Estée Lauder reports sales slump across the board as tariff headwinds loom
Estée Lauder Companies (ELC) ended fiscal 2025 with sales down across all regions and most categories as tariff pressures under the Trump administration loomed. The beauty giant’s shares dropped by 8% in premarket trading after it forecast annual profit below Wall Street estimates.
For the year ending 30 June 2025, ELC’s net sales fell by 8%, with all geographic regions experiencing declines. The Americas saw sales dip by 3% to $4.41 billion (£3.27 billion), EMEA was down by 13% to $5.38 billion (£3.99 billion), and Asia/Pacific was down by 7% to $4.54 billion (£3.37 billion).
Overall operating results showed a $785 million (£581 million) loss while adjusted operating income fell by 28% year-on-year to $1.15 billion (£850 million).
Product Category Performance:
Skincare: Net sales fell by 17%, particularly impacted by Estée Lauder and La Mer.
Makeup: Sales fell by 12%, led by M·A·C and Too Faced, impacted by retail softness and shipment timing.
Fragrance: Sales were up by 2%, driven by Le Labo, Jo Malone London and the launch of BALMAIN Beauty.
Hair care: Declined by 15%, reflecting continued challenges in North American brick-and-mortar retail.
In the fourth quarter, the decline accelerated. Organic net sales fell 13% year-on-year, with fragrance the only category showing growth. Operating losses for the quarter totalled $390 million (£289 million), versus $233 million (£172 million) the year prior.
Amid a challenging year, Estée Lauder made strides in digital and e-commerce channels. In fiscal 2025, the company launched eight brands in Amazon’s US Premium Beauty store and expanded online distribution in Southeast Asia, opening 14 stores on Shopee and four on TikTok Shop. Meanwhile, in the UK, The Ordinary made its TikTok and Amazon debut. This positioned the company to return to growth in the "next few years".
Under new CEO Stephane de La Faverie, who assumed the role earlier this year, ELC has accelerated new launches, introduced new luxury price tiers, increased investment in marketing and implemented cost-saving measures. This is all part of its profit recovery plan, the 'Beauty Reimagined' strategy, which was revealed in February 2025. The company expects restructuring charges of $1.2–$1.6 billion (£0.89 - £1.2 billion) before taxes in 2026 as part of these strategic adjustments.
As part of its turnaround efforts, the company is shaking up its leadership team. During the fiscal year, it appointed Lisa Sequino as its new President to lead its makeup division, as well as Sara Staniford to the role of Vice President and General Manager for MAC Cosmetics, Bobbi Brown and Too Faced in the UK and Ireland. It also named Pernilla Nyberg as Senior Vice President and General Manager in the UK and Ireland, replacing Sue Fox.
Despite these efforts, tariffs are expected to reduce ELC’s 2026 profit by around $100 million (£74 million), highlighting the continued impact of trade policy uncertainty. The unpredictability of trade policies has strained consumers’ wallets as well as operational planning.
However, ELC maintained its dividend at $0.35 (£0.26) per share for the quarter. Management highlighted plans to return to sales growth in fiscal 2026 and restore a double-digit adjusted operating margin in the coming years.
Stéphane de La Faverie, President and CEO, said: "Having closed fiscal 2025 as expected, we remain wholly focused on continuing to execute our strategic vision of Beauty Reimagined with excellence.
"Despite continued volatility in the external environment, we embarked on fiscal 2026 with signs of momentum and confidence in our outlook to deliver organic sales growth this year after three years of declines and to begin rebuilding operating profitability in pursuit of a solid double-digit adjusted operating margin over the next few years."
