Estée Lauder (EL) shares jumped in premarket trading Wednesday after the beauty giant reported fiscal fourth-quarter results that beat Wall Street's expectations. The company's CEO, Stéphane de La Faverie, declared that growth is back, and the numbers back him up.
Adjusted earnings came in at 39 cents per share, topping the 32-cent analyst estimate. The Middle East conflict shaved 5 cents off adjusted earnings, but tariff refunds added 7 cents, helping offset the drag.
Sales rose 6% year over year to $3.63 billion, beating the $3.54 billion consensus. Organic net sales grew 5%.
De La Faverie said Estée Lauder had "reignited growth," with organic sales up 3% for the full fiscal year and accelerating to 5% in the fourth quarter. That marks the fourth consecutive quarter of growth, a clear sign the company's turnaround is gaining traction.
Looking ahead, Estée Lauder expects organic sales growth to accelerate further in fiscal 2027 and raised its adjusted operating margin outlook, signaling confidence that the recovery has more room to run.
Sales Growth Broadens Across Regions
The Middle East conflict disrupted business and reduced consolidated sales growth by about 1 percentage point. It also cut growth in Europe, the U.K. and emerging markets (EUKEM) by about 2 percentage points.
Despite those headwinds, sales increased across all product categories except Hair Care, and every geographic region posted growth.
The Americas returned to growth, led by North America. Major campaigns, shipment timing around key shopping events, and increased consumer-facing investments supported the results.
The region also got a boost from an $18 million gain tied to the reversal of liabilities for unused gift cards. That was partly offset by closures of certain specialty multi-retailer-operated shop-in-shop locations.
For context, the prior-year quarter included $527 million in restructuring charges and intangible asset impairments. Those charges totaled $408 million after tax, or $1.12 per diluted share. The company also recorded a $172 million adjustment to its U.S. deferred tax asset valuation allowance, equal to 48 cents per diluted share.
Estée Lauder declared a quarterly cash dividend of 35 cents per share, payable Sept. 15 to shareholders of record Aug. 31.
Estée Lauder Backs Fiscal 2027 Sales Growth Outlook
For fiscal 2027, Estée Lauder expects adjusted earnings of $3.10 to $3.35 per share, compared with the $3.18 analyst estimate.
The company affirmed its organic net sales growth outlook of 3% to 5%. It expects stronger growth in the first half, helped by earlier product launches, higher travel retail shipments, and easier comparisons.
Estée Lauder projects fiscal 2027 sales of $15.50 billion to $15.80 billion, versus the $15.56 billion analyst estimate.
The company expects continued growth in Fragrance and Skin Care, and a return to full-year growth in Makeup. It also expects more diversified growth across regions.
Notably, Estée Lauder does not currently expect the Middle East conflict to materially affect fiscal 2027 results.
Adjusted operating margin is expected at 12.7% to 13.5%, up from its previous outlook of 12.5% to 13%. The company forecasts operating cash flow of $1.3 billion to $1.4 billion for the fiscal year.
EL Price Action: Estée Lauder shares were up 13.27% at $95.45 during premarket trading on Wednesday, according to market data.
