Key Highlights
- The cosmetics giant reported adjusted earnings per share of $0.91 for Q3, crushing the Street’s $0.65 expectation
- Quarterly sales reached $3.71 billion, marking a 5% increase from the previous year
- The company elevated its full-year adjusted EPS forecast to $2.35–$2.45, surpassing the $2.22 Street estimate
- An additional 3,000 job eliminations announced, pushing total workforce reductions to 9,000–10,000 roles
- Shares of EL surged approximately 13% during Friday’s premarket session
Shares of Estée Lauder soared about 13% in Friday’s premarket session following the beauty conglomerate’s impressive third-quarter earnings report and an upward revision to its annual profit outlook.
The Estée Lauder Companies Inc., EL
The company delivered adjusted earnings of $0.91 per share, significantly exceeding Wall Street’s projection of $0.65. Quarterly revenue totaled $3.71 billion, topping the $3.69 billion estimate and representing a 5% climb from the $3.55 billion recorded in the same period last year. On an organic basis, net sales expanded 2% year-over-year.
The impressive performance was fueled by robust momentum in the fragrance segment, where organic net sales surged 10%. Premium labels such as Le Labo, KILIAN PARIS, BALMAIN Beauty, and TOM FORD each registered double-digit percentage increases.
The skin care division saw net sales remain essentially unchanged, while the makeup and hair care categories both experienced flat organic growth during the quarter.
Chinese Market Shows Strength
From a regional perspective, Mainland China emerged as a significant growth driver with 6% organic expansion. This marked the third straight quarter in which Estée Lauder outpaced the broader prestige beauty sector in that market.
Priority Emerging Markets delivered double-digit growth, and three of the company’s four global regions experienced expansion.
Adjusted operating margin widened by 360 basis points to 15.0%, compared with 11.4% in the comparable prior-year quarter. Adjusted gross margin improved 140 basis points to reach 76.4%.
Market analysts at Vital Knowledge highlighted the operating margin expansion as the most impressive aspect of the results, attributing it to the company’s aggressive cost reduction initiatives.
Workforce Reduction Expands
Concurrent with the earnings announcement, Estée Lauder revealed intentions to eliminate up to 3,000 additional positions worldwide. This expansion increases the total anticipated workforce reduction to between 9,000 and 10,000 roles, up from the previously disclosed target of up to 7,000.
At the upper end of this range, the reductions would account for roughly 17.5% of the company’s 57,000-person workforce as of June 2025.
Over 70% of these additional eliminations will come from downsizing department store personnel, as the beauty giant pivots toward digital platforms and specialty retail partners such as Ulta, Sephora, Amazon, and TikTok Shop.
The restructuring initiative is designed to generate up to $1.2 billion in cost savings.
Chief Executive Stéphane de La Faverie attributed the quarterly momentum to the company’s “Beauty Reimagined” strategic framework, highlighting improved results in luxury markets across China and Europe.
The company is reportedly exploring a potential merger with Puig, which owns the Jean Paul Gaultier brand. Industry observers suggest the expanded job reduction target may anticipate position eliminations on Estée Lauder’s side in preparation for a possible transaction.
Management raised its full-year adjusted earnings per share guidance to a range of $2.35–$2.45, up from the previous outlook of $2.05–$2.25. The company also anticipates organic net sales growth will land at the upper end of its prior 1%–3% range.
Looking ahead to fiscal 2027, Estée Lauder provided an initial forecast calling for organic net sales growth of 3%–5% and an adjusted operating margin between 12.5%–13.0%.
Management cautioned that its current projections assume no worsening of geopolitical conditions, including tariff developments and consumer confidence, and no additional business interruptions in the Middle East beyond May 2026.
