Estée Lauder(US:EL)2025-10-30 13:32Financial 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%, 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 experienced low single-digit growth [16]. - Makeup and hair care categories declined, contributing to a low single-digit decrease in the Americas [17]. - The Ordinary brand drove share gains in skincare, while Aveda contributed to share gains in hair care [7][11]. Market Data and Key Metrics Changes - Mainland China contributed positively to growth, with the company outperforming the prestige beauty market, achieving double-digit growth [5][42]. - High single-digit growth was reported in priority emerging markets, including Mexico, Turkey, and India [4]. - The UK market showed resilience with nearly 10% industry sales growth, while France and Spain also saw share gains [8][10]. 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, emphasizing the importance of sustainable sales growth and rebuilding operating margins [5][24]. - The macroeconomic environment remains dynamic, with ongoing challenges in certain markets, particularly in the East [22][44]. - The company anticipates a non-linear growth path, with potential headwinds from tariffs impacting profitability by approximately $100 million [23]. Other Important Information - The company opened 14 net new freestanding stores and launched several new campaigns to enhance consumer engagement [12][15]. - 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][30]. Question: Clarity on full-year guidance - Management explained that while Q1 results were strong, macro volatility and challenging comparisons in the second half influenced the decision to maintain guidance [40][46]. Question: Margin outlook for the year - Management reaffirmed guidance for gross and operating margins, indicating confidence in sequential improvement despite potential tariff impacts [52][54]. Question: Asia travel retail inventory levels - Management confirmed that travel retail inventory is appropriately sized relative to demand, with positive momentum observed in certain markets [60][66]. 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 [74][78].