Estée Lauder raises outlook after fragrance-led sales growth
The Estée Lauder Companies has raised its outlook after reporting a 5% increase in third-quarter revenue to $3.7 billion (£2.7 billion), but is planning fresh job cuts as part of its broader cost-saving and turnaround strategy.
Growth was driven by double-digit net sales gains in fragrance, supported by the company’s Luxury Brands portfolio. These brands grew across all geographic regions, led by Le Labo, Kilian Paris, Balmain Beauty and Tom Ford Beauty.
Within fragrance, Le Labo saw particularly strong momentum, driven by its Classic Collection and new product launches in fiscal 2026, including Violette 30 and perfuming hand creams, alongside expanded consumer reach.
Skincare sales were broadly flat. Growth in La Mer and The Ordinary was offset by declines in Clinique and Origins. It comes as the company this week confirmed its minority investment in luxury skin care brand 111Skin.
Makeup sales were also broadly unchanged, with growth in Estée Lauder offset by weaker performance from Clinique and Too Faced.
Hair care sales were flat overall. Gains from The Ordinary, supported by its Multi-Peptide Serum for Hair Density and wider distribution, were balanced by declines in Bumble and bumble and Le Labo.
The company said it is raising its fiscal 2026 full-year outlook, while remaining cautious due to ongoing geopolitical and macroeconomic uncertainty, including disruptions in the Middle East and continued softness in key Western markets.
It now expects approximately 3% organic net sales growth for fiscal 2026, at the upper end of its previous guidance range.
New reports indicate the company also expects to cut a total of 9,000 to 10,000 positions, up from a previous estimate of up to 7,000, with potential cost savings of as much as $1.2 billion.
At the upper end of these reductions, the plan would affect about 17.5% of its global workforce of 57,000 employees as of 30 June 2025.
Stéphane de La Faverie, President and CEO at The Estée Lauder Companies, said: "With momentum across all five action plan priorities of Beauty Reimagined, today we raised our fiscal 2026 outlook, now expecting organic sales growth at the high-end of the prior range and adjusted operating margin expansion to approach 300 basis points, bolstered in part by adjusted gross margin expansion.
"Fiscal 2026 is promising to be the pivotal year we intended, one in which we restore organic sales growth and expand our adjusted operating margin for the first time in four years.
"Looking ahead to fiscal 2027, we are confident in our improving trajectory and realizing the benefits of One ELC, especially its One Operating Ecosystem which will be fully deployed. Our preliminary view is to accelerate organic sales growth and for adjusted operating margin to approach 13%, albeit in an uncertain geopolitical and macroeconomic environment."
The update comes as the company confirmed it has entered exploratory discussions with Puig regarding a potential business combination.
If completed, such a deal would represent a significant consolidation in the global beauty industry, bringing together two major players with extensive brand portfolios. Previous reports have suggested a combined valuation of around $40 billion, though this remains speculative.
Puig this week stated that no agreement has been reached and there is no certainty that a transaction will proceed or on what terms it might be completed.
