The Estée Lauder Companies Inc.

10/30/2025 | Press release | Distributed by Public on 10/30/2025 11:44

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS
The Estée Lauder Companies Inc. is one of the world's leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. We are a steward of over 20 luxury and prestige brands globally. Our products are sold in approximately 150 countries and territories. We operate as a wholesaler, with our products sold in brick-and-mortar locations and on various e-commerce platforms, including those operated by department stores, duty-free retailers, specialty-multi retailers, online pure players, upscale perfumeries and pharmacies, and top-tier salons and spas. Additionally, we operate a direct-to-consumer business across freestanding stores, our brands' websites and third-party online platforms.
Three Months Ended
September 30,
2025 2024
($ in millions)
$ % $ %
Net sales $ 3,481 100.0 % $ 3,361 100.0 %
Cost of sales 927 26.6 928 27.6
Gross profit 2,554 73.4 2,433 72.4
Operating expenses:
Selling, general and administrative 2,296 66.0 2,298 68.4
Restructuring and other charges 89 2.6 97 2.9
Talcum litigation settlement agreements
- - 159 4.7
Total operating expenses 2,385 68.5 2,554 76.0
Operating income (loss)
169 4.9 (121) (3.6)
Interest expense 86 2.5 92 2.7
Interest income and investment income, net 30 0.9 35 1.0
Other components of net periodic benefit cost 4 0.1 2 0.1
Earnings (loss) before income taxes
109 3.1 (180) (5.4)
Provision (benefit) for income taxes
62 1.8 (24) (0.7)
Net earnings (loss)
$ 47 1.4 % $ (156) (4.6) %
Not adjusted for differences caused by rounding
THE ESTÉE LAUDER COMPANIES INC.
The following table is a comparative summary of operating results for the three months ended September 30, 2025 and 2024, for our product categories and geographic regions and reflects the basis of presentation described in Notes to Consolidated Financial Statements, Note 1 - Summary of Significant Accounting Policiesand Note 13 - Segment Dataand Related Information, for our product categories that meet the definition of reportable segments, for all periods presented. Royalty revenue from license arrangements, and products and services that do not fit within our definitions of skin care, makeup, fragrance and hair care have been included in the "other" category.
Three Months Ended
September 30,
(In millions) 2025 2024
NET SALES
By Product Category:
Skin Care $ 1,575 $ 1,529
Makeup 1,030 1,038
Fragrance 721 630
Hair Care 129 139
Other 25 25
3,480 3,361
Returns associated with restructuring and other activities 1 -
Net sales $ 3,481 $ 3,361
By Geographic Region(1):
The Americas $ 1,174 $ 1,197
Europe, United Kingdom and Ireland and Emerging Markets ("EUKEM")
901 868
Asia/Pacific 873 806
Mainland China
532 490
3,480 3,361
Returns associated with restructuring and other activities 1 -
Net sales $ 3,481 $ 3,361
OPERATING INCOME (LOSS)
By Product Category:
Skin Care $ 187 $ 117
Makeup (15) (185)
Fragrance 86 60
Hair Care (12) (18)
Other 9 11
255 (15)
Charges associated with restructuring and other activities (86) (106)
Operating income (loss)
$ 169 $ (121)
By Geographic Region(1)(2):
The Americas $ 87 $ (85)
EUKEM
6 10
Asia/Pacific 150 76
Mainland China
12 (16)
255 (15)
Charges associated with restructuring and other activities (86) (106)
Operating income (loss)
$ 169 $ (121)
(1)The net sales and operating results from the Company's travel retail business are included in the Asia/Pacific region.
(2)Operating results by geographic region for the fiscal 2025 first quarter have been adjusted to reflect the correction of a regional misclassification in the amounts furnished in the Form 8-K on October 2, 2025 related to a one-time charge during the fiscal 2025 first quarter. The misclassification was offset in the fiscal 2025 second quarter (quarter-to-date period) furnished amounts, and the adjusted amounts will be reflected in the fiscal 2026 second quarter Form 10-Q. No other periods were impacted and there is no impact on the consolidated financial results or results by product category.
THE ESTÉE LAUDER COMPANIES INC.
Period-over-period changes in our net sales are generally attributable to the impacts from (i) pricing on our base portfolio, including changes in mix and those due to strategic pricing actions, (ii) volume, including changes driven by the impact of new product innovation, (iii) acquisitions and/or divestitures, and/or (iv) foreign currency translation. The percentages disclosed for these impacts are calculated on an individual basis.
The net sales impact from pricing consists of changes in list prices, due to strategic pricing actions, and mix shifts within and among product categories, geographic regions, brands and distribution channels. The prices at which we sell our products vary by brand, distribution channel (e.g., wholesale or direct-to-consumer) and may also vary by country. Our brands and products cover a broad array of pricing tiers. Prices of skin care and fragrance products are typically higher than makeup and hair care products.
New product innovation includes the introduction of new products, as well as changes related to existing products or where they are sold, including reformulations, regional expansion, repackaging and sets. A product is considered "new innovation" for the twelve-month period following the initial shipment date. Our innovation is launched at different price points than existing products and value derived from innovation may vary from year to year. We continually introduce new products, support new and established products through advertising, merchandising and sampling and phase out existing products that no longer meet the needs of our consumers or our objectives. The economics of developing, producing, launching, supporting and discontinuing products impact our sales and operating performance each period. The introduction of new products often has some cannibalizing effect on sales of existing products, which we take into account in our business planning. The impact of new product introductions, including timing compared to introductions in prior periods, also affects our results.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period helps investors and others compare operating performance between periods. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP. See Reconciliations of Non-GAAP Financial Measuresbeginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
We operate on a global basis, with the majority of our net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates affect our results of operations. Therefore, we present certain net sales, operating results and diluted net earnings (loss) per common share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of our underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current-period results using prior-year monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.
Outlook
We have experienced challenges within our business and we expect volatility and uncertainty to continue. Although there are signs of stabilization in Mainland China, travel retail conversion continues to be weak and challenges persist in Western Europe, including subdued sentiment. Additionally, within the United States we continue to experience headwinds from challenges in department stores. These challenges are collectively expected to impact net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.
We are continuing to monitor and assess the potential effects of new and existing tariffs in the United States as well as in other markets in which we operate. These tariffs have led to significant volatility and uncertainty in global markets and difficulty in forecasting demand. We have implemented and are continuing to implement and consider additional mitigation measures. The impact was not material to fiscal 2026 first quarter profitability and cash flows, however, even if we can minimize some of these impacts, we anticipate higher tariff rates to have an adverse effect on fiscal 2026 profitability and cash flows, and depending on actual rates and countries imposing tariffs such adverse impacts could be material.
THE ESTÉE LAUDER COMPANIES INC.
We continue to believe that the best way to increase long-term stockholder value is to provide superior products and services in the most efficient and effective manner while recognizing shifts in consumers' behaviors and shopping practices. Accordingly, our long-term strategy has numerous initiatives across product categories, brands, geographic regions, channels of distribution and functions designed to grow our sales, provide cost efficiencies, leverage our strengths, such as our history of outstanding creativity and innovation, high quality products and services, and engaging communications, and make us more productive and profitable. With the transition of leadership in the second and third quarters of fiscal 2025, we have embarked on "Beauty Reimagined," a strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work, including through the expansion of the Profit Recovery and Growth Plan ("PRGP"), as discussed below.
We continue to monitor the effects of the global macro environment, including the risk of recession; currency volatility; inflationary pressures; supply chain challenges; social and political issues; competitive pressures; legal and regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues. We are also mindful of inflationary pressures (including those caused by tariffs) on our cost base and are monitoring the impact on consumer preferences, the impact of changes being made in the organization, including those related to Beauty Reimagined and the PRGP, as well as the potential impact of changes expected to be made as part of the PRGP on suppliers, retailers and others, and challenges relating to successfully outsourcing select services. In our outlook, we have made assumptions relating to these and other internal and external factors and challenges. Declines in net sales and profitability have, and may continue to, adversely impact the goodwill and other intangible assets associated with our brands, as well as long-lived assets, potentially resulting in impairments.
In December 2021, the Organization for Economic Cooperation and Development issued "Pillar Two" Global Anti-Base Erosion model rules for countries to enact into domestic law that would establish a 15% global minimum tax applied on a country-by-country basis for multinational companies. We are continuing to monitor and evaluate the potential impact of incorporating the global minimum tax in additional countries that have yet to enact the legislation.
On July 4, 2025, new U.S tax legislation was enacted known as the One Big Beautiful Bill Act. This legislation includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business tax provisions. The legislation has multiple effective dates, and we are continuing to evaluate the potential impact of the provisions that are expected to be effective in future fiscal years.
Our ability to recognize deferred tax assets, inclusive of utilizing net operating loss carryforwards, tax credits, and other carryforwards is dependent on the generation of sufficient taxable income in future periods. Accordingly, there can be no assurance that additional valuation allowances on our deferred tax assets will not be required should our financial performance be negatively impacted in the future. Such valuation allowance could be material. We are also monitoring certain provisions in global tax regulations that may expire during fiscal 2026, which, if not extended, could increase our effective tax rate.
Restructuring Program Component of the Profit Recovery and Growth Plan
As announced on November 1, 2023, we launched the PRGP to help progressively rebuild our profit margins in fiscal years 2025 and 2026.
As a component of the PRGP, on February 5, 2024, we announced a two-year restructuring program. We committed to this course of action on February 1, 2024.
After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, we committed to the expansion of the PRGP, including an expansion of the restructuring program.
The expanded component of the restructuring program began during our fiscal 2025 third quarter. The focus of the overall expanded restructuring program (collectively the "Restructuring Program") includes (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models. Specific initiatives under the Restructuring Program are expected to be approved by the end of fiscal 2026 and substantially completed by the end of fiscal 2027.
In connection with the Restructuring Program, as of September 30, 2025 we estimate a net reduction in the range of approximately 5,800 to 7,000 positions globally, which is about 9-11% of our positions including temporary and part-time employees as of June 30, 2023. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.
THE ESTÉE LAUDER COMPANIES INC.
We expect that the Restructuring Program will result in restructuring and other charges totaling between $1,200 million and $1,600 million, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.
Once fully implemented, we expect the restructuring program to yield annual target gross benefits of between $800 million and $1,000 million, before taxes, a portion of which is expected to be reinvested in consumer-facing activities. The net benefits of the PRGP, which includes the Restructuring Program, are expected to enable a return to a double-digit operating margin over the next few years.
Further information about the Restructuring Program Component of the Profit Recovery and Growth Plan, is described in Notes to Consolidated Financial Statements, Note 3 - Charges Associated with Restructuring and Other Activitiesherein.
NET SALES
Three Months Ended
September 30,
($ in millions) 2025 2024
As Reported:
Net sales $ 3,481 $ 3,361
$ Change from prior-year period 120
% Change from prior-year period 4 %
Non-GAAP Financial Measure(1):
% Change from prior-year period in constant currency
3 %
(1)See "Reconciliations of Non-GAAP Financial Measures"beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Reported net sales increased for the three months ended September 30, 2025, driven by an increase in net sales in the fragrance and skin care product categories.
By geographic region, reported net sales increased across all geographic regions, with the exception of The Americas. The increase in net sales was primarily driven by higher net sales in our travel retail business, and to a lesser extent, in Mainland China.
Reported net sales were impacted by approximately $25 million of favorable foreign currency translation for the three months ended September 30, 2025.
Reported net sales increased 4% for the three months ended September 30, 2025, driven by the increase from pricing of 2% reflecting the favorable impact from strategic price actions and changes in mix, the increase from volume of 1%, and the favorable impact from foreign currency translation of 1%.
Returns associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select areas of the business. Accordingly, the following discussions of Net sales by Product Categories and Geographic Regions exclude the impacts of return adjustments associated with restructuring and other activities of $1 million for the three months ended September 30, 2025. There were no returns associated with restructuring and other activities for the three months ended September 30, 2024.
THE ESTÉE LAUDER COMPANIES INC.
Product Categories
Reported net sales for our product categories for the three months ended September 30, 2025 and 2024 were as follows:
Three Months Ended September 30,
($ in millions) 2025 2024
$ Change
% Change
% Change in Constant Currency(1)
Skin Care $ 1,575 $ 1,529 $ 46 3 % 3 %
Makeup 1,030 1,038 (8) (1) (2)
Fragrance 721 630 91 14 13
Hair Care 129 139 (10) (7) (7)
Other 25 25 - - -
3,480 3,361 119 4 3
Returns associated with restructuring and other activities 1 - 1 100 100
Net sales $ 3,481 $ 3,361 $ 120 4 % 3 %
(1)See "Reconciliations of Non-GAAP Financial Measures"beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Skin Care
Reported skin care net sales increased $46 million, or 3%, for the three months ended September 30, 2025, reflecting higher net sales from La Mer and Estée Lauder, combined, of approximately $54 million.
Net sales from La Mer increased, primarily driven by higher net sales in our Asia travel retail business, attributable to the low prior-year period net sales base which reflected (i) the challenging retail environment, including low consumer sentiment and conversion from Chinese consumers, as well as (ii) our prior-year efforts to improve in-trade inventory levels. The increase in net sales from Estée Lauder was primarily driven by higher net sales in our Asia travel retail business, as reflected above, and higher net sales in Mainland China, primarily driven by the impacts from new product launches, and reflecting an improvement in the retail environment, including improved consumer sentiment comparatively, to the prior-year period.
Skin care net sales were impacted by approximately $7 million of favorable foreign currency translation for the three months ended September 30, 2025.
Reported skin care net sales increased 3% for the three months ended September 30, 2025, driven by the increase from pricing of 3% reflecting the favorable impact from strategic pricing actions and changes in mix. The impact from volume was flat period-over-period.
Makeup
Reported makeup net sales decreased $8 million, or 1%, for the three months ended September 30, 2025, reflecting lower net sales from Bobbi Brown and Too Faced, combined, of approximately $17 million.
The decrease in net sales from Bobbi Brown was primarily driven by lower net sales in the face subcategory reflecting the unfavorable year-over-year impact of new product launch shipments and lower net sales in the eye subcategory reflecting a reduction in color palettes. Net sales from Too Faced decreased, primarily driven by North America, reflecting lower net sales in the face and eye subcategories.
Partially offsetting the makeup net sales decrease were higher net sales from Estée Lauder, primarily driven by higher net sales in our Asia travel retail business, attributable to the low prior-year period net sales base which reflected (i) the challenging retail environment, including low consumer sentiment and conversion from Chinese consumers, as well as (ii) our prior-year efforts to improve in-trade inventory levels.
THE ESTÉE LAUDER COMPANIES INC.
Makeup net sales were impacted by approximately $10 million of favorable foreign currency translation for the three months ended September 30, 2025.
Reported makeup net sales decreased 1% for the three months ended September 30, 2025, driven by the decrease from pricing of 1% reflecting changes in mix partially offset by the favorable impact from strategic pricing actions. Partially offsetting the decrease was the favorable impact from foreign currency translation of 1%. The impact from volume was flat period-over-period.
Fragrance
Reported fragrance net sales increased $91 million, or 14% for the three months ended September 30, 2025, primarily driven by higher net sales from Le Labo, TOM FORD, and Jo Malone London, combined, of approximately $76 million. The increase in net sales for Le Labo reflected growth from targeted expanded consumer reach and the success of hero products. Net sales from TOM FORD increased, primarily driven by growth in the Private Blend and Signature franchises, reflecting the benefit from new product launches which created halo benefits on existing products. Net sales from Jo Malone London increased reflecting higher net sales in the cologne subcategory, including success from hero franchises and holiday campaigns, as well as new product launches.
Fragrance net sales were impacted by approximately $8 million of favorable foreign currency translation for the three months ended September 30, 2025.
Reported fragrance net sales increased 14% for the three months ended September 30, 2025, driven by the increase from volume of 8%, an increase from pricing of 5% reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 1%.
Hair Care
Reported hair care net sales decreased $10 million, or 7%, for the three months ended September 30, 2025, driven by lower net sales from Aveda, reflecting the brand's strategies to improve long-term performance, including (i) planned reductions in online promotional activity and (ii) the exit from underperforming doors, including freestanding stores. Also contributing to the decrease in Aveda net sales was continued softness in the salon channel. These declines were partially offset by the impact from its launch in Amazon's U.S. Premium Beauty store during the fiscal 2025 fourth quarter.
Reported hair care net sales decreased 7% for the three months ended September 30, 2025, driven by the decrease from volume of 14%, partially offset by an increase from pricing of 6% reflecting changes in mix and the favorable impact from strategic pricing actions.
Geographic Regions
Reported net sales by geographic region for the three months ended September 30, 2025 and 2024 were as follows:
Three Months Ended September 30,
($ in millions) 2025 2024
$ Change
% Change
% Change in Constant Currency(2)
The Americas $ 1,174 $ 1,197 $ (23) (2) % (2) %
EUKEM
901 868 33 4 -
Asia/Pacific(1)
873 806 67 8 9
Mainland China
532 490 42 9 9
3,480 3,361 119 4 3
Returns associated with restructuring and other activities 1 - 1 100 100
Net sales $ 3,481 $ 3,361 $ 120 4 % 3 %
(1)The net sales from the Company's travel retail business are included in the Asia/Pacific region.
(2)See "Reconciliations of Non-GAAP Financial Measures"beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
THE ESTÉE LAUDER COMPANIES INC.
Reported net sales increased for the three months ended September 30, 2025, primarily driven by higher net sales in Asia/Pacific and in Mainland China, combined, of approximately $109 million.
The increase in net sales in Asia/Pacific was primarily driven by higher net sales in our travel retail business, led by Asia travel retail, attributable to the low prior-year period net sales base which reflected (i) the challenging retail environment, including low consumer sentiment and conversion from Chinese consumers, as well as (ii) our prior-year efforts to improve in-trade inventory levels. Also contributing to the increase in net sales from our travel retail business was higher net sales from our Europe, the Middle East & Africa travel retail business, primarily driven by growth in fragrance.
The increase in net sales in Mainland China for the three months ended September 30, 2025 was primarily driven by the impact from new product launches and the expansion of The Ordinary into the region during the fiscal 2025 third quarter, and also reflected an improvement in the retail environment, including improved consumer sentiment comparatively, to the prior-year period.
Partially offsetting the reported net sales increase was lower net sales in North America, primarily reflecting continued challenges in department stores, including the impact from store closures related to a retailer bankruptcy as well as softness in certain retailers, and elevated levels of inventory for some brands that continued through the quarter. Partially offsetting the net sales decline for North America was growth from shipments in support of our Amazon Premium Beauty stores in the U.S. and Canada, including ongoing brand expansion on the platform.
Reported net sales in The Americas decreased 2% for the three months ended September 30, 2025, driven by the decrease from volume of 3%, partially offset by an increase from pricing of 2% reflecting changes in mix and the favorable impact from strategic pricing actions.
Reported net sales in EUKEM increased 4% for the three months ended September 30, 2025, driven by the favorable impact of foreign currency translation of 4% and an increase from pricing of 3% reflecting the favorable impact from strategic pricing actions and changes in mix. Partially offsetting these increases was the decrease from volume of 3%.
Reported net sales in Asia/Pacific increased 8% for the three months ended September 30, 2025, driven by an increase from pricing of 5% reflecting the favorable impact from strategic pricing actions and changes in mix, and the increase from volume of 4%.
Reported net sales in Mainland China increased 9% for the three months ended September 30, 2025, driven by an increase from volume of 12%, partially offset by a decrease in pricing of 3%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.
THE ESTÉE LAUDER COMPANIES INC.
GROSS MARGIN
Gross margin increased to 73.4% for the three months ended September 30, 2025, as compared with 72.4% in the prior-year period.
Favorable (Unfavorable) Basis Points
September 30, 2025
Three Months Ended
As Reported:
Mix of business 50
Obsolescence charges 20
Manufacturing costs and other 20
Foreign exchange transactions (30)
Charges associated with restructuring and other activities
40
As Reported Gross Margin Basis Point Variance
100
Non-GAAP Financial Measure Adjustments
Charges associated with restructuring and other activities
(40)
Non-GAAP Gross Margin Basis Point Variance
60
The increase in gross margin for the three months ended September 30, 2025 reflected net benefits from the PRGP, which included favorable impacts across our mix of business, obsolescence charges and manufacturing costs and other. The favorability within mix of business was driven by reductions in promotional activity, and the favorability within obsolescence charges was driven by reductions in excess inventory. Manufacturing costs and other reflects the favorable impact of cost efficiencies within our global supply chain network, partially offset by the impact of inflation on our costs.
THE ESTÉE LAUDER COMPANIES INC.
OPERATING EXPENSES
Operating expenses as a percentage of net sales was 68.5% for the three months ended September 30, 2025, as compared with 76.0% in the prior-year period.
Favorable (Unfavorable) Basis Points
September 30, 2025
Three Months Ended
As Reported:
General and administrative expenses 90
Advertising, marketing, promotion and product development
140
Selling 30
Shipping 30
Store operating costs 10
Stock-based compensation (20)
Foreign exchange transactions (30)
Charges associated with restructuring and other activities 30
Talcum litigation settlement agreements
470
As Reported Operating Expense Margin Basis Point Variance
750
Non-GAAP Financial Measure Adjustments:
Impact of restructuring and other activities
(40)
Talcum litigation settlement agreements
(470)
Non-GAAP Operating Expense Margin Basis Point Variance 240
The favorability in our operating expense margin reflects lower expenses within non-consumer-facing areas of the business, primarily within general and administrative, marketing and product development expenses. These reductions were driven by lower employee-related costs realized through initiatives as part of the PRGP, with the general and administrative favorability partially offset by the year-over-year increase in employee incentive costs. Partially offsetting these expense reductions were increased investments in consumer-facing areas of the business to drive sales, including advertising, selling, promotion and store operating expenses.
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OPERATING RESULTS
Three Months Ended
September 30,
($ in millions) 2025 2024
As Reported:
Operating income (loss)
$ 169 $ (121)
$ Change from prior-year period 290
% Change from prior-year period 100+%
Operating margin 4.9 % (3.6) %
Non-GAAP Financial Measure(1):
% Change in operating income (loss) from the prior-year period adjusting for the impact of charges associated with restructuring and other activities and talcum litigation settlement agreements
77 %
(1)See "Reconciliations of Non-GAAP Financial Measures"beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
The increase in reported operating margin for the three months ended September 30, 2025 was driven by the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million, reflected within the favorable operating expense margin, as well as the increase in net sales and increase in gross margin, as discussed above.
Charges associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select areas of the business. Accordingly, the following discussions of Operating income (loss) by Product Categoriesand Geographic Regionsexclude the impact of charges associated with restructuring and other activities for the three months ended September 30, 2025 and 2024 of $86 million and $106 million, respectively.
Product Categories
Reported Operating income (loss) for our product categories for the three months ended September 30, 2025 and 2024 were as follows:
Three Months Ended September 30,
($ in millions) 2025 2024 $ Change % Change
(As reported)
% Change
(Non-GAAP)(1)
Non-GAAP Financial Measure(1)
Skin Care $ 187 $ 117 $ 70 60 % 60 %
Makeup (15) (185) 170 92 42
Adjusted for the impact of talcum litigation settlement agreements.
Fragrance 86 60 26 43 43
Hair Care (12) (18) 6 33 33
Other 9 11 (2) (18) (18)
255 (15) 270 100+ 77
Charges associated with restructuring and other activities
(86) (106) 20 19 68
Operating income (loss)
$ 169 $ (121) $ 290 100+% 100+%
(1)See "Reconciliations of Non-GAAP Financial Measures"beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
THE ESTÉE LAUDER COMPANIES INC.
Skin Care
Reported skin care operating income increased $70 million, or 60%, for the three months ended September 30, 2025, reflecting an increase in net sales, as well as lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP.
Makeup
Reported makeup operating loss decreased $170 million, or 92%, for the three months ended September 30, 2025, primarily reflecting the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million, and to a lesser extent lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP.
Fragrance
Reported fragrance operating income increased $26 million, or 43%, for the three months ended September 30, 2025, reflecting higher net sales, partially offset by higher cost of sales, and an increase in investments in consumer-facing areas of the business, including selling expenses to support targeted expanded consumer reach, higher promotion expenses to support new product launches, and higher store operating costs to support targeted expanded consumer reach.
Hair Care
Reported hair care operating loss decreased $6 million, or 33%, for the three months ended September 30, 2025, primarily reflecting lower operating expenses and cost of sales, partially offset by lower net sales.
Geographic Regions
Three Months Ended September 30,
($ in millions)
2025
2024(1)
$ Change
% Change
(As Reported)
% Change
(Non-GAAP)(2)
Non-GAAP Financial Measure(2)
The Americas $ 87 $ (85) $ 172 100+% 18 % Adjusted for the impact of talcum litigation settlement agreements
EUKEM
6 10 (4) (40) (40)
Asia/Pacific(3)
150 76 74 97 97
Mainland China
12 (16) 28 100+ 100+
255 (15) 270 100+ 77
Charges associated with restructuring and other activities
(86) (106) 20 19 68
Operating income (loss)
$ 169 $ (121) $ 290 100+% 100+%
(1)Operating results by geographic region for the fiscal 2025 first quarter have been adjusted to reflect the correction of a regional misclassification in the amounts furnished in the Form 8-K on October 2, 2025 related to a one-time charge during the fiscal 2025 first quarter. The misclassification was offset in the fiscal 2025 second quarter (quarter-to-date period) furnished amounts, and the adjusted amounts will be reflected in the fiscal 2026 second quarter Form 10-Q. No other periods were impacted and there is no impact on the consolidated financial results or results by product category.
(2)See "Reconciliations of Non-GAAP Financial Measures" beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
(3)The operating results from the Company's travel retail business are included in the Asia/Pacific region.
Reported operating results in The Americas increased $172 million, or over 100%, for the three months ended September 30, 2025, reflecting the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million, and to a lesser extent, lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, and lower cost of sales, partially offset by lower net sales.
THE ESTÉE LAUDER COMPANIES INC.
Reported operating income in EUKEM decreased $4 million, or 40%, for the three months ended September 30, 2025, reflecting an increase in investments in consumer-facing areas of the business, including to support targeted expanded consumer reach and to support key campaigns and activations, offset by higher net sales.
Reported operating income in Asia/Pacific increased $74 million, or 97%, for the three months ended September 30, 2025, reflecting higher net sales and lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, partially offset by higher cost of sales.
Reported operating results in Mainland China increased $28 million, or over 100%, for the three months ended September 30, 2025, reflecting higher net sales, partially offset by higher cost of sales and the unfavorable year-over-year impact associated with the recognition of local government subsidies in the prior-year period.
INTEREST AND INVESTMENT INCOME
Three Months Ended
September 30,
(In millions) 2025 2024
Interest expense $ 86 $ 92
Interest income and investment income, net $ 30 $ 35
Interest expense decreased for the three months ended September 30, 2025, primarily reflecting a lower average debt balance compared to the prior-year period. Interest income and investment income, net decreased, primarily reflecting a lower average cash balance and lower average interest rates compared to the prior-year period.
PROVISION FOR INCOME TAXES
The provision or benefit for income taxes represents U.S. federal, foreign, state and local income taxes. The effective rate differs from the federal statutory rate primarily due to the effect of state and local income taxes, the tax impact of stock-based compensation, the taxation of foreign income and income tax reserve adjustments, which represent changes in our net liability for unrecognized tax benefits including tax settlements and lapses of the applicable statutes of limitations, as well as changes to valuation allowances based on our assessment of the realizability of deferred tax assets. Our effective tax rate will change from quarter-to-quarter based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, tax reserve adjustments, the tax impact of stock-based compensation, changes to valuation allowances, the interaction of various global tax strategies and the impact from certain acquisitions. In addition, changes in judgment from the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the quarter of change.
Three Months Ended
September 30,
2025 2024
Effective rate for income taxes 56.9 % 13.3 %
Basis-point change from the prior-year period 4,360
The increase in the effective tax rate of 4,360 basis points was attributable in part to the loss before income taxes in the fiscal 2025 first quarter as well as the estimated unfavorable impact of the newly enacted U.S. tax legislation, a higher effective tax rate on our foreign operations due to our full year geographical mix of earnings in the current and prior-year periods and an unfavorable impact associated with the establishment of a valuation allowance against current period foreign tax credit and research and development tax credit U.S. deferred tax assets.
THE ESTÉE LAUDER COMPANIES INC.
NET EARNINGS (LOSS)
Three Months Ended
September 30,
($ in millions, except per share data) 2025 2024
As Reported:
Net earnings (loss)
$ 47 $ (156)
$ Change from prior-year period 203
% Change from prior-year period 100+%
Diluted net earnings (loss) per common share
$ .13 $ (.43)
% Change from prior-year period 100+%
Non-GAAP Financial Measure(1):
% Change in diluted net earnings (loss) per common share from the prior-year period adjusting for the impact of charges associated with restructuring and other activities and talcum litigation settlement agreements
100+%
(1)See "Reconciliations of Non-GAAP Financial Measures"below for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period, or do not reflect the Company's underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze our operating performance from period to period. In the future, we expect to incur charges or adjustments similar in nature to those presented below; however, the impact to the Company's results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP. The following tables present Net sales, Operating income (loss) and Diluted net earnings (loss) per common share adjusted to exclude the impact of charges associated with restructuring and other activities; talcum litigation settlement agreements; and the effects of foreign currency translation.
THE ESTÉE LAUDER COMPANIES INC.
The following table provides reconciliations between these non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
($ in millions, except per share data) Three Months Ended
September 30, 		Variance
% Change
% Change in
constant currency
2025 2024
Net sales, as reported $ 3,481 $ 3,361 $ 120 4 % 3 %
Returns associated with restructuring and other activities (1) - (1)
Net sales, as adjusted $ 3,480 $ 3,361 $ 119 4 % 3 %
Operating income (loss), as reported
$ 169 $ (121) $ 290 100+% 100+%
Charges associated with restructuring and other activities 86 106 (20)
Talcum litigation settlement agreements
- 159 (159)
Operating income, as adjusted $ 255 $ 144 $ 111 77 % 79 %
Diluted net earnings (loss) per common share, as reported
$ .13 $ (.43) $ .56 100+% 100+%
Charges associated with restructuring and other activities .19 .23 (.04)
Talcum litigation settlement agreements
- .34 (.34)
Diluted net earnings per common share, as adjusted $ .32 $ .14 $ .18 100+% 100+%
As diluted net earnings (loss) per common share, as adjusted, is used as a measure of the Company's performance, we consider the impact of current and deferred income taxes when calculating the per-share impact of each of the reconciling items.
THE ESTÉE LAUDER COMPANIES INC.
The following table reconciles the change in net sales by product category and geographic region, as reported, to the change in net sales excluding the effects of foreign currency translation:
As Reported Impact of foreign
currency translation 		Variance,
in constant currency 		% Change,
as reported 		% Change,
in constant currency
Three Months Ended
September 30,
($ in millions) 2025 2024 Variance
By Product Category:
Skin Care $ 1,575 $ 1,529 $ 46 $ (7) $ 39 3 % 3 %
Makeup 1,030 1,038 (8) (10) (18) (1) (2)
Fragrance 721 630 91 (8) 83 14 13
Hair Care 129 139 (10) - (10) (7) (7)
Other 25 25 - - - - -
3,480 3,361 119 (25) 94 4 3
Returns associated with restructuring and other activities 1 - 1 - 1
Total $ 3,481 $ 3,361 $ 120 $ (25) $ 95 4 % 3 %
By Geographic Region:
The Americas $ 1,174 $ 1,197 $ (23) $ 4 $ (19) (2) % (2) %
EUKEM
901 868 33 (35) (2) 4 -
Asia/Pacific 873 806 67 4 71 8 9
Mainland China
532 490 42 2 44 9 9
3,480 3,361 119 (25) 94 4 3
Returns associated with restructuring and other activities 1 - 1 - 1
Total $ 3,481 $ 3,361 $ 120 $ (25) $ 95 4 % 3 %
THE ESTÉE LAUDER COMPANIES INC.
The following table reconciles the change in operating results by product category and geographic region, as reported, to the change in operating results excluding the impact of talcum litigation settlement agreements:
As Reported Add:
Talcum litigation settlement agreements 		Variance, as adjusted % Change, as reported % Change, as adjusted
Three Months Ended
September 30,
($ in millions) 2025 2024 Variance
By Product Category:
Skin Care $ 187 $ 117 $ 70 $ - $ 70 60 % 60 %
Makeup (15) (185) 170 (159) 11 92 42
Fragrance 86 60 26 - 26 43 43
Hair Care (12) (18) 6 - 6 33 33
Other 9 11 (2) - (2) (18) (18)
255 (15) 270 $ (159) $ 111 100+% 77 %
Charges associated with restructuring and other activities (86) (106) 20
Total $ 169 $ (121) $ 290
By Geographic Region(1):
The Americas $ 87 $ (85) $ 172 $ (159) $ 13 100+% 18 %
EUKEM 6 10 (4) - (4) (40) (40)
Asia/Pacific 150 76 74 - 74 97 97
Mainland China 12 (16) 28 - 28 100+ 100+
255 (15) 270 $ (159) $ 111 100+% 77 %
Charges associated with restructuring and other activities (86) (106) 20
Total $ 169 $ (121) $ 290
(1)Operating results by geographic region for the fiscal 2025 first quarter have been adjusted to reflect the correction of a regional misclassification in the amounts furnished in the Form 8-K on October 2, 2025 related to a one-time charge during the fiscal 2025 first quarter. The misclassification was offset in the fiscal 2025 second quarter (quarter-to-date period) furnished amounts, and the adjusted amounts will be reflected in the fiscal 2026 second quarter Form 10-Q. No other periods were impacted and there is no impact on the consolidated financial results or results by product category.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal sources of funds historically have been cash flows from operations, borrowings pursuant to our commercial paper program, borrowings from the issuance of long-term debt and committed and uncommitted credit lines provided by banks and other lenders in the United States and abroad. At September 30, 2025, we had cash and cash equivalents of $2,219 million compared with $2,921 million at June 30, 2025. Our cash and cash equivalents are maintained at a number of financial institutions. To mitigate the risk of uninsured balances, we select financial institutions based on their credit ratings and financial strength, and we perform ongoing evaluations of these institutions to limit our concentration risk exposure.
Based on past performance and current expectations, we believe that cash on hand, cash generated from operations, available credit lines and access to credit markets will be adequate to support seasonal working capital needs, currently planned business operations, information technology enhancements, capital expenditures, acquisitions, dividends, stock repurchases, restructuring initiatives, commitments and other contractual obligations on both a near-term and long-term basis.
THE ESTÉE LAUDER COMPANIES INC.
The Tax Cuts and Jobs Act resulted in the Transition Tax on unrepatriated earnings of our foreign subsidiaries and changed the tax law in ways that present opportunities to repatriate cash without additional U.S. federal income tax. We continue to analyze the indefinite reinvestment assertion on our remaining applicable foreign earnings. We do not believe that continuing to reinvest these remaining applicable foreign earnings impairs our ability to meet our domestic debt or working capital obligations. If these reinvested earnings were repatriated into the United States as dividends, we would be subject to state income taxes and applicable foreign taxes in certain jurisdictions.
Inflation impacted our operating results in the fiscal 2026 first quarter and we expect it to continue. Generally, we have plans to introduce new products at higher prices, increase prices and implement other operating efficiencies which we expect to offset some of these cost increases.
Credit Ratings
Changes in our credit ratings will likely result in changes in our borrowing costs. Our credit ratings also impact the cost of our revolving credit facilities. Downgrades in our credit ratings may reduce our ability to issue commercial paper and/or long-term debt and would likely increase the relative costs of borrowing. A credit rating is not a recommendation to buy, sell, or hold securities, is subject to revision or withdrawal at any time by the assigning rating organization, and should be evaluated independently of any other rating. As of October 23, 2025, our long-term debt is rated A- with a negative outlook by Standard & Poor's and A3 with a negative outlook by Moody's.
THE ESTÉE LAUDER COMPANIES INC.
Debt
At September 30, 2025, our outstanding borrowings were as follows:
($ in millions) Long-term
Debt 		Current
Debt 		Total Debt
5.150% Senior Notes, due May 15, 2053 ("2053 Senior Notes") (1), (15)
$ 591 $ - $ 591
3.125% Senior Notes, due December 1, 2049 ("2049 Senior Notes") (2), (15)
637 - 637
4.150% Senior Notes, due March 15, 2047 ("2047 Senior Notes") (3), (15)
495 - 495
4.375% Senior Notes, due June 15, 2045 ("2045 Senior Notes") (4), (15)
455 - 455
3.700% Senior Notes, due August 15, 2042 ("2042 Senior Notes") (5), (15)
247 - 247
6.000% Senior Notes, due May 15, 2037 ("2037 Senior Notes") (6), (15)
295 - 295
5.000% Senior Notes, due February 14, 2034 ("2034 Senior Notes) (7), (15)
640 - 640
5.75% Senior Notes, due October 15, 2033 ("October 2033 Senior Notes") (8), (15)
198 - 198
4.650% Senior Notes, due May 15, 2033 ("May 2033 Senior Notes") (9), (15)
695 - 695
1.950% Senior Notes, due March 15, 2031 ("2031 Senior Notes") (10), (15)
566 - 566
2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") (11), (15)
631 - 631
2.375% Senior Notes, due December 1, 2029 ("2029 Senior Notes") (12), (15)
645 - 645
4.375% Senior Notes, due May 15, 2028 ("2028 Senior Notes") (13), (15)
698 - 698
3.150% Senior Notes, due March 15, 2027 ("2027 Senior Notes") (14), (15)
500 - 500
Other long-term borrowings 27 - 27
Other current borrowings - 3 3
$ 7,320 $ 3 $ 7,323
(1)Consists of $600 million principal, unamortized debt discount of $3 million and debt issuance costs of $6 million.
(2)Consists of $650 million principal, unamortized debt discount of $7 million and debt issuance costs of $6 million.
(3)Consists of $500 million principal, unamortized debt discount of $1 million and debt issuance costs of $4 million.
(4)Consists of $450 million principal, net unamortized debt premium of $9 million and debt issuance costs of $4 million.
(5)Consists of $250 million principal, unamortized debt discount of $1 million and debt issuance costs of $2 million.
(6)Consists of $300 million principal, unamortized debt discount of $3 million and debt issuance costs of $2 million.
(7)Consists of $650 million principal, unamortized debt discount of $2 million, debt issuance costs of $4 million and a $4 million loss to reflect the fair value of interest rate swaps.
(8)Consists of $200 million principal, unamortized debt discount of $1 million and debt issuance costs of $1 million.
(9)Consists of $700 million principal, unamortized debt discount of $1 million and debt issuance costs of $4 million.
(10)Consists of $600 million principal, unamortized debt discount of $2 million, debt issuance costs of $2 million and a $30 million loss to reflect the fair value of interest rate swaps.
(11)Consists of $700 million principal, unamortized debt discount of $1 million, debt issuance costs of $2 million and a $66 million loss to reflect the fair value of interest rate swaps.
(12)Consists of $650 million principal, unamortized debt discount of $3 million and debt issuance costs of $2 million.
(13)Consists of $700 million principal and debt issuance costs of $2 million.
(14)Consists of $500 million principal.
(15)The Senior Notes contain certain customary covenants, including limitations on indebtedness secured by liens.
Total debt as a percent of total capitalization was 65% at September 30, 2025 and June 30, 2025.
Cash Flows
Three Months Ended
September 30,
(In millions) 2025 2024
Net cash flows used for operating activities
$ (340) $ (670)
Net cash flows used for investing activities $ (116) $ (160)
Net cash flows used for financing activities
$ (239) $ (226)
THE ESTÉE LAUDER COMPANIES INC.
The change in net cash flows used for operating activities was primarily driven by higher net earnings in the fiscal 2026 first quarter and a favorable change in operating assets and liabilities variances.
The change in net cash flows used for investing activities was primarily driven by a favorable year-over-year impact from lower capital expenditures compared to the prior-year period.
The change in net cash flows used for financing activities primarily reflected the payment of deferred consideration in the fiscal 2026 first quarter associated with the fiscal 2023 acquisition of TOM FORD, partially offset by a decrease in dividends paid to stockholders in the current-year period.
Dividends
For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock during the three months ended September 30, 2025, see Notes to Consolidated Financial Statements, Note 11 - Equity and Redeemable Noncontrolling Interest.
Pension and Post-retirement Plan Funding
There have been no significant changes to our pension and post-retirement funding as discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Commitments, Contractual Obligations and Contingencies
There have been no significant changes to our commitments and contractual obligations as discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.For a discussion of contingencies, see Notes to Consolidated Financial Statements, Note 8 - Commitments and Contingencies.
Derivative Financial Instruments and Hedging Activities
For a discussion of our derivative financial instruments and hedging activities, see Notes to Consolidated Financial Statements, Note 4 - Derivative Financial Instruments.
Foreign Exchange Risk Management
For a discussion of foreign exchange risk management, see Notes to Consolidated Financial Statements, Note 4 - Derivative Financial Instruments (Fair Value Hedges, Cash Flow Hedges and Net Investment Hedges).
Credit Risk
For a discussion of credit risk, see Notes to Consolidated Financial Statements, Note 4 - Derivative Financial Instruments (Credit Risk).
Market Risk
We address certain financial exposures through a controlled program of market risk management that includes the use of foreign currency forward contracts to reduce the effects of fluctuating foreign currency exchange rates and to mitigate the change in fair value of specific assets and liabilities on the balance sheet, anticipated transactions and receivables and payables and the net investment in certain foreign operations. To perform a sensitivity analysis of our foreign currency forward contracts, we assess the change in fair values from the impact of hypothetical changes in foreign currency exchange rates. A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our portfolio would have resulted in a net decrease in the fair value of our portfolio of approximately $186 million and $223 million as of September 30, 2025 and June 30, 2025, respectively. This potential change does not consider our underlying foreign currency exposures.
We also enter into cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt and to hedge a portion of the net investment in certain foreign operations. A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our cross-currency swap contracts would have resulted in a net decrease in the fair value of our cross-currency swap contracts of approximately $85 million as of September 30, 2025 and June 30, 2025.
In addition, we enter into interest rate derivatives to manage the effects of interest rate movements on our funded indebtedness, including future debt issuances. Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $63 million and $43 million as of September 30, 2025 and June 30, 2025, respectively.
THE ESTÉE LAUDER COMPANIES INC.
Our sensitivity analysis represents an estimate of reasonably possible net losses that would be recognized on our portfolio of derivative financial instruments assuming hypothetical movements in future market rates and is not necessarily indicative of actual results, which may or may not occur. It does not represent the maximum possible loss or any expected loss that may occur, since actual future gains and losses will differ from those estimated, based upon actual fluctuations in market rates, operating exposures, and the timing thereof, and changes in our portfolio of derivative financial instruments during the year. We believe, however, that any such loss incurred would be offset by the effects of market rate movements on the respective underlying transactions for which the derivative financial instrument was intended.
OFF-BALANCE SHEET ARRANGEMENTS
We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.
CRITICAL ACCOUNTING POLICIES
As disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, the discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in those financial statements. These estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates. Refer to the Critical Accounting Policies and Estimates section within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operationsin our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Since June 30, 2025, there have been no significant changes to the assumptions and estimates related to our critical accounting policies.
RECENTLY ISSUED ACCOUNTING STANDARDS
For a discussion regarding the impact of accounting standards that were recently issued but not yet effective, on our consolidated financial statements, see Notes to Consolidated Financial Statements, Note 1 - Summary of Significant Accounting Policies.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
We and our representatives from time to time make written or oral forward-looking statements, including in this and other filings with the Securities and Exchange Commission, in our press releases and in our reports to stockholders, which may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like "expect," "will," "will likely result," "would," "believe," "estimate," "planned," "plans," "intends," "may," "should," "could," "anticipate," "estimate," "project," "projected," "forecast," and "forecasted" or similar expressions. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, actual results may differ materially from our expectations. Factors that could cause actual results to differ from expectations include, without limitation:
(1)increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses;
(2)our ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in our business;
(3)consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell our products, an increase in the ownership concentration within the retail industry, ownership of retailers by our competitors or ownership of competitors by our customers that are retailers and our inability to collect receivables;
(4)destocking and tighter working capital management by retailers;
THE ESTÉE LAUDER COMPANIES INC.
(5)the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs;
(6)shifts in the preferences of consumers as to how they perceive value and where and how they shop;
(7)social, political and economic risks to our foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States;
(8)changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, our business, including those relating to our products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result;
(9)foreign currency fluctuations affecting our results of operations and the value of our foreign assets, the relative prices at which we and our foreign competitors sell products in the same markets and our operating and manufacturing costs outside of the United States;
(10)changes in global or local conditions, including those due to volatility in the global credit and equity markets, government economic policies, natural or man-made disasters, real or perceived epidemics, supply chain challenges, inflation, or increased energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase our products while traveling, the financial strength of our customers, suppliers or other contract counterparties, our operations, the cost and availability of capital which we may need for new equipment, facilities or acquisitions, the returns that we are able to generate on our pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying our critical accounting estimates;
(11)shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture our products or at our distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings;
(12)real estate rates and availability, which may affect our ability to increase or maintain the number of retail locations at which we sell our products and the costs associated with our other facilities;
(13)changes in product mix to products which are less profitable;
(14)our ability to acquire, develop or implement new information technology, including operational technology and websites, on a timely basis and within our cost estimates; to maintain continuous operations of our new and existing information technology; and to secure the data and other information that may be stored in such technologies or other systems or media;
(15)our ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom;
(16)consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation;
(17)the timing and impact of acquisitions, investments and divestitures; and
(18)additional factors as described in our filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
We assume no responsibility to update forward-looking statements made herein or otherwise.
The Estée Lauder Companies Inc. published this content on October 30, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 30, 2025 at 17:44 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]