EL · The Estée Lauder Companies Inc.

The Estée Lauder Companies Inc. delivered a strong fiscal third quarter, with reported net sales increasing 5% to $3.71 billion and organic net sales up 2%. The performance was driven by double-digit growth in the Fragrance category and high single-digit organic growth in Mainland China, where the company outperformed the prestige beauty market to gain share. The Skin Care category remained relatively flat, while Makeup and Hair Care saw modest organic declines. A significant highlight was the 140 basis point expansion in gross margin to 76.4%, attributed to benefits from the Profit Recovery and Growth Plan (PRGP) which offset headwinds from tariffs and inflation. While GAAP operating margin contracted 190 basis points to 6.7% due to restructuring charges and an $84 million loss contingency related to a securities class action settlement, Adjusted Operating Margin expanded 360 basis points to 15.0%, demonstrating strong operating leverage and cost discipline. Adjusted Diluted EPS rose 40% to $0.91. Management raised the full-year fiscal 2026 outlook, now anticipating organic sales growth at the high-end of the previous range and adjusted operating margin expansion approaching 300 basis points. Looking ahead to fiscal 2027, the company provided preliminary guidance targeting 3-5% net sales growth and an adjusted operating margin approaching 13%, signaling confidence in the continued execution of its 'Beauty Reimagined' strategy and the 'One ELC' operating model, despite acknowledging an uncertain geopolitical and macroeconomic environment. The PRGP continues to outperform expectations, with restructuring actions substantially completed and run-rate benefits expected to be realized in fiscal 2027.