On August 20, Estée Lauder Companies announced its financial results for fiscal year 2025 (July 2024 – June 2025). Net sales fell 8% from $15.6 billion in the prior year to $14.3 billion, marking the third consecutive annual decline.
Gross profit decreased to $10.6 billion from the previous year, but the gross margin improved to 74%. This was the result of operational efficiencies such as inventory reduction and supply chain optimization, as well as adjustments in pricing strategy, including the introduction of higher price tiers in luxury lines and a reduction in discounting. On the other hand, operating income turned into a loss of $785 million. Even on an adjusted basis, operating income was $1.15 billion, down 28% year-on-year.
Earnings per share (EPS) stood at a GAAP loss of $3.15, while adjusted EPS came in at $1.51. This represents a sharp 42% decline from $2.59 in the prior year, highlighting the company’s weakened profitability.
By product category, skincare sales fell 12%, makeup declined 5%, and haircare dropped 10%. Fragrance was the only segment that remained flat. Regionally, sales decreased 4% in the Americas, 12% in EMEA (Europe, the Middle East, and Africa), and 7% in Asia-Pacific. Consumer weakness in China and South Korea, along with a slowdown in the Western European luxury market, weighed heavily on results. In addition, tit-for-tat tariffs between the U.S. and China are expected to reduce profitability by approximately $100 million in fiscal 2026.
Stéphane de La Faverie, whose appointment as CEO was announced in October 2024 and who officially assumed the role on January 1, 2025, commented on the results in a statement: “Having closed fiscal 2025 as expected, we remain wholly focused on continuing to execute our strategic vision of Beauty Reimagined with excellence. Despite continued volatility in the external environment, we embarked on fiscal 2026 with signs of momentum and confidence in our outlook to deliver organic sales growth this year after three years of declines and to begin rebuilding operating profitability in pursuit of a solid double-digit adjusted operating margin over the next few years.”
For fiscal 2026, the company expects organic net sales growth in the range of 0–3% and adjusted EPS between $1.90 and $2.10. While this falls short of analysts’ consensus estimate of $2.21, the company is targeting an adjusted operating margin of 9.4–9.9%.
In fiscal 2025, Estée Lauder faced both region-wide sales weakness and broad declines across all product categories, compounded by external pressures such as tariffs and deteriorating consumer sentiment. Nevertheless, through its Profit Recovery and Growth Plan (PRGP), which focuses on inventory reduction and cost efficiencies, the company has made clear its determination to rebuild its financial structure.
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