Recovery momentum in Asia Pacific travel retail was a key dynamic as The Estée Lauder Companies (ELC) returned to sales growth and improved profitability in the year ended 30 June 2026.
ELC recorded reported net sales of US$15 billion for the full year, up +5% year-on-year, with organic net sales increasing +3%.
Net earnings per common share reached $0.50 from a loss of US$3.15 in FY2025.
The improvements reflected the benefits from the company’s Profit Recovery and Growth Plan, said management.
Fourth-quarter reported net sales climbed +6% and organic net sales rose +5%. The quarterly net loss narrowed to US$116 million from US$546 million a year earlier.
The Estée Lauder Companies President and CEO Stéphane de La Faverie commented: “I am incredibly proud of our team for delivering fiscal 2026 results ahead of the expectations we had to start the year. We reignited growth with organic sales rising +3%, driven by the breadth of growth across brands, and achieved significant operating margin expansion.
“We ended the year on a high note, as organic sales growth accelerated to +5% for our fourth consecutive quarter of growth and stronger profitability. We are delivering on all aspects of Beauty Reimagined. Our One ELC operating model is increasingly enabling the entire organisation to move at speed and with discipline,” de La Faverie emphasised.
“For fiscal 2027, we are affirming our confidence to accelerate organic sales growth. In addition, we are raising our outlook for an even stronger adjusted operating margin, as we double down on our strengths to further diversify growth across product categories and geographies, including accelerating growth in North America.”
Travel retail recovery
Asia Pacific organic net sales increased by mid-single digits, led by travel retail.
Korea and Hong Kong travel retail delivered growth, benefiting from retailer shifts towards more profitable duty-free business models, which helped reduce discounting, alongside an increase in traveller numbers, noted ELC in its earnings statement.
Hainan travel retail net sales also increased, reflecting improving traffic and successful retail activations. This was partly offset by net sales declines across the rest of Mainland China travel retail, primarily due to transitional pressure related to changes in duty-free retailers serving Beijing and Shanghai airports [from 51% CDFG-controlled Sunrise Duty Free to CDFG and Wangfujing Duty Free in Beijing and from Sunrise to CDFG and Avolta in Shanghai], including associated online businesses (Sunrise Duty Free).
Performance by region
Organic net sales increased across every geographic region in fiscal 2026.
Mainland China recorded US$3 billion net sales, a +12% increase on a reported basis. This was driven by innovation, existing products and key shopping moments, alongside increased consumer-facing investment. Asia Pacific sales overall grew at +4% to US$3.74 billion.
The Americas recorded US$4.4 billion net sales, up +1% on a reported basis. Europe, UK & Ireland and Emerging Markets (EUKEM) recorded US$3.8 billion net sales, increasing +6% (reported).
ELC also achieved prestige beauty share gains in several key markets, including Mainland China, Japan and the USA, while Korea and Western Europe returned to value share growth in the fourth quarter.
Performance by category
Fragrance was the strongest-performing category, with net sales up +10%, led by double-digit growth across ELC’s luxury fragrance portfolio, with Le Labo, Tom Ford and Kilian Paris key growth drivers.
Skincare net sales increased +4%, driven by La Mer, The Ordinary and Estée Lauder.
Makeup net sales were virtually flat, although growth improved by more than 500 basis points compared with the previous year. Growth from MAC Cosmetics and Tom Ford was offset by declines at Bobbi Brown and Too Faced.
Haircare net sales fell -1%, primarily due the decline in Aveda, largely offset by growth from The Ordinary.
Outlook
ELC expects continued organic growth in fragrance and skincare and a return to growth for makeup in fiscal 2027. The company forecasts organic net sales growth overall of +3% to +5% and has raised its adjusted operating margin outlook to 12.7%-13.5%.
The improving travel retail picture is set to play a role in the company’s fiscal 2027 performance. ELC said it expects an increase in travel retail shipments, reflecting improved trends entering the new financial year. The comparison will also benefit from a lower travel retail shipment base in the first half of fiscal 2026 relative to the second half.
Growth should also become more diversified across geographic regions in fiscal 2027.
The company anticipates stronger growth in the second half for EUKEM. This is supported by an easier comparison with the prior-year period, when performance was affected by disruption related to the conflict in the Middle East.
Based on current conditions, ELC does not expect the conflict to have a material impact on its fiscal 2027 results, although it said it will continue to monitor developments closely. ✈
More details from the ELC investors call will follow.
