Key Highlights

  • Net sales rose 7% to USD 3,715 million from USD 3,481 million, driven by Volume growth of 7%.
  • Operating income more than doubled to USD 408 million from USD 169 million, with restructuring charges of USD 40 million.
  • Net Earnings were USD 233 million, or USD 0.64 per diluted share, compared with USD 47 million, or USD 0.13.
  • Net sales increased in every geographic region, led by Mainland China and the Asia/Pacific region as a whole.

Sales and Profit Rebound

The Estée Lauder Companies Inc. (NYSE:EL) reported fiscal first-quarter 2027 net sales of USD 3,715 million, up USD 234 million, or 7%, from USD 3,481 million. Constant currency growth adjusting for returns associated with restructuring and other activities was 6%. Volume contributed 7% and currency 1%, with about USD 20 million of favorable foreign currency translation.

Operating income was USD 408 million versus USD 169 million. Net earnings were USD 233 million, or USD 0.64 per diluted share, versus USD 47 million, or USD 0.13.

Category and Regional Detail

Net sales rose in fragrance and skin care, and to a lesser extent in makeup. Skin care net sales increased USD 76 million, or 5%, led by La Mer and The Ordinary, which together added about USD 97 million, on volume growth of 3%, pricing of 1% and currency of 1%. Makeup net sales rose USD 18 million, or 2%, on higher sales of M·A·C and TOM FORD that together added about USD 59 million.

By region, reported net sales increased in all geographic regions, led by Mainland China and Asia/Pacific.

Costs, Charges and Taxes

Total operating expenses were USD 2,405 million versus USD 2,385 million, including restructuring and other charges of USD 40 million versus USD 89 million. Interest expense was USD 83 million versus USD 86 million, interest and Investment income was USD 25 million versus USD 30 million, and earnings before income taxes were USD 345 million versus USD 109 million. The provision for income taxes was USD 112 million versus USD 62 million. Diluted shares were 366.1 million versus 363.3 million. Interest and investment income, net, was USD 25 million versus USD 30 million. Operating Margin was about 11.0% versus 4.9%, and the effective tax rate was about 32.5% versus 56.9%. Implied gross profit, derived from Operating Income and operating expenses, was about USD 2,813 million versus USD 2,554 million, a margin near 75.7% versus 73.4%.

Brand and Regional Variables

Basic earnings per share were USD 0.64 versus USD 0.13, on 363.3 million basic shares versus 361.2 million, and other components of net periodic benefit cost were USD 5 million versus USD 4 million. Favorable foreign currency translation added about USD 18 million to skin care and USD 4 million to makeup net sales. Cash and cash equivalents were USD 3,198 million at September 30 versus USD 3,498 million at June 30, and total Debt was 64% of total Capitalization versus 66%. Long-term debt is rated A- with a stable outlook by Standard & Poor's and A3 with a negative outlook by Moody's, and share repurchases remain suspended since December 2022. Items to watch include the contribution of restructuring savings, continued growth in Mainland China, the performance of skin care brands and currency effects.