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EL delivered Q3 EPS of 91 cents and sales of $3.72B, topping estimates with year-over-year growth.
EL saw growth across Skin Care, Makeup and Fragrance, with margins boosted by PRGP cost savings.
EL raised FY2026 outlook, projecting up to 62% EPS growth and higher restructuring targets.
The Estee Lauder Companies Inc. (EL - Free Report) reported third-quarter fiscal 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year. Management has raised fiscal 2026 guidance.
Adjusted earnings of 91 cents per share beat the Zacks Consensus Estimate of 66 cents in the fiscal third quarter. The bottom line increased 40% from 65 cents in the year-ago quarter.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
The company's quarterly net sales of $3,712 million beat the Zacks Consensus Estimate of $3,701 million. The top line increased 5% year over year. Organic net sales increased 2% to reach $3,611 million.
Category-Wise Revenue Results for EL's Q3
Skin Care sales rose 3% year over year to $1,856 million, led by La Mer and The Ordinary, which was offset by declines in Clinique and Origins. Operating income improved due to higher reported net sales, though partially offset by increased consumer-facing investments behind key activations, launches and expansion initiatives.
Makeup revenues increased 4% year over year to $1,072 million, with growth in the Estee Lauder brand offset by declines in Clinique and Too Faced. The segment reported an operating loss in contrast to an income in the prior year, largely due to a $35 million charge related to a potential securities class action settlement. Excluding this impact, operating income improved, driven by higher sales and cost benefits from the Profit Recovery and Growth Plan (PRGP) initiative, though partly offset by increased investments in marketing and product launches.
In the Fragrance category, revenues of $628 million increased 13%, led by strong double-digit growth in luxury brands across all regions, particularly Le Labo, KILIAN PARIS, BALMAIN Beauty and TOM FORD. Operating results declined, reflecting a $13 million unfavorable allocation tied to a potential securities class action settlement recorded in the fiscal third quarter. Excluding this impact, operating income rose modestly, supported by higher gross profit driven by increased sales, though partially offset by elevated consumer-facing investments in key activations, distribution expansion and new product launches.
Hair Care sales totaled $128 million, up 2% year over year, driven by growth from The Ordinary, which was offset by declines in Bumble and bumble and Le Labo. Segment operating results improved but remained in a loss position, reflecting a $9 million unfavorable allocation tied to a potential securities class action settlement recorded in the fiscal third quarter. Excluding this impact, the segment returned to operating income, driven by cost benefits from the PRGP initiative — which reduced non-consumer-facing expenses — along with disciplined expense management.
Regional Revenue Results for EL's Q3
In the Americas, sales increased 1% to $1,076 million. Revenues in the EUKEM region increased 9% to $859 million. Sales in the Asia-Pacific region broke even at $1,003 million, whereas in Mainland China, sales increased 11% to $774 million.
EL’s Q3 Margin Breakdown: Key Insights
Estee Lauder’s adjusted gross margin expanded 140 basis points (bps) year over year to 76.4%, driven by benefits from its PRGP. These gains were largely offset by headwinds from incremental tariffs and inflation. The improvement also reflects an easier comparison with the prior-year period, which included a charge for under-absorbed manufacturing overhead, as well as better sales leverage.
Adjusted Operating Income expanded 360 bps to 15%, driven by gross margin expansion and improved operating leverage. This included PRGP-driven cost savings that reduced non-consumer-facing expenses, offsetting more normalized employee incentive costs while enabling increased investment in consumer-facing initiatives.
EL’s Financial Health Snapshot
This Zacks Rank #3 (Hold) company exited the quarter with cash and cash equivalents of $3,126 million, long-term debt of $6,810 million and total equity of $3,993 million. The net cash flow provided for operating activities for the nine months ended March 31, 2026, was $1,197 million. Capital expenditures during this time amounted to $306 million.
EL’s Restructuring Program of PRGP
As of March 31, 2026, the company has incurred $1.1 billion in cumulative restructuring charges under the PRGP, primarily tied to employee-related costs, including $0.2 billion in the quarter and $0.5 billion year to date.
The company has raised its total restructuring charge outlook to $1.5-$1.7 billion (pre-tax), up from the prior estimate of $1.2-$1.6 billion. Expected annual gross benefits have also been increased to $1-$1.2 billion from the earlier $0.8-$1 billion, indicating additional efficiency opportunities.
Similarly, the planned workforce reduction has been revised higher to 9,000-10,000 positions from 5,800-7,000, largely driven by the elimination of point-of-sale roles in underperforming retail locations. All initiatives remain on track for approval by the end of fiscal 2026, with a focus on cost optimization and reinvestment in growth areas.
What to Expect From EL in Fiscal 2026?
The company has raised its fiscal 2026 outlook, driven by strong first-nine months performance, while maintaining a cautious stance amid macroeconomic uncertainty and ongoing business headwinds.
The reported net sales are now expected to increase 4% year on year, compared with the previous guidance of 3-5%. The company’s adjusted organic net sales are also anticipated to grow 3% in the year, compared with its prior outlook of 1-3%.
The adjusted earnings per share are now likely to increase 56-62%, ranging from $2.35-$2.45 in fiscal 2026, up from its prior guidance of 36-49% and a range of $2.05-$2.25.
EL stock has fallen 35.4% in the past three months compared with the industry’s decline of 32.7%.
The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 11.3% and 19.2%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 63.4%, on average.
Walmart Inc. (WMT - Free Report) engages in the operation of retail and wholesale stores and clubs, ecommerce websites and mobile applications worldwide. At present, Walmart carries a Zacks Rank of 2 (Buy). WMT delivered a trailing four-quarter earnings surprise of 0.8%, on average.
The consensus estimate for Walmart’s current fiscal-year sales and earnings calls for growth of 5% and 9.5%, respectively, from the year-ago reported numbers.
Burlington Stores, Inc. (BURL - Free Report) operates as a retailer of branded merchandise in the United States and Puerto Rico. It currently holds a Zacks Rank #2. BURL delivered a trailing four-quarter earnings surprise of 13.8%, on average.
The Zacks Consensus Estimate for Burlington Stores’ current fiscal-year sales and earnings calls for growth of 9.7% and 15.5%, respectively, from the year-ago reported numbers.
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Estee Lauder Q3 Earnings Beat Estimates, 2026 Guidance Raised
Key Takeaways
The Estee Lauder Companies Inc. (EL - Free Report) reported third-quarter fiscal 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year. Management has raised fiscal 2026 guidance.
Adjusted earnings of 91 cents per share beat the Zacks Consensus Estimate of 66 cents in the fiscal third quarter. The bottom line increased 40% from 65 cents in the year-ago quarter.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
The Estee Lauder Companies Inc. price-consensus-eps-surprise-chart | The Estee Lauder Companies Inc. Quote
The company's quarterly net sales of $3,712 million beat the Zacks Consensus Estimate of $3,701 million. The top line increased 5% year over year. Organic net sales increased 2% to reach $3,611 million.
Category-Wise Revenue Results for EL's Q3
Skin Care sales rose 3% year over year to $1,856 million, led by La Mer and The Ordinary, which was offset by declines in Clinique and Origins. Operating income improved due to higher reported net sales, though partially offset by increased consumer-facing investments behind key activations, launches and expansion initiatives.
Makeup revenues increased 4% year over year to $1,072 million, with growth in the Estee Lauder brand offset by declines in Clinique and Too Faced. The segment reported an operating loss in contrast to an income in the prior year, largely due to a $35 million charge related to a potential securities class action settlement. Excluding this impact, operating income improved, driven by higher sales and cost benefits from the Profit Recovery and Growth Plan (PRGP) initiative, though partly offset by increased investments in marketing and product launches.
In the Fragrance category, revenues of $628 million increased 13%, led by strong double-digit growth in luxury brands across all regions, particularly Le Labo, KILIAN PARIS, BALMAIN Beauty and TOM FORD. Operating results declined, reflecting a $13 million unfavorable allocation tied to a potential securities class action settlement recorded in the fiscal third quarter. Excluding this impact, operating income rose modestly, supported by higher gross profit driven by increased sales, though partially offset by elevated consumer-facing investments in key activations, distribution expansion and new product launches.
Hair Care sales totaled $128 million, up 2% year over year, driven by growth from The Ordinary, which was offset by declines in Bumble and bumble and Le Labo. Segment operating results improved but remained in a loss position, reflecting a $9 million unfavorable allocation tied to a potential securities class action settlement recorded in the fiscal third quarter. Excluding this impact, the segment returned to operating income, driven by cost benefits from the PRGP initiative — which reduced non-consumer-facing expenses — along with disciplined expense management.
Regional Revenue Results for EL's Q3
In the Americas, sales increased 1% to $1,076 million. Revenues in the EUKEM region increased 9% to $859 million. Sales in the Asia-Pacific region broke even at $1,003 million, whereas in Mainland China, sales increased 11% to $774 million.
EL’s Q3 Margin Breakdown: Key Insights
Estee Lauder’s adjusted gross margin expanded 140 basis points (bps) year over year to 76.4%, driven by benefits from its PRGP. These gains were largely offset by headwinds from incremental tariffs and inflation. The improvement also reflects an easier comparison with the prior-year period, which included a charge for under-absorbed manufacturing overhead, as well as better sales leverage.
Adjusted Operating Income expanded 360 bps to 15%, driven by gross margin expansion and improved operating leverage. This included PRGP-driven cost savings that reduced non-consumer-facing expenses, offsetting more normalized employee incentive costs while enabling increased investment in consumer-facing initiatives.
EL’s Financial Health Snapshot
This Zacks Rank #3 (Hold) company exited the quarter with cash and cash equivalents of $3,126 million, long-term debt of $6,810 million and total equity of $3,993 million. The net cash flow provided for operating activities for the nine months ended March 31, 2026, was $1,197 million. Capital expenditures during this time amounted to $306 million.
EL’s Restructuring Program of PRGP
As of March 31, 2026, the company has incurred $1.1 billion in cumulative restructuring charges under the PRGP, primarily tied to employee-related costs, including $0.2 billion in the quarter and $0.5 billion year to date.
The company has raised its total restructuring charge outlook to $1.5-$1.7 billion (pre-tax), up from the prior estimate of $1.2-$1.6 billion. Expected annual gross benefits have also been increased to $1-$1.2 billion from the earlier $0.8-$1 billion, indicating additional efficiency opportunities.
Similarly, the planned workforce reduction has been revised higher to 9,000-10,000 positions from 5,800-7,000, largely driven by the elimination of point-of-sale roles in underperforming retail locations. All initiatives remain on track for approval by the end of fiscal 2026, with a focus on cost optimization and reinvestment in growth areas.
What to Expect From EL in Fiscal 2026?
The company has raised its fiscal 2026 outlook, driven by strong first-nine months performance, while maintaining a cautious stance amid macroeconomic uncertainty and ongoing business headwinds.
The reported net sales are now expected to increase 4% year on year, compared with the previous guidance of 3-5%. The company’s adjusted organic net sales are also anticipated to grow 3% in the year, compared with its prior outlook of 1-3%.
The adjusted earnings per share are now likely to increase 56-62%, ranging from $2.35-$2.45 in fiscal 2026, up from its prior guidance of 36-49% and a range of $2.05-$2.25.
EL stock has fallen 35.4% in the past three months compared with the industry’s decline of 32.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Five Below, Inc. (FIVE - Free Report) operates as a specialty value retailer in the United States and currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 11.3% and 19.2%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 63.4%, on average.
Walmart Inc. (WMT - Free Report) engages in the operation of retail and wholesale stores and clubs, ecommerce websites and mobile applications worldwide. At present, Walmart carries a Zacks Rank of 2 (Buy). WMT delivered a trailing four-quarter earnings surprise of 0.8%, on average.
The consensus estimate for Walmart’s current fiscal-year sales and earnings calls for growth of 5% and 9.5%, respectively, from the year-ago reported numbers.
Burlington Stores, Inc. (BURL - Free Report) operates as a retailer of branded merchandise in the United States and Puerto Rico. It currently holds a Zacks Rank #2. BURL delivered a trailing four-quarter earnings surprise of 13.8%, on average.
The Zacks Consensus Estimate for Burlington Stores’ current fiscal-year sales and earnings calls for growth of 9.7% and 15.5%, respectively, from the year-ago reported numbers.