Estée Lauder Companies Inc. (EL) stock rose in Monday's premarket trading after the beauty company reported better-than-expected fiscal first-quarter 2027 results and raised its full-year outlook.
Adjusted earnings of 72 cents per share beat the analyst estimate of 51 cents.
Revenue rose 7% year over year to $3.715 billion, topping Wall Street's estimate of $3.654 billion. Organic net sales increased 6%.
Estée Lauder CEO Stéphane de La Faverie said the company's transformation strategy is driving faster sales growth, stronger profitability and improved operational efficiency. He highlighted new product innovations, high-impact marketing campaigns and efforts to strengthen the company's brands.
De La Faverie said the company has shifted its focus from restoring growth to building sustainable, long-term profitability. He expressed confidence in its brands and ongoing transformation efforts, adding that the strong start to fiscal 2027 supported the decision to raise its full-year outlook.
Profit Margins Improve As Cost Savings Take Hold
Adjusted gross margin expanded 240 basis points to 75.7%, supported by procurement savings, manufacturing efficiencies and strategic pricing.
Adjusted operating margin rose 480 basis points to 12.1%, reflecting stronger sales and improved cost management.
Reported earnings increased to 64 cents per share from 13 cents a year earlier. Adjusted earnings rose from 32 cents per share.
The company ended September with $3.2 billion in cash and $7.25 billion in debt.
Free cash flow improved to negative $235 million from negative $436 million a year earlier.
Estée Lauder returned $126 million to shareholders through dividends. It also declared a quarterly dividend of 35 cents per share, payable Dec. 15 to shareholders of record Nov. 30.
Fragrance and China Drive Sales Growth
Fragrance led product categories with 20% organic sales growth, supported by Le Labo, TOM FORD, Jo Malone London and KILIAN PARIS.
Skin Care sales rose 4%, while Makeup gained 1%. Hair Care remained flat.
Asia/Pacific recorded 10% organic growth, followed by Mainland China at 9%. The Americas and Europe, the U.K. and emerging markets each grew 4%.
Turkey, Mexico and India led growth across priority emerging markets.
The company also expanded its digital presence through Amazon.com Inc. (AMZN), reaching 13 brands across 17 markets. Its TikTok Shop presence now covers 15 brands across 11 markets.
Estée Lauder Raises Fiscal 2027 Forecast
Estée Lauder raised its adjusted earnings forecast to $3.20-$3.45 per share from $3.10-$3.35. Analysts expect $3.33 per share.
The company increased its revenue forecast to $15.801 billion-$16.027 billion from $15.50 billion-$15.80 billion. Wall Street expects $15.73 billion.
Management now expects organic sales growth of 4% to 5.5%, compared with its previous forecast of 3% to 5%.
The company also raised its adjusted operating margin forecast to 12.9%-13.7% from 12.7%-13.5%.
Estée Lauder expects operating cash flow of $1.4 billion-$1.5 billion and capital expenditures of approximately 4% of sales.
Management anticipates stronger first-half growth, supported by earlier product launches and improving travel retail demand.
The company expects continued growth in Fragrance and Skin Care, alongside a return to full-year growth in Makeup.
In October, Estée Lauder completed its acquisition of the remaining stake in India's Forest Essentials business. The transaction is not expected to materially affect fiscal 2027 results.
The outlook assumes no further deterioration in geopolitical conditions, tariffs or consumer sentiment. Management does not expect the Middle East conflict to materially affect annual results.
EL Price Action: Estée Lauder shares gained 2.30% to $111.74 in Monday's premarket trading, according to market data.
