Estée Lauder Beats Estimates and Raises Its Fiscal 2027 Outlook

Estée Lauder raised its full-year outlook on Monday after adjusted earnings per share, which strip out restructuring charges, beat expectations in its fiscal first quarter.

Adjusted diluted earnings per share reached $0.72 in the quarter ended September 30. That compared with $0.32 a year earlier. On a reported basis, diluted earnings per share were $0.64, up from $0.13.

Sales beat, led by fragrance

Net sales rose 7% to $3.72 billion, from $3.48 billion a year earlier. Organic net sales, which strip out currency effects and restructuring returns, rose 6%. Fragrance was the standout category.

Fragrance organic net sales rose 20% in the quarter. The company credited double-digit growth from its luxury brands. KILIAN PARIS was its fastest-growing luxury brand, helped by The Cocktails Collection. Le Labo, TOM FORD and Jo Malone London also contributed.

On a reported basis, fragrance net sales rose 19% to eight hundred sixty-one million dollars. Skin care remained the largest category, at one point six five billion dollars in reported net sales. Makeup reported net sales were one point zero five billion dollars.

Skin care organic net sales rose 4%, led by La Mer and The Ordinary. Makeup organic net sales rose 1%, helped by M·A·C. Hair care organic sales were flat, as growth from The Ordinary offset a decline from Aveda.

Growth in every region

Mainland China reported net sales rose 15% to six hundred fourteen million dollars. Asia/Pacific reported sales rose 9% to nine hundred fifty-two million dollars. Sales in the Americas rose 5% on a reported basis. Every geographic region grew on an organic basis, the company said.

Consensus sat well below the print

Adjusted earnings of $0.72 a share beat the $0.52 consensus estimate, a surprise of 38.46%. Net sales also topped the $3.65 billion consensus estimate, a surprise of 1.86%. Zacks reported both consensus figures alongside the results. The estimates are not company figures, and the release does not carry them.

Margins widened as costs fell

Gross margin expanded to 75.7%, from 73.4% a year earlier. The company credited cost and operational efficiencies under its Profit Recovery and Growth Plan. Strategic pricing actions and sales leverage also helped. Together, those gains offset inflation, the company said.

Operating income rose to $408 million, from $169 million a year earlier. Adjusted operating income rose 76% to $449 million. Reported operating margin reached 11.0%, up from 4.9%. Adjusted operating margin was 12.1%, up from 7.3%. Net earnings were $233 million, up from $47 million.

Consumer-facing investments rose 8% from a year earlier. The company said gross margin expansion and operating leverage funded that increase. The year-over-year decrease in restructuring and other charges was $45 million, it said.

The raised outlook, line by line

The company now expects organic net sales growth of 4% to 5.5% for fiscal 2027. The previous range was 3% to 5%. Reported sales growth is now seen at 5% to 6.5% for the year.

Adjusted earnings per share are now guided to $3.20 to $3.45. That range sits $0.10 above the previous $3.10 to $3.35 range at both ends. Adjusted operating margin is now seen at 12.9% to 13.7%. The previous range was 12.7% to 13.5%.

Operating cash flow for the full year is now seen at $1.4 billion to $1.5 billion. The previous range was $1.3 billion to $1.4 billion. Capital expenditures are expected to be about 4% of projected sales. Diluted shares are expected to average about three hundred sixty-eight million.

The raise comes with caution attached. The company said it remains cautious amid geopolitical and macroeconomic uncertainty. Its outlook assumes no deterioration in the geopolitical landscape. That assumption explicitly covers tariffs and consumer sentiment.

Growth is also expected to be larger in the first half than the second. The company pointed to earlier product launches in fiscal 2027. It also cited a lower travel retail comparison base in the prior first half.

Cash, the dividend, and the chief executive's claim

Cash and cash equivalents stood at $3.20 billion on September 30. Free cash flow, cash from operations minus capital spending, improved to negative $235 million. A year earlier it was negative $436 million.

The company declared a quarterly dividend of $0.35 a share. It is payable on December 15 to stockholders of record on November 30. Dividend payments in the quarter itself were $126 million.

"We have moved beyond restoring growth," said Stéphane de La Faverie, President and CEO. "We are building diverse drivers for sustained profitable growth." The company discussed the results on a conference call at 8:30 a.m. Eastern Time on Monday. Its strategy is called Beauty Reimagined.

What remains unknown

What remains unknown starts with the holiday quarter. The release does not show whether fragrance strength holds through the key selling season. It also does not show how tariffs or consumer sentiment move from here. Whether makeup returns to full-year growth, as the outlook assumes, is also unproven.

The tests that come next

What to watch begins with the Capital Markets Experience in Shanghai on November 4. The company will webcast presentations there on its long-term strategy. The next quarterly report will test the raised outlook against holiday demand. It will also show whether the first-half growth skew the company expects is arriving.