Core Viewpoint - The Lauder family is planning to sell over $1 billion worth of Estée Lauder Cos. stock to settle estate obligations following the death of Leonard A. Lauder [1][2]. Group 1: Stock Offering Details - Trusts affiliated with Leonard A. Lauder's descendants are proposing to sell 11,301,323 shares of Class A common stock through a registered public offering [1]. - J.P. Morgan Securities is acting as the sole underwriter for the offering [2]. - The proceeds from the offering will go entirely to the selling stockholders, not to Estée Lauder Cos., and will be used to settle estate obligations, including taxes and debts [2]. Group 2: Ownership and Influence - After the completion of the offering, the Lauder family will beneficially own 82 percent of the outstanding voting power of the company's common stock [3]. - Leonard A. Lauder, who passed away at age 92, was a significant figure in establishing Estée Lauder Cos. as a leader in the prestige beauty industry [3][4]. - Several family members, including William P. Lauder and Jane Lauder, are on the board of the company but are not involved in daily operations [4].

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 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]

Executive Compensation - The total pay package for Stéphane de La Faverie, the new CEO, is $9.6 million for fiscal year 2025, which includes stock options that may not be fully realized due to stock price fluctuations [2][3] - Akhil Shrivastava, the new CFO, has a compensation of $3.6 million, while Tracey T. Travis, the former CFO, has a package totaling $7.5 million for 2025 [4] - Jane Hertzmark Hudis, the chief brand officer, has a compensation of $6.8 million, down from $7.2 million the previous year [4] Leadership Changes - Stéphane de La Faverie took over as CEO in January and is implementing a new strategy called "Beauty Reimagined" to drive growth for the company [3] - Fabrizio Freda, the former president and CEO, received the highest compensation at $17.8 million before his retirement [5] - Other notable compensations include Rashida La Lande at $10.9 million and Peter Jueptner at $5.8 million [5] Financial Performance - For the three months ending June 30, the company's net sales decreased by 12% to $3.4 billion [3]

Group 1: Estée Lauder - Estée Lauder's Q3 report shows a 10% decline in net sales to $3.55 billion, with an organic decline of 9%, but slightly better than expected, and a gross margin increase of 3.1% due to the Profit Recovery and Growth Plan [2] - The company's China operations achieved low single-digit growth, driven by brands like La Mer, Estée Lauder, and Tom Ford, marking three out of the last four quarters with market share growth [2] - Global skincare and travel retail segments saw double-digit declines, with skincare sales down 11%, and makeup category performance was negatively impacted by M·A·C's product launch timing [2][3] Group 2: Prada - Prada's Q1 report indicates a 60.2% year-on-year increase in retail revenue for Miu Miu, contributing €377 million in net sales and increasing its share within the group from 22% to 31% [4] - The overall revenue for Prada Group was €1.34 billion, slightly above expectations, while competitors like LVMH and Kering reported sales declines [6] - Prada's cautious outlook reflects the challenging market conditions, with a focus on expanding its distribution network through partnerships, such as with Mytheresa [6] Group 3: Aesop - Aesop launched its first "tea fragrance" Virēre in mainland China, priced at 1,250 yuan, marking a significant increase in the frequency of new fragrance releases since being acquired by L'Oréal [12][15] - The brand's strategy aligns with the growing potential of the fragrance category in the beauty market, contributing to L'Oréal's double-digit growth in this segment [15] Group 4: Adidas - Adidas reported Q1 2025 revenue of €6.153 billion, a 13% increase year-on-year, with operating profit rising 82% to €610 million, driven by continued growth in the Chinese market [18] - The company maintains its full-year growth forecast despite tariff pressures, having minimized exposure to U.S. market products manufactured in China [18] Group 5: LVMH - LVMH's wine and spirits division is set to cut over 10% of its workforce, approximately 1,200 employees, due to a 9% decline in organic sales, primarily from weak performance in the U.S. and China [20]