$EL · ESTEE LAUDER COMPANIES INC
Estée Lauder filed its 10-Q for Q1 FY2027 (ended September 30, 2026), reporting net sales of $3.715B (+6.7% YoY), net earnings of $233M versus $47M in the prior-year quarter, and diluted EPS of $0.64 versus $0.13. Gross margin expanded to 75.7% from 73.4%, and operating income more than doubled to $408M from $169M, driven by revenue growth across all four segments and lower restructuring charges.
- Net sales rose 6.7% YoY to $3.715B, with gross margin expanding 230 bps to 75.7%.
- Operating income jumped to $408M from $169M; operating margin reached 11.0% vs. 4.9% a year ago.
- Skin Care segment operating income grew to $262M from $187M; Makeup swung to $3M profit from a $15M loss.
- Net earnings hit $233M ($0.64 diluted EPS) vs. $47M ($0.13) in the prior-year quarter.
- Restructuring charges fell to $40M from $89M as the Profit Recovery and Growth Plan winds down.
Despite the strong operational turnaround, shares are down 1.68% to $107.39 in the regular session. The -0.36% move since filing suggests the market may have already priced in the recovery or is focused on forward-looking risks.
Estée Lauder's turnaround is producing hard numbers: operating income more than doubled, all four segments are profitable, and the restructuring program is delivering margin expansion ahead of schedule.
The 6.7% revenue growth and margin recovery signal that Estée Lauder's restructuring is gaining traction, contrasting with peers still struggling in the prestige beauty channel. Skin Care remains the profit engine at $262M segment operating income.
The effective tax rate of 32.5%, while improved from 56.9%, reflects rising unrecognized tax benefits tied to transfer pricing matters across multiple jurisdictions. A recent acquisition (DECIEM-related) remains under incomplete initial accounting, adding uncertainty to future purchase price allocation.