Estée Lauder returns to growth with 5% sales rise
The beauty industry just got a major shot of adrenaline. The Estée Lauder Companies (ELC) recently unveiled results for fiscal 2026 that signal a powerful return to growth and significant profitability, demonstrating that the company’s strategic vision is truly paying off.
Net sales climbed 5% to US$15.05 billion, with organic sales expanding by 3%. This momentum was further accelerated in the fourth quarter, where sales grew by 6% and organic sales jumped 5%, painting a picture of robust momentum heading into the next fiscal year.
Beyond the top line, the company delivered impressive gains in the bottom line. The gross margin expanded significantly, reaching 75.5%—a testament to efficient operations. Furthermore, the adjusted operating margin soared by 320 basis points to 11.2%, and adjusted operating income rose by 47% to US$1.69 billion. This strong performance translated directly to shareholder value, with adjusted diluted earnings per share increasing by 66% to US$2.51.
Cash flow also proved robust, with the company generating US$1.32 billion in free cash flow, nearly doubling the US$0.67 billion recorded just one year prior.
The growth engine was clearly the fragrance division, which saw organic sales increase by 10%. This success was fueled by explosive growth across the Luxury Brands portfolio, including covetable names like Le Labo, TOM FORD, and KILIAN PARIS. Meanwhile, the skincare segment maintained healthy momentum, growing 4% and led by powerhouse brands such as La Mer, The Ordinary, and Estée Lauder.
While makeup remained relatively flat and hair care saw a slight decline of 1%, the overall portfolio demonstrated remarkable diversification and resilience. ELC is actively pushing innovation, which accounted for 23% of fiscal 2026 sales, underscoring a commitment to future-forward product development.
To meet consumers where they are, ELC significantly expanded its retail footprint and digital presence. The company grew its Amazon presence to 13 brands across 11 markets and boosted its TikTok Shop to 12 brands across nine markets. Physical expansion continued with the opening of 33 net new fragrance freestanding stores, alongside strategic retail placements for brands like M·A·C in select locations.
These results are powerful evidence that the company’s overarching strategies—specifically the Beauty Reimagined initiative and the Profit Recovery and Growth Plan (PRGP)—are successfully translating into tangible financial success. The PRGP restructuring program is on track to deliver approximately US$1.2 billion in annual gross benefits and a net reduction of around 10,000 positions.
Looking ahead, the outlook remains bright. For fiscal 2027, ELC anticipates continued organic sales growth between 3% and 5%, alongside an elevated adjusted operating margin outlook of 12.7%–13.5%, signaling strong expectations for sustained profitability and strategic expansion in the dynamic beauty landscape.
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