology and aesthetics, allowing for better integration of strategies [18][19] Future Growth Opportunities - The company sees significant potential in the longevity market, with plans to introduce supplements and advanced beauty protocols [7][20] - L'Oréal aims to reach 2 billion consumers in the next decade, driven by trends in emerging markets and changing consumer behaviors [21]

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]

Group 1 - Procter & Gamble reported mixed results for its fiscal second quarter of 2026, with adjusted earnings per share of $1.88 exceeding analyst expectations, while revenue of $22.21 billion fell slightly below consensus estimates [2] - The company adjusted its fiscal year 2026 outlook for diluted net earnings per share growth due to higher restructuring charges but maintained its guidance for core earnings per share and organic sales growth [3] - P&G has solid fundamentals, showing a lower valuation (P/OpInc) compared to Estée Lauder Companies, while demonstrating higher growth in revenue and operating income [3][4] Group 2 - The disparity between valuation and performance suggests that P&G stock may be a better investment choice than Estée Lauder stock [4] - A multi-faceted analysis is essential for assessing investments, and the Trefis High Quality Portfolio aims to mitigate stock-specific risk while providing potential upside exposure [5][7] - Evaluating the current stock price of Estée Lauder Companies in relation to its peers may indicate whether the stock is overpriced, particularly if there has been a significant reversal in its performance metrics over the past year [6]

Core Insights - Ulta Beauty exceeded Wall Street forecasts in Q3, reporting net sales of $2.9 billion, a 12.9% increase, driven by fragrance, K-beauty, and international expansion [1][2] - The company anticipates full-year 2025 net sales of approximately $12.3 billion, up from the previous estimate of $12 billion to $12.1 billion [2] Sales Performance - Net income for the third quarter was $230.9 million, down from $242.2 million year-over-year, while diluted earnings per share remained flat at $5.14, surpassing analysts' expectations of $4.61 [2] - Fragrance was the strongest growing category with double-digit comparable sales growth, supported by new brand launches [4] - Skin care achieved high-single-digit comparable sales growth, bolstered by K-beauty and an expanded wellness assortment [5] - Makeup saw midsingle-digit comparable sales growth, while hair care also rose by midsingle digits, although personal styling tools faced sales declines due to tariff-related pressures [6] Strategic Initiatives - The company is executing its "Ulta Beauty Unleashed Strategy," focusing on new product assortments, improved in-store and digital experiences, and bold marketing efforts [3] - Ulta initiated its first international expansion by opening seven stores in Mexico and a store in Kuwait through franchise partnerships [7]

Cosmetics manufacturer Intercos is working on at least one US acquisition to expand its skin and hair care business https://t.co/wNzGtsNscd ...

Consumer Staples Sector Overview - The consumer staples sector is currently facing challenges such as cost pressures from inflation, high commodity prices, and tariffs, which have negatively impacted profit margins [1] - Real average wages have declined, leading consumers to reduce spending [1] - Investor focus has shifted towards high-growth industries like AI, resulting in high valuations and limited upside for consumer staples companies [1][2] Constellation Brands - Constellation Brands is a major player in the alcoholic beverages market, with brands like Modelo and Corona, and has seen a year-to-date decline of nearly 29%, making it an attractive value play with a price/sales ratio of 2.56 [4][5] - The global alcohol market is projected to reach approximately $3 trillion by 2030, and Constellation's strong international presence positions it well, particularly among Hispanic and Latino consumers [5] - Despite a troubling dividend payout ratio of -170.7%, Constellation has maintained a dividend yield of 2.56% and analysts expect earnings to grow by about 7% in the coming year, indicating potential upside of over 33% for STZ shares [7] Estée Lauder - Estée Lauder has experienced mixed results in its latest fiscal quarter, with both EPS and revenue declining year-over-year, although EPS exceeded analyst expectations [8][9] - The company is implementing cost-cutting measures aimed at saving up to $1 billion annually, which has led to a gross margin expansion of 230 basis points to 74% [10] - Estée Lauder's strong market position in prestige beauty and improved value metrics make it well-positioned to navigate external challenges [11] Mondelez International - Mondelez International maintains a strong market presence in the snack food and beverage sector, leveraging pricing power and brand loyalty to counteract volume slippage [13] - Despite a year-over-year decline in EPS, Mondelez's revenue grew by about 8% due to strong performance in emerging markets [14] - The company has a sustainable dividend payout ratio and is expected to generate over $3 billion in free cash flow this year, with analysts projecting more than 17% upside potential for MDLZ shares [15]

Regulatory Changes - The EU is preparing to limit retinol content in skincare products [1] Industry Implications - Skincare devotees need to be aware of the upcoming retinol content limitations [1]