TLDR
- The beauty giant’s third-quarter adjusted earnings per share reached $0.91, significantly exceeding the $0.65 analyst forecast
- Quarterly sales totaled $3.71 billion, marking a 5% increase compared to the same period last year
- The company upgraded its annual adjusted EPS outlook to $2.35–$2.45, surpassing the Street’s $2.22 estimate
- Estée Lauder will eliminate an additional 3,000 positions, pushing total workforce reductions to 9,000–10,000 employees
- Shares of EL climbed approximately 13% during Friday’s premarket session
Shares of Estée Lauder surged approximately 13% in Friday’s premarket session following the cosmetics powerhouse’s announcement of third-quarter results that exceeded Wall Street projections and an upgraded annual forecast.
The Estée Lauder Companies Inc., EL
The company delivered adjusted earnings per share of $0.91, handily surpassing the analyst consensus of $0.65. Quarterly revenue reached $3.71 billion, topping expectations of $3.69 billion and representing a 5% climb from the $3.55 billion recorded in the year-ago quarter. On an organic basis, net sales advanced 2% year-over-year.
The impressive results were fueled by exceptional strength in the fragrance segment, which posted 10% organic net sales growth. High-end brands such as Le Labo, KILIAN PARIS, BALMAIN Beauty, and TOM FORD each recorded double-digit revenue increases.
Meanwhile, skin care revenue remained essentially unchanged, while the makeup and hair care divisions each reported flat organic performance during the period.
Chinese Market Shines
From a regional perspective, Mainland China emerged as a standout performer with 6% organic revenue growth. This marked the third straight quarter in which Estée Lauder outpaced the broader prestige beauty sector in that crucial market.
The company’s Priority Emerging Markets segment delivered double-digit expansion, while three of its four geographic regions posted overall growth.
Adjusted operating margin expanded by 360 basis points to reach 15.0%, compared to 11.4% in the corresponding quarter last year. Adjusted gross margin improved by 140 basis points to 76.4%.
Vital Knowledge analysts highlighted the operating margin expansion as the report’s most impressive element, attributing the gains to rigorous cost reduction initiatives.
Workforce Reduction and Strategic Overhaul
Concurrent with its earnings announcement, Estée Lauder revealed intentions to eliminate up to 3,000 additional positions worldwide. This expansion brings the total anticipated workforce reduction to between 9,000 and 10,000 jobs, up from the previously announced target of up to 7,000.
At the upper end of this range, the cuts would account for roughly 17.5% of the company’s 57,000-person workforce as of June 2025.
Over 70% of these new job eliminations will target department store personnel, reflecting the organization’s strategic pivot toward digital platforms and specialty retail partners such as Ulta, Sephora, Amazon, and TikTok Shop.
The restructuring initiative is projected to generate up to $1.2 billion in cost savings.
Chief Executive Stéphane de La Faverie attributed the quarterly progress to the company’s “Beauty Reimagined” strategic framework, highlighting improved results in luxury markets including China and Europe.
The beauty conglomerate is currently exploring a potential merger with Puig, which owns Jean Paul Gaultier. Industry observers suggest the expanded workforce reduction target may signal preparations to eliminate redundant roles on Estée Lauder’s side in anticipation of a possible transaction.
Management elevated its full-year adjusted EPS guidance to a range of $2.35–$2.45, up from the previous projection of $2.05–$2.25. The company also anticipates organic net sales growth at the upper end of its prior 1%–3% range.
Looking ahead to fiscal 2027, Estée Lauder provided preliminary expectations calling for organic net sales expansion of 3%–5% and an adjusted operating margin between 12.5% and 13.0%.
Management emphasized that its current projections assume no worsening of geopolitical conditions, including tariff developments and consumer confidence levels, and no additional business interruptions in the Middle East beyond May 2026.
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