The Estée Lauder Companies (ELC) said net sales grew 4% year-on-year to $3.48 billion in the first quarter of fiscal 2026, ended 30 September 2025. The growth was driven by a long-awaited rebound in Mainland China and the Asia-Pacific region.
Operating margin improved from -3.6% to 4.9%. The company expects the actions under its profit recovery and growth plan to be substantially completed by fiscal 2027, with goals to reach a double-digit operating margin over the next few years. Under this plan, ELC plans to restructure, cutting between 5,800 and 7,000 roles, which will result in savings of between $1.2 billion to $1.6 billion.
“We had a strong start to fiscal 2026 as we execute on our Beauty Reimagined strategy — returning to organic sales growth, gaining prestige beauty share in strategic areas of focus and improving profitability. Encouragingly, we are building momentum across the organization from the significant operational changes we have executed to date, to be faster and more agile,” says Stéphane de La Faverie, president and CEO, in a statement.
The fragrance category performed the strongest, with sales up 13% on an organic basis, thanks to top sellers Le Labo, Tom Ford and Jo Malone. Skincare sales rose 3%, driven by performance at La Mer and Estée Lauder, as well as strengthened travel retail growth. Haircare sales declined 7% as Aveda exited underperforming retail stores and reduced online promotions, which helped margins but hurt top-line growth. Makeup sales slipped 2%, with Bobbi Brown underperforming and scaling back on certain color palette launches and promotional intensity. On Wednesday, the company announced that Mac Cosmetics will launch at Sephora in the US in early 2026.
Sales grew 9% in Asia-Pacific and Mainland China, thanks to a rebound in travel retail, which has been suffering since the pandemic. Outbound and domestic tourism in China has been improving, and favorable government policies are also playing a role. On 1 November, China will expand the annual purchase allowance for duty-free shopping in travel retail hub Hainan, before December’s official implementation of a zero tariff and customs closure system designed to boost Hainan trade further.
The Americas slipped 2%, dragged by softer performance in department stores. Sales in Europe, the UK and Ireland and emerging markets (EUKEM) increased 4%, driven by activations that expanded consumer reach.
ELC confirmed its 2026 outlook: it expects net sales growth of between 2% and 5%, and anticipates that tariffs will impact profitability by approximately $100 million. “These results reinforce the confidence we have in our fiscal 2026 outlook — a pivotal year — as we restore organic sales growth and expand our operating margin for the first time in four years,” de La Faverie said.
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