Estée Lauder Posts Solid Q4 Results but Cautious Outlook Sends Shares Tumbling
NEW YORK – Estée Lauder Companies Inc. (NYSE: EL) reported fiscal second-quarter results that aligned with Wall Street's revenue projections, but a cautious earnings outlook for the full year overshadowed the performance, sending its stock sharply lower in after-hours trading.
The iconic beauty conglomerate posted net sales of $4.23 billion for the quarter ended December 31, 2025, a 5.6% increase from the prior-year period. On an adjusted basis, earnings per share came in at $0.89, surpassing analyst consensus estimates by 6.6%.
"Our second-quarter results reflect strong execution and the resilience of our brand portfolio in a dynamic environment," said Stéphane de La Faverie, President and Chief Executive Officer. "We are making strategic investments to fuel sustainable growth and regain momentum in key markets."
Despite the earnings beat, the market's focus zeroed in on the company's guidance. Management's full-year adjusted EPS forecast fell slightly below analyst expectations, citing ongoing macroeconomic pressures and strategic reinvestment needs. This prompted a swift investor reaction, with shares dropping approximately 7.9% following the report.
The quarter presented a mixed picture. A notable bright spot was a 4% year-over-year increase in organic sales, marking a positive reversal from a trend of declines over the preceding two years. This suggests recent initiatives in product innovation and regional expansion, particularly in Asia travel retail, are beginning to gain traction.
However, analysts point out that the projected full-year revenue growth of 4.2%, while improved, remains below the broader prestige beauty sector average. For a company of Estée Lauder's scale—with annual revenue exceeding $14 billion—the challenge of moving the needle on growth is pronounced. The path forward likely hinges on successful pricing strategies, deeper penetration in emerging markets, and the sustained success of newer brand acquisitions.
Market Reaction & Analyst Commentary:
The post-earnings stock drop underscores the high expectations placed on the beauty bellwether. We gathered immediate reactions from industry observers:
"The organic sales growth is a welcome sign after a difficult period," said David Chen, a portfolio manager at Horizon Capital. "It shows their turnaround plan has legs. The guidance conservatism might be prudent management, not weakness. This could be a buying opportunity for patient investors."
"Another quarter, another disappointment masked by a one-time EPS beat," countered Anya Petrova, a senior analyst at Veritas Financial. "The core issue remains: their legacy brands are stagnating in saturated markets, and their guidance confirms they see no quick fix. The 8% drop is warranted—the growth story is broken until proven otherwise."
"The results are actually quite solid operationally," noted Marcus Reynolds, an independent beauty retail consultant. "The market is punishing the guidance miss, but we're seeing green shoots in Asia and skincare. The key will be whether this organic sales rebound is sustainable into next quarter."