The Estée Lauder Companies Inc. (NYSE: EL) reported fiscal fourth-quarter 2026 results that exceeded Wall Street expectations, with adjusted diluted net earnings per share rising to $0.39 from $0.09 in the prior-year period. This result beat the analyst consensus estimate of $0.32 by 21.88%. Quarterly reported net sales increased 6% to $3.627 billion, surpassing the analyst estimate of $3.543 billion, while organic net sales grew 5%. CEO Stéphane de La Faverie stated that the company had "reignited growth," marking a fourth straight quarter of organic sales acceleration.

Fourth Quarter Highlights

For the three months ended June 30, 2026, growth was broad-based across all product categories except Hair Care and all geographic regions. The Middle East conflict reduced consolidated sales growth by approximately 1 percentage point and cut Europe, U.K., and emerging markets (EUKEM) growth by about 2 percentage points. However, these disruptions were more than offset by benefits from tariff refunds received, which contributed $.07 per share compared to a $.05 dilutive impact from the conflict.

Net loss for the quarter was $116 million, or $.32 per diluted share, compared to a net loss of $546 million, or $1.51 per diluted share, in the prior-year period. Restructuring and other charges resulted in an unfavourable impact of $306 million ($258 million net of tax), equal to $.71 per diluted share.

Full-Year Financial Performance

The following table summarises key fiscal 2026 and fiscal 2025 financial metrics for the year ended June 30.

Gross margin and adjusted gross margin both expanded 150 basis points to 75.5%, reflecting net benefits from the company's Profit Recovery and Growth Plan (PRGP). This expansion was partially offset by inflation and the impact of incremental tariffs net of refunds received. The prior-year operating loss was unfavourably impacted by $1,286 million of goodwill and other intangible asset impairments and $159 million of aggregate charges associated with talcum litigation settlement agreements.

Cash Flow and Balance Sheet

For the year ended June 30, 2026, cash and cash equivalents increased to $3,498 million from $2,921 million. Key cash flow highlights include:

• Net cash flows provided by operating activities increased 39% to $1,773 million from $1,272 million in the prior year, primarily reflecting higher net earnings excluding non-cash items.
• Capital expenditures decreased to $457 million from $602 million, with over 75% of total capital expenditures directed toward consumer-facing investments.
• Free Cash Flow was $1,316 million, compared with $670 million in the prior year.
• The company paid $300 million in deferred consideration associated with the fiscal 2023 acquisition of the TOM FORD brand and $508 million in dividends.

Results by Product Category

The table below reflects full-year net sales and operating income by product category for the year ended June 30.

• Skin Care organic net sales increased 4%, driven by La Mer, The Ordinary, and Estée Lauder. Adjusted operating income increased 52%.
• Makeup organic net sales were virtually flat, with growth from M·A·C and TOM FORD offset by declines from Bobbi Brown and Too Faced. Makeup net sales growth improved over 500 basis points compared to the prior year.
• Fragrance organic net sales increased 10%, led by double-digit growth from Le Labo, TOM FORD, and KILIAN PARIS. Adjusted operating income increased 27%.
• Hair Care organic net sales decreased 1%, driven by a decline from Aveda largely offset by growth from The Ordinary. Adjusted operating results improved to income from a loss in the prior year.

Results by Geographic Region

The table below reflects full-year net sales and operating income by geographic region for the year ended June 30.

Organic net sales grew across all geographic regions. Mainland China delivered high-single-digit organic net sales growth, driven by innovation and existing products during key shopping moments, with strong double-digit growth across online distribution channels. The Americas returned to growth, led by North America, supported by major campaigns and increased consumer-facing investments. The region also benefited from an $18 million gain tied to the reversal of liabilities for unused gift cards. Adjusted operating income rose 17% in The Americas, 35% in EUKEM, 48% in Asia/Pacific, and 92% in Mainland China.

What the Numbers Show

The Q4 beat on both top-line and bottom-line metrics underscores the effectiveness of the company's cost-cutting measures amidst tariff headwinds. While incremental tariffs impacted gross margins by $102 million for the full year, the receipt of $38 million in refunds during Q4 helped mitigate this pressure. Furthermore, the swing from an operating loss of $(785) million in FY25 to an operating income of $780 million in FY26 highlights the significant contribution of the Profit Recovery and Growth Plan, which delivered $1.2 billion in gross benefits. The company expects stronger growth in the first half of fiscal 2027, helped by earlier product launches, higher travel retail shipments, and easier comparisons.

Profit Recovery and Growth Plan

The company concluded approvals relating to the restructuring component of the PRGP as of June 30, 2026. Key achievements include:

• Total gross benefits of $1.2 billion, at the high-end of the previously communicated range.
• Total net reduction of approximately 10,000 positions, at the high-end of the previously communicated range, enabling a 50% increase in productivity across corporate-function employees.
• Total cumulative charges slightly above the high-end of the previously communicated range of $1.5 billion to $1.7 billion.
• Full-year gross margin expansion of 150 basis points in fiscal 2026, with expansion in each quarter.
• Full-year adjusted operating margin expansion of 320 basis points, with expansion of nearly 300 basis points or more in each quarter.

Through June 30, 2026, the company recognised total cumulative charges under the restructuring component of the PRGP of $1.4 billion, consisting primarily of employee-related costs. In fiscal 2026, for the fourth quarter and full year, the company recognised charges of $0.3 billion and $0.8 billion, respectively. Actions under the PRGP are still expected to be substantially completed in fiscal 2027.

Fiscal 2027 Outlook

The company affirmed its fiscal 2027 organic net sales growth guidance of 3% to 5% and raised its adjusted operating margin outlook to 12.7% to 13.5%, up from a preliminary outlook of 12.5% to 13.0% communicated in May 2026. Forecasted adjusted diluted net earnings per common share for fiscal 2027 is $3.10 to $3.35, representing growth of 24% to 34% from fiscal 2026's $2.51. This compares with the $3.18 analyst estimate. Forecasted adjusted constant currency diluted net earnings per common share is $3.06 to $3.31, representing growth of 22% to 32%.

Key fiscal 2027 assumptions include an adjusted effective tax rate in the range of approximately 33% to 34%, diluted weighted-average shares outstanding of approximately 368 million shares, net cash flows provided by operating activities of between $1.3 billion and $1.4 billion, and capital expenditures of approximately 4% of projected sales. The company projects fiscal 2027 sales of $15.50 billion to $15.80 billion, compared with the $15.56 billion analyst estimate. Estée Lauder does not currently expect the Middle East conflict to materially affect fiscal 2027 results.

Quarterly Dividend

The company announced a quarterly dividend of $.35 per share on its Class A and Class B Common Stock, payable in cash on September 15, 2026 to stockholders of record at the close of business on August 31, 2026.

Estee Lauder Cos (NYSE: EL) has expanded its fiscal year 2027 financial outlook by disclosing GAAP earnings per share (EPS) guidance. The company projects GAAP EPS in the range of $2.52 to $2.85. This guidance sits below the analyst consensus estimate of $2.89, indicating that market expectations for non-adjusted profitability are higher than the company's current projection.

This new disclosure supplements the adjusted financial metrics previously released by management. Estee Lauder had earlier outlined an adjusted EPS range of $3.10 to $3.35 for FY27, which spans the analyst estimate of $3.18. The divergence between the GAAP and adjusted figures highlights the impact of non-operating items or accounting adjustments on the company's bottom line.

The cosmetics giant also forecast total sales for the period between $15.5 billion and $15.8 billion. This revenue projection closely mirrors the analyst consensus estimate of $15.557 billion, indicating broad alignment between management's outlook and market expectations for top-line growth.

Guidance vs Estimates

What the Numbers Show

The addition of GAAP EPS guidance provides a clearer picture of the company's underlying profitability versus its adjusted performance. The upper bound of the GAAP EPS range ($2.85) misses the estimate ($2.89) by $0.04, while the lower bound ($2.52) represents a significant downside risk relative to consensus. In contrast, the adjusted EPS guidance offers upside potential, with the midpoint ($3.225) exceeding the estimate. This bifurcation suggests that while core operational metrics may align with or exceed expectations, specific accounting items or one-time charges are expected to weigh on GAAP results.