EL

On August 19, 2026, Coty Inc. (NYSE:COTY)'s fiscal fourth-quarter net revenue rose 1.3% to $1.27 billion in the quarter ended June 30, beating the average analyst estimate for a 4.6% decline, Reuters reported. Bloomberg said the total included a 3% currency tailwind, and like-for-like revenue actually fell 1%, the seventh straight decline but the smallest in 18 months. Adjusted loss per share narrowed to 2 cents from 5 cents but still missed the 1-cent loss expected. Coty withheld full-year guidance and called fiscal 2027 a "transition year" amid the Gucci exit. Shares fell 7% in extended trading. Coty actually beat the revenue estimate that mattered most this quarter, yet withholding full-year guidance while rivals like Estée Lauder issue confident forecasts sent a clear signal to investors. Coty's beat points to real demand, not an easy comparison. It topped Bloomberg's $1.19 billion consensus and beat Reuters' 4.6% decline estimate, even before currency helped. Like-for-like revenue's 1% decline was also the smallest in 18 months, a "significant sequential improvement," Coty said. Coty Inc. (NYSE:COTY) also sits in the strongest-growing part of the beauty industry. Rival Estee Lauder's fragrance business posted double-digit organic growth in the same fiscal year, helping drive its full-year net sales up 5% to about $15 billion, the company reported. Prestige fragrance outgrowing the rest of beauty favors Coty's fragrance-heavy portfolio. Coty's cost program is delivering real, structural savings, not just cuts to survive one bad year. The "All-in to Win" initiative generated more than $250 million in productivity and fixed-cost savings in fiscal 2026, ahead of target, and underlying fixed costs fell 4% even as inflation rose, Coty said. That kind of structural discipline supports margin recovery even if revenue growth stays slow. Coty's balance sheet is strengthening too since free cash flow rose to $348.2 million in fiscal 2026 from $277.6 million, and total debt fell to $3.09 billion from $3.22 billion. That growing cushion funds restructuring internally rather than needing fresh capital. The Gucci exit itself brings in cash: $250 million at signing and $150 million more by September 2027. Coty will use this cash to pay down debt and fund internal restructuring while management pursues a strategic review of slower brands like CoverGirl and Rimmel. The headline beat shrinks once currency comes out. Reported revenue rose 1.3%, but that included a 3% currency benefit, Bloomberg said, and like-for-like revenue actually fell 1%, the seventh straight quarterly decline. The weakness was concentrated in the Middle East, Germany, and Central and Eastern Europe, where revenue fell $45.3 million year over year, Coty said. The Gucci exit could create a lasting earnings gap as Coty gives up a recovering brand and its future growth potential. Kering bought back the license early for $400 million and signed a 50-year master deal with L'Oréal to run global operations after Coty's transition period ends. Profitability moved the wrong way even as revenue stabilized since adjusted loss per share came in at 2 cents, wider than the 1-cent loss expected. Adjusted gross margin fell 140 basis points to 60.9%, and adjusted EBITDA dropped 26% to $93.6 million. Full-year net loss widened to $618.0 million from $381.1 million. Coty Inc. (NYSE:COTY) is also losing ground in a market that is otherwise growing. It is underperforming a growing beauty market. Prestige beauty grew about 6% and mass beauty about 5% in the second half of fiscal 2026, yet Coty's own sellout fell 1% in Prestige and 2% in Consumer Beauty over that period. That gap hit profitability directly: Consumer Beauty adjusted EBITDA fell 67% year over year in the fourth quarter, though it improved $32 million sequentially from the third quarter. Guidance disappointed more than the quarter itself. Coty withheld full-year forecasts and guided to just 11 to 13 cents in adjusted earnings, below the 14-cent estimate, while peers Estee Lauder and Elf Beauty gave confident outlooks. Investors typically read a withheld number as management's own uncertainty, which likely explains the 7% drop despite the beat. Coty Inc. (NYSE:COTY) was held by 32 hedge funds as of Q1 2026, down from 35. For comparison, larger rival Estée Lauder was held by 47. Coty Inc. (NYSE:COTY)'s fourth quarter shows improvement, but not enough yet. The revenue beat is real, though the basic business is still shrinking once currency and regional weakness are stripped out. Coty is losing share even in a growing category, with its weakest division's profitability collapsing. The 7% stock drop shows investors weighing execution risk, a stronger rival inheriting Gucci, and an unresolved portfolio review over one good quarter. While we acknowledge the potential of COTY as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: BP p.l.c. (BP) vs. Shell plc (SHEL): Two Oil Majors Cash In on the Iran War, But Tell Different Stories and ArcelorMittal (MT) vs. Microsoft Corporation (MSFT): A Steel Giant Bets Its Future on Azure. Disclosure: None. This article is originally published at Insider Monkey.

Estée Lauder’s second quarter showed a return to top-line growth, as sales outpaced Wall Street expectations and the market responded with strong optimism. Management attributed this performance to broad-based organic sales gains across every region and most product categories, notably in Skin Care and Fragrance, as well as operational improvements that lifted margins. CEO Stephane de la Faverie credited the company’s “streamlined organization and faster innovation launches,” while highlighting the success of brands like The Ordinary and Jo Malone London. Despite a GAAP loss, management pointed to substantial progress in cost control and renewed market share gains in key areas such as Mainland China and North America. Is now the time to buy EL? Find out in our full research report (it’s free). Revenue: $3.64 billion vs analyst estimates of $3.54 billion (6.8% year-on-year growth, 2.7% beat) Adjusted EPS: $0.39 vs analyst estimates of $0.32 (22.1% beat) Operating Margin: -1.1%, up from -11.4% in the same quarter last year Organic Revenue rose 5% year on year (beat) Market Capitalization: $37.93 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Stephen Robert Powers (Deutsche Bank): Asked about margin outlook upgrades and the path to diversified profitability. CFO Akhil Shrivastava explained improvements stem from completed restructuring, ongoing SG&A optimization, and plans to expand margins across all product categories and regions. Lauren Lieberman (Barclays): Questioned the consistency of organic sales growth guidance and stability of travel retail inventory. CEO Stephane de la Faverie clarified that travel retail shipments are now aligned with actual consumption and that growth is expected to be more diversified in the coming year. Christopher Carey (Wells Fargo): Inquired about the pace of growth in the first half versus second half and managing Asia’s ecosystem. De la Faverie detailed a sophisticated coordination between Mainland China and travel retail, supported by new leadership and improved demand-driven operations. Filippo Falorni (Citi): Sought details on the drivers behind sustained market share gains in China. De la Faverie attributed this to locally relevant innovation, strong digital presence (notably on Douyin), and less reliance on promotions. Olivia Tong Cheang (Raymond James): Focused on margin expansion opportunities and cash deployment post-restructuring. Shrivastava highlighted ongoing SG&A reductions, future sales leverage, and the prioritization of deleveraging and targeted investments over transformational M&A. Looking forward, the StockStory team will be monitoring (1) the pace of innovation launches and their impact on category growth, (2) continued improvement in North American sales and market share gains, and (3) the stability of travel retail and emerging market performance. Progress in digital channel penetration, along with operational efficiency gains, will also be key indicators of whether Estée Lauder can sustain its recent momentum. Estée Lauder currently trades at $104.19, up from $84.27 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, Aug. 19, 2026 at 8:30 a.m. ET Senior Vice President of Investor Relations - Laraine Mancini President and Chief Executive Officer - Stephane de la Faverie Executive Vice President and Chief Financial Officer - Akhil Shrivastava Operator: Good day, everyone, and welcome to the Estée Lauder Companies' Fiscal 2026 Fourth Quarter and Full Year Conference Call. Today's webcast is being recorded. For opening remarks and introductions, I would like to turn the call over to the Senior Vice President of Investor Relations, Ms. Rainey Mancini. Laraine Mancini: Hello. On today's webcast are Stephane de la Faverie, President and Chief Executive Officer; and Akhil Shrivastava, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward-looking statements. To facilitate the discussion of our underlying business, the commentary on our financial results and expectations is before restructuring and other charges and adjustments disclosed in our press release. Unless otherwise stated, references to net sales refer to organic net sales, which excludes the noncomparable impacts of acquisitions, divestitures, brand closures and the impact of foreign currency translation. You can find reconciliations between GAAP and non-GAAP measures in our press release and on the Investors section of our website. Retail sales performance discussed is based on information available as of August 14, 2026. As a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms. It also includes estimated sales of our products through our retailers' websites. Throughout our discussion, our Profit Recovery and Growth Plan will be referred to as our PRGP. [Operator Instructions] And now we have a brand portfolio video before Stephane begins. [Presentation] Stephane de la Faverie: Thank you, Rainey, and hello to everyone. I am incredibly proud of our fiscal '26 results. We reignited growth with organic sales rising 3%, driven by the breadth of growth across brands and expanded operating margin significantly. When we introduced Beauty Reimagined in February 2025, we committed to the biggest organizational leadership and cultural transformation in our company's history to become faster and more agile with greater discipline. Our ambition was clear: become the best consumer-centric Prestige Beauty company with more diversified, balanced and sustainable growth drivers. Before getting into our fiscal '26 results, which reflects the early success of this ambition, I want to share why I'm more optimistic for the company's future today, 18 months into my tenure as CEO and address some of the questions that have arisen in recent months. First, can we accelerate growth? Yes, we just did and we will again. The PRGP's approvals are done. And now all our energy can be focused on accelerating growth. As we continue to deploy our One ELC operating model, we are enabling the entire organization to do what we do best. This means deepening investment in the desirability of our brands, leveraging superior AI-enabled consumer-driven insights to drive breakthrough innovation and executing with excellence. Second, the elephant in the room, M&A. Our focus has been and will remain growing our core business. We will continue to pursue minority and single-brand deals that enhance our portfolio and can benefit from our ability to create scale and deliver attractive ROIC. We have done this with KILIAN PARIS, Le Labo and The Ordinary, our 3 fastest-growing brand in fiscal '26. We have no doubt we will do it again with Forest Essentials, which we have announced we are adding to our portfolio. To be clear, for the foreseeable future, we are not entertaining transformational deals that will divert us from our winning strategy. Third, I have heard the question about whether the transformation has left us without the right talent in place. Nothing could be further from the truth. I can say definitely, we are now stronger having invested in the retained organization and brought in great new talent across the company, including in creative marketing, research and innovation and technology. Even more powerful is what is harder for outsider to see the ways that the team is working more efficiently, significantly less layers, fewer silos, clarity of roles and greater accountability, a truly empowered organization. This is why I am confident we will accelerate our growth and continue to rebuild profitability. Now let's turn to our strong fiscal '26 results. Reported sales rose 5% and organic sales grew 3%, with positive sales performance every quarter. Looking at profitability, we significantly exceeded our initial outlook from last August. Benefits from the PRGP were more robust and achieved more quickly than anticipated, which is a tribute to the extraordinary contribution of our employees around the world and our strengthening cultures around speed of execution. Gross margin expanded 150 basis points. Operating margin expanded 320 basis points and diluted EPS grew 66%. Impressively, Jo Malone London and TOM FORD joined our billion-dollar club. Our portfolio of billion-dollar brand is unparalleled in Prestige Beauty with these 2 brands joining Clinique, Estée Lauder, La Mer and M·A·C. With their scale, premier brand desirability, breakthrough innovation and consumer reach, these brands are positioned to be a powerful contributor to growth. In fiscal '26, 5 of the 6 delivered sequentially improved organic sales performance. And The Ordinary is quickly ascending towards this milestone, fueled by another year of double-digit organic sales growth in fiscal '26. Looking at categories. Skin Care delivered 4% organic sales growth. We drove growth across the price spectrum with The Ordinary vibrant in the entry price tier, Estée Lauder thriving in the heart of Prestige and La Mer exceptional in the luxury price tier. For Fragrance, our results are amongst the best in the industry with organic sales growth of 10%. This reflects our continued investment to develop and capture growing demand. Hero scent and newness from Le Labo, TOM FORD, KILIAN PARIS and Jo Malone London prospered. We also successfully launched Balmain Beauty into the Prestige price tier and we have more to come as we enter fiscal '27. Looking at Makeup, we stabilized performance and improved organic sales trend by 500 basis points, led by M·A·C and TOM FORD. Lip drove M·A·C renaissance while TOM FORD innovation in face and eye powered its growth. We have much more to do in Makeup, but we are making encouraging progress as we better position our brands in high-growth channels like social commerce and specialty multi and speed up launch cycles. For Hair Care, while not yet back to organic sales growth, we are seeing evidence of Aveda's turnaround in the U.S., its biggest market, given share expansion in tracked salon data. The Ordinary's Serum for Hair Density remain a viral sensation, delivering strong growth in both organic and retail sales. Now for the regions. Each improved in fiscal '26 versus fiscal '25 from negative to positive organic sales growth across the board. Mainland China led with broad-based 9% organic sales growth as Skin Care rose high single digit, Makeup rose mid-single digit and Fragrance rose double digit. We outperformed the market every quarter of fiscal '26 to gain Prestige Beauty share for the year led by La Mer, Le Labo and TOM FORD. Within Asia Pacific, global travel retail returned to growth, fueled in part by our investment in experiential retail across Mainland China and Korea. Travel retail represented approximately 15% of reported sales in fiscal '26, similar to the channel's global Prestige share. Our priority emerging market excelled with organic sales growth accelerating from mid-single digit in fiscal '25 to high single digit in fiscal '26 despite the disruption in the Middle East. For the U.S., the U.K. and Ireland and Korea, we improved organic sales trend throughout fiscal '26. In the U.S., we returned to organic sales growth in the fourth quarter with retail sales again rising mid-single digit amid continuous Prestige Beauty volume share gain. For fiscal '26, we gained volume share with every category contributing. In the U.K. and Ireland, we delivered 3 consecutive quarters of organic sales growth, including the fourth quarter when we also gained Prestige Beauty share in the U.K. This is especially meaningful, given Prestige Beauty's strength in the U.K. and following many years of share loss. Our performance in Korea was similarly encouraging with 3 consecutive quarter of organic sales growth through the fourth quarter. Retail sales growth accelerated from high single digit in the third quarter to double digit in the fourth quarter, driving return to Prestige Beauty share gain to end the year. Looking at channels. Online performance was outstanding, with organic sales rising double digits, driving strong Prestige Beauty share gain for the channel across many markets, including China and the U.S. Impressively, online reached 34% of reported sales for fiscal '26, up 3 percentage points from fiscal '25 to an all-time record. Finally, when we introduced Beauty Reimagined, we committed to creating transformative innovation as we restored sales growth. During fiscal '26, we accelerated speed to market, launching breakthrough on-trend and commercial innovation across every category with 23% of sales from innovation. With this fiscal '26 result, we delivered on all aspects of Beauty Reimagined as promised, accelerating best-in-class consumer coverage, bringing innovation to market faster, increasing consumer-facing investment, streamlining our fixed cost base and revitalizing our entrepreneurial spirit. Looking ahead to fiscal '27, we are doubling down on our strengths to further diversify growth across product categories and geographies, including accelerating growth in North America. This means expanding more brand into high-growth channel across more markets, launching a bigger and broader innovation pipeline, continuing to increase consumer-facing investment, including more into our priority emerging market and increasingly benefiting from One ELC, our new operating model. We kicked off fiscal '27 with a robust slate of newness. For the fiscal year, innovation as a percentage of sales is set to increase 200 to 250 basis points led by Skin Care. Already out in Skin Care, Clinique and The Ordinary tapped into emerging ingredient trend with PDRN innovation, while Estée Lauder introduced a breakthrough in longevity as well newness for night. La Mer and Bobbi Brown created next-generation edition of beloved hero product, and Clinique introduced a new franchise for sensitive skin spanning Skin Care and Makeup. Building on this in Makeup, M·A·C launched exciting innovation in signature lip franchise, including an all-new lip stain, which was a blockbuster success in its early launch in Korea during fiscal '26. For Fragrance, the category we expect to lead Prestige Beauty's growth again in fiscal '27, our first quarter innovation are extensive from Balmain Beauty along with the new Prestige line from KILIAN PARIS and Estée Lauder to Jo Malone London and TOM FORD in the luxury price tier. We introduced distinctive scents to drive new consumer acquisition across demographics and regional preference. For One ELC operating ecosystem, we are advancing with speed across our 3 biggest initiatives. We launched M·A·C U.S. brand.com on Shopify last week, the first of many deployment online and in-store across brands around the world in fiscal '27 as we modernize capabilities in our direct-to-consumer business to drive growth. For enterprise business services, we are on track to have transitioned about 80% of the expected roles by September, while also standardizing select processes and standing up key AI-enabled technologies to facilitate service delivery and productivity. For our new unified global media model, most of our markets have transitioned to WPP, already lighting up over 1,500 campaigns and harnessing AI for real-time personalization for many of our performance campaigns. And we expanded our collaboration with Meta, leveraging the AI-powered tool built for advertising, conversational commerce and agentic messaging across our brand portfolio to reflect the new consumer behavior of where they are interacting with brands. Now let me close where I began. I am proud of our fiscal '26 results. In Beauty Reimagined, we have a winning playbook and I am confident we will deliver another strong year in fiscal '27. We have the right brands, the right team, a clear momentum onward and upward. I will now turn the call over to Akhil. Akhil Shrivastava: Thank you, Stephane. Hello, everyone, and thank you for joining us today. We are proud of the progress we made in fiscal '26 and how our teams executed with excellence against Beauty Reimagined with speed, focus and discipline. We had promised a focus on gross margin, cash to drive sustainable growth and long-term value creation. Our return to organic sales growth of 3%, operating margin improvement of 320 basis points, diluted EPS growth of 66% and net cash flows from operations of $1.8 billion reflect our strong delivery against that commitment. This was driven by the strategic and disciplined actions we have taken to focus on restoring growth, transforming our operating model, improving our cost structure and creating operating leverage. Before discussing our fiscal '27 outlook, I'll briefly highlight our fourth quarter and full year results and progress across key areas of the business. For more information on our full year and fourth quarter performance, please refer to our press release issued this morning. Starting with organic net sales, we saw broad-based growth in the fourth quarter across all product categories and geographic regions with the exception of Hair Care. Our 5% organic sales growth was the strongest quarterly performance of the year, with sequential improvement from the third quarter across every region, except EUKEM where business disruptions from the conflict in the Middle East reduced growth by 2%. We are encouraged by North America's sequential improvement in retail sales growth, along with its return to organic sales growth in the fourth quarter even without the onetime benefit discussed in our press release. These results reflect the progress we are making through our consumer-facing investments to drive growth. Now looking at margins. Fourth quarter and full year gross margin reached 75.5%, expanding 360 basis points and 150 basis points, respectively, compared to last year. This represents nearly 400 basis points of improvement in gross margin compared to fiscal 2024 when we first announced the PRGP. These results reflect the structural improvements we have made and our ability to execute with speed, enhancing operational efficiency, reducing excess and bringing gross margin back to near historical levels. Turning to operating margin. We delivered nearly 300 basis points or more of expansion in every quarter this year, including 330 basis points in the fourth quarter, contributing to a full year operating margin of 11.2%, up 320 basis points from last year. Through our PRGP initiatives, we delivered net benefits that funded additional consumer-facing investments throughout the year. Our investments increased 7% for the full year or 4% excluding FX. We reduced nonconsumer-facing expenses in every quarter this year, except the fourth quarter, which included higher employee incentive costs tied to a better-than-expected full year performance. This reflects our continuous focus on streamlining our fixed cost base to create greater flexibility and our disciplined allocation of investments toward the highest return areas. In terms of our PRGP restructuring program, we concluded approvals as of June 30 and recorded $823 million of total cumulative charges in fiscal '26, primarily in employee-related costs. Although the approval phase is behind us, our unrelenting focus on everyday efficiency is not. It is embedded in how we operate, enabling ongoing investments in growth opportunities. Our adjusted effective tax rate for the full year improved to 35.7%, a decrease from 38.8% last year. Diluted EPS increased to $0.39 in the fourth quarter from $0.09 last year and increased 66% for the full year to $2.51. Moving to our next strategic priority, cash flow. Cash generation was very strong this year, with cash flow from operating activities of $1.8 billion, up from $1.3 billion last year despite higher restructuring payments. This reflects higher earnings and disciplined working capital management, which improved cash productivity across the business. We spent $457 million in CapEx this year compared to $602 million last year, reflecting disciplined capital allocation and prioritizing consumer-facing investments to support growth. These actions supported improved free cash flow, and we ended the year with $3.5 billion in cash on hand. The significant progress we made in fiscal '26 through our disciplined execution of Beauty Reimagined, including our PRGP, has transformed our operating model, strengthening our company as we enter fiscal '27. With our momentum, I'm excited about our outlook for fiscal '27 and even more confident in our ability to deliver long-term sustainable value creation. For fiscal '27, we expect to accelerate organic sales growth and deliver stronger adjusted operating profitability. Turning to top line. For fiscal '27, we expect organic net sales growth in the range of 3% to 5%, reflecting more diversified growth across product categories and geographic regions. We expect organic net sales growth in the first half of the year to be stronger than in the second half, reflecting a slate of innovation earlier in the year and stronger travel retail shipments, given improving retail trends and a lower base of shipment in the prior year. Looking at EUKEM, we expect stronger sales growth in the second half of the year as we lap the business disruptions related to the conflict in the Middle East that affected the second half of fiscal '26. While the situation remains dynamic, based on what we know today, we do not expect the impacts from the conflict in the Middle East to be material to our fiscal '27 results. Turning now to profitability. We are raising our preliminary outlook and now expect operating margin to range between 12.7% and 13.5%. This reflects in part our strong fiscal '26 results, continued operating leverage in nonconsumer-facing expenses and a modest expansion in gross margin. We expect an effective tax rate in the range of approximately 33% to 34%, building upon the progress we made in fiscal '26. Diluted EPS is expected to range between $3.10 and $3.35, assuming a weighted average share count of approximately 368 million shares. Moving now to cash generation. In fiscal '27, we expect to generate net cash flows from operating activities between $1.3 billion and $1.4 billion. This decrease from last year reflects higher restructuring payments as well as increased working capital needs to support growth compared to strong working capital improvements in fiscal '26. After the restructuring payments expected in fiscal '27, the vast majority of the cash payments associated with the program will be behind us. We expect capital expenditures for the full year to be approximately 4% of sales as we continue to prioritize consumer-facing investments to fuel growth, including upgrades to our brick-and-mortar and online distribution channels as well as targeted expanded consumer reach. Before we close, I would like to highlight another example of the more streamlined processes and stronger execution discipline we have built into the organization. Beginning with fiscal '27, we are accelerating our year-end reporting time line and plan to report our fiscal '27 results on August 4. In closing, we enter fiscal '27 as a different company, more focused, more agile and better positioned to execute with speed and excellence. We remain confident in Beauty Reimagined and our ability to deliver sustainable growth and long-term value creation. I want to thank our employees around the world for leading our transformation and for your unwavering commitment to our company and our success. That concludes our prepared remarks. I'll now turn it over to the operator to begin the Q&A session. Operator: [Operator Instructions] Our first question comes from Steve Powers with Deutsche Bank. Stephen Robert Powers: Great. I guess if we could start on profitability, just a little bit more detail, if you could, on what has improved since May that's allowed you to upgrade the fiscal '27 margin outlook. And within that, if I could, in the quarter, we're seeing growth appear increasingly diversified, but profitability still seems very concentrated. So as we think about the year ahead, the time line for Makeup, Fragrance, Hair Care and maybe the Americas to contribute more meaningfully to that profitability improvement? Akhil Shrivastava: Thank you, Steve. So essentially, we had a strong '26 beat. We had a strong '26 beat, so we wanted to flow that to the next year. In addition, as we have completed our PRGP work, we see further opportunities for SG&A optimization, which we are flowing through, and that has been a consistent message on nonconsumer-facing investment optimization all through the year and that is included in the improved outlook. What is also included in the improved outlook is continued investments to fuel growth because that is ultimately the way to continue driving better leverage, better value creation. And then, of course, we are also looking at executing the savings we have on PRGP ramp up through the year. So frankly, this then goes to the full run rate will even be reflected in '28. So we'll exit with a stronger '27 with most of the savings coming through, but the full run rate will come through on '28 as well. Now related to your point on the diversity or the concentration of a profit, agree, we have strong profitability on Skin Care. We have strong profitability in Asia. And it is -- and we are improving profitability in all our segments. However, you are right that we have opportunity to further improve profitability on categories like Makeup, Hair Care and Fragrance as well and which is a clear part of our plan to improve profitability as we go towards further from the 13.5%, which is the top end we have given. So over the next coming years, you should continue to see clear sequential improvement in all segments, both geographic and category. Operator: Your next question comes from Lauren Lieberman with Barclays. Lauren Lieberman: Great. I thought there was very big news today in the earlier August reporting, so thank you for that. I wanted to acknowledge that. And also all of the great transparency throughout the presentation was really helpful. My question is the risk of being a bit nitpicky is organic sales guide for '27 of 3% to 5% growth versus the comment that expectation to accelerate organic sales growth because obviously, at the low end, that would not be an acceleration. So just wanted to understand that low end. And then more specifically, it does feel like there's a degree of organic sales growth that is still very tied to timing and dynamics around travel retail shipments. So it feels that areas of the business, particularly Hainan retail has really stabilized and I guess that inventory levels there have as well, given the visibility you seem to have into first half shipments. But just some commentary on, I guess, overall sort of stability in inventory levels on particularly Asia TR and the degree to which that influences the organic sales outlook. Stephane de la Faverie: Yes. Thanks, Lauren, and thank you for your comment. Really appreciate it. Very proud of what the team has achieved throughout like fiscal '26. When it looks at the -- talk about the outlook, obviously, as the Beauty Reimagined strategy lays it out very clearly, we want a much more diversified growth across geography, across categories, across channel going forward. So you're going to see us continuing to build on the strengths, obviously, of China and the Asia Pacific, including travel retail geographies. But we're also clearly laying out an acceleration on the West, especially with North America, where we are laser-focused on pushing like retail. And you saw obviously, in the quarter 4, some very strong results in the mid-single-digit growth. So obviously, this is really balanced in the way we do it. And to complement like what Akhil was saying, we are obviously going to continue to accelerate like Skin Care and Fragrances. Fragrances, like I said in my prepared remarks, we expect Fragrance to continue to be outstanding performance in fiscal like '27, but obviously, with a clear intent to accelerate the performance on Makeup. And the performance of Makeup will be broad-based from a geography standpoint, but with a clear focus also on the West, especially in North America again. So I think you have to see the outlook for us. We're always looking at the 3% to 5%. But as we, in fiscal '26, delivered the top end of the guidance, our goal is to just like look at acceleration over fiscal '26. If you look at the midpoint, there will be 100 basis point improvement. If you look at the top end of the guidance, will be 200 basis point improvement that mainly will obviously come like from the West. So that's where I would like look at our overall guidance from a sales standpoint for fiscal '27. Then your second part of your question, when you took -- talk about like TR shipment, I want to be very clear, and I reiterate what I've said like many, many times, we are shipping to demand. So our inventory is in a very good place in travel retail. Now I'm very happy to report another good news in travel retail for the first time in 3 years. For the month of June and the month of July, we are back into positive territory for travel retail global, led by Hainan that is in double-digit growth in the fourth quarter. That was also there in Q3, but we are seeing great momentum in Korea, in Hong Kong, in Southeast Asia in travel retail. And obviously, like travel retail West, the America is strong and it's helping to offset some of the headwind that we are getting to the Middle East. So the retail is strong in travel retail, and we are managing inventory to the demand. And as I said also many times, travel retail represents about 15% of our business, and we intend to just keep it in line with industry standards. I hope it answers your question, Lauren. Operator: Our next question comes from Chris Carey with Wells Fargo Securities. Christopher Carey: Great. I wanted to follow up on this from a bit of a different angle. But just number one, you talked about faster organic sales growth in the front half of the year. Can you just dimensionalize that? Would you be above your guidance range in the front half or more at the higher end? And then secondly, just on this travel retail comment, I mean, I think the question is well taken in that travel retail shipment is -- are these 2 words that we've come accustomed to, representing volatility over recent years. And clearly, you just said that you're shipping in line with consumption. But can you just give us a sense of how you've evolved the management of the broader Asia ecosystem when you go to market and how you're thinking about managing the Mainland China business versus the travel retail business in Asia such that you can deliver more consistent growth in both areas over the course of the year? Stephane de la Faverie: Well, thanks, Chris. So let me just take on this question. When it looks at the outlook for fiscal '27, and we said it in our prepared remarks, we have a stronger pipeline of innovation in the first half versus the second half. And it was by design, obviously, because when we laid out Beauty Reimagined, we said we were going to just accelerate our innovation. And obviously, like Skin Care alongside every other category was a key focus, like, for us for acceleration. So you're seeing a lot more coming in the first half, which led to believe that, obviously, we will be higher in terms of growth in the first half than we would be in the second half, okay? And that will help to guide somehow the construction of how we are looking at the year between first half and second half and deliver the 3% to 5%, like, guidance. So hopefully, that just gives you a little bit flavor on how to look at it. When it comes to the TR visibility, we have a very clear system in place today. Like you said, on the management, first of all, we had a complete transformation of the leadership team in travel retail, with a new leader in travel retail managing, like, from different places around the world. And we have like 2 key regions, one for the East and one for the West. The West being managed out of like London for us and the East managed by -- from like Singapore, and we have like new talent. Like I said in my prepared remarks, also we've really accelerated experiential retail in travel retail. So you are going to see us doing a lot more activities in the East and in the West. We've accelerated the deployment of our brand in the West, especially led by the Fragrances. You're seeing a lot more visibility on Jo Malone, on TOM FORD, on KILIAN, on Le Labo, on many, many airports in the Americas and EMEA. And when it comes to the management of the East, we have some system in place that allows a clear coordination of activities between Mainland China and travel retail China. And that is done in conjunction between Joy Fan, who is the leader of China; and Matthew Growdon, who is the leader of APAC and travel retail, where they meet regularly to coordinate launches, activities, how do we go at 11/11 versus 6/18 between the travel retail and in the local market. So it's a very sophisticated model that allows us to really making sure that we're managing the total China ecosystem and we are looking at it from Mainland to travel retail, alongside also with the Chinese travelers around the world in a very coordinated model that allows us to delight the Chinese consumer wherever they are. And as you say, to continue to ship to the demand wherever it is. Operator: Our next question comes from Filippo Falorni with Citi. Filippo Falorni: I wanted to ask about the Mainland China business. Clearly, the category has improved and you called out the significant improving market share as well. In terms of brand rankings around the 6/18, 11/11 and you mentioned even the #1 share position in Prestige Beauty. So I was just wanted to get your perspective of what has changed in the market, both at the category level and at your execution that has really transformed this business and put in a consistent top line growth. And what allowed you to kind of like consistently gain market share in the market, both in terms of like innovation changes, marketing, social media presence, what has been the big change that has allowed this very impressive turnaround in China? Stephane de la Faverie: Thank you, Filippo. Fantastic question on China. And the first thing I would say is like I'm really proud of the work that the team in China is doing across all the brands. But the most important thing is understanding the fundamental of the market. And the market is very, very strong. It's in high single-digit growth on the Prestige Beauty. So we're seeing like China growing again. And as, thank you for pointing it out, we've had some fantastic results, we've been gaining market share in every single quarter in every single category. So now we are on to sixth consecutive quarter of market share gain in China. And in the last quarter, what is very impressive, we have 11 brands in retail sales growth, of which 6 are in double-digit growth. And that's very important for you to just note because as we committed a diversified growth around the world, we also committed to a more diversified growth within the region and within the channel where we operate. So today, we have obviously continued to have very strong performance on like La Mer, but we have a very diversified growth across now 6 brands in double-digit growth and we have like brand Le Labo that are like growing in excess of 50% like during the year, so which is like fantastic. The other thing to answer your question of why we are winning in the market is like remarkable, despite the remarkable execution from the team. We're also accelerating innovation in China for China. Now 30% of our innovation around the world is coming from China for the China market, thanks to the ramp-up of all the activities we have from our R&D center in Shanghai. So this is also allowing us to be even more tailored to the need of the Chinese consumer in Skin Care or in Makeup. And then I would say we have -- the last thing I would say is in China, we've always been first movers to new channels. So like today, obviously, we started years ago with the department stores that continues to be strong. We accelerated our freestanding stores that allows us to like accelerate our experience. But obviously, in online, which is now over 50% of the business in China, we are like having great success with Douyin. We have now 11 brands in China on the Douyin platform, and we are performing extremely well there. So overall, the market is strong. Our business is even stronger than the market. And the last thing that I would say in China, we are now less promotional. We've really pushed the valorization in the market that have really allowed us to just like recruit new consumers and allowed us to -- thanks to the valorization to continue to sustain strong investment in the market to just like capture the Chinese demand. Operator: Our next question comes from Peter Grom with UBS. Peter Grom: I was hoping to get some perspective on '26 and just kind of taking a step back and just looking at things -- where things came in relative to your expectations and kind of just the drivers of the upside, right? Organic sales came at the high end, operating margin well ahead of the midpoint if we go back to where guidance was a year ago. And I'm curious if you've embedded similar levels of flexibility as it pertains to kind of '27 guidance, particularly as it would seem you're exiting the year with some really nice momentum on the top line and the majority of the benefits related to PRGP are still to be realized. Akhil Shrivastava: Thank you, Peter. Yes, so I'll start and Stephane can add here. Essentially, look, it has been what Stephane just said, it has been outstanding execution against our priorities overall on all of the pillars. So of course, we started the year with a guide of 9.4%, 9.9% on margin, and we significantly beat that through the year. That is really the outstanding execution of PRGP, first of all. Secondly, the continued progress we made on reducing, therefore, the nonconsumer-facing. Thirdly, which allowed us to fuel the business, which is seeing as the much more diversified growth in quarter 4. So we are pleased with the fact that North America has come back to positive results this quarter on net sales as well as our retail has been building. So those have been positive surprises from a cost and top line perspective. And at the same time, China business, consistent share growth quarter-over-quarter in one of the most competitive market and that too by a significant distance, as we just said, that has been a positive. And then travel retail returning to positive retails as we are exiting the year. So these are all positive surprises. And also on gross margin, we delivered 150 basis points. When we entered the year, the environment was quite uncertain with the tariffs, et cetera, being announced, but we really executed very well against that and mitigated a significant part. And so our beat on gross margin as well has been very strong. As we look to '27, of course, the outlook is 3% to 5% on sales growth, but it's a much more diversified growth, as Stephane just said. North America should accelerate, Makeup should accelerate. While East will lead growth, West will accelerate from its prior trends. We will keep building savings through the year, ramping as we execute, which should also give momentum into '28. And then what -- of course, when we give guidance, we consider various things which are controllable. So what we are demonstrating is execution against controllables is very, very strong, and we typically exceed that. Of course, what we are also keeping in mind is the macro environment, which we don't control, so we keep enough scenario planning to get to our goals into multiple different paths. So that's generally been our posture. And I'll pass it over to Stephane to add. Stephane de la Faverie: Yes. No. I think, Peter, I'd just like to add to what Akhil said, I think what you have to take into consideration is the way we enter fiscal '26 and the way we enter fiscal '27. We're a very different company. The business is really clearly transformed. We are really operating at a very different speed than we've ever done before. And we are back growing. And that's the most important thing because the streamlining of the cost has given us a lot greater flexibility to manage sales volatility. So to your question, are we building scenario planning for sales volatility? Absolutely, as we did it in fiscal '26. And we are also realizing a lot more sales leverage. And I think when we started the year from 0% to 3% and we are finishing at the top end of the guidance, that is giving us a lot of leverage. And next year to 3% to 5%, let's say, we just delivered the midpoint or the high point of like the guidance. This is going to give us a lot more sales leverage. And that allows us like continue to accelerate. So the model and the discipline that we've built in fiscal '26 is now fully in place clearly on a very different company on how we are operating for fiscal '27 and is going to allow us to replicate and accelerate, frankly, what we've done in '26 -- in '27. Operator: Our next question comes from Cristian Rios with Bernstein. Cristian Rios Martinez: Congratulations on a fantastic quarter. I was hoping, can you break down the 5% organic sales growth in North America in the quarter into how much of that was sell-through or consumption? And I think there was mention of timing of shipments. Can you talk a bit more about what that was, the magnitude of the impact and how it connects to previous or next quarter growth? Or any other puts and takes that you think we should understand? And as we think about next year, what are you most excited about in terms of channels or retailers or maybe even brands in North America? Stephane de la Faverie: Yes. So thank you, Cristian. I think North America for us is a key focus. It's been a key '26. And you see there was one slide in our prepared remarks that shows the sequential improvement quarter-over-quarter on our performance finishing on a high note in Q4. Now obviously, from a timing of shipment, no, we are like -- this is retail driven. Now obviously, there will -- there's a change on activities like Prime Day from Amazon was in July the prior year. It's in June in fiscal '26. So there's obviously -- the market has been like growing faster in the last quarter, especially due to the June activity. But the good news is that as we've been able to accelerate as the market is accelerating at the midpoint. And the one thing that I would say is the most important thing for us and the most important indicator in '26 was to make sure that we could resume with volume share gain because it is an acquisition game. We needed to just make sure that we reignite the recruitment wheel. It's exactly what we've done. And alongside, we are seeing brands like The Ordinary continuing to having outstanding performance. M·A·C, thanks to our deployment in new channel like Sephora, not only we've been able to regain the #1 ranking in Q4, but we've been able to gain market share also in Q4, which is quite outstanding and a very quick turnaround that we will continue to accelerate in fiscal '27. But I could go on, Bobbi Brown is also in market share gain in Makeup. We've had exceptional performance on brands like Le Labo that are not in the track data because it's mostly a direct-to-consumer brand, but also like TOM FORD, Prestige Fragrances that is doing very strong. Let alone online where we know and we have clear data showing that we are gaining market share. So that is actually showing the outstanding execution that our team are doing in North America, and I really believe that we are going to be able to just continue to do that. And actually, the early signal of the months of July that we are getting are extremely strong for The Estée Lauder Company (sic) [ Companies ], led by Clinique and M·A·C, thanks to great activities that we are doing on social commerce and also like, obviously, the continuous deployment of M·A·C into more growth distribution. So I feel very confident. And frankly, there's nobody more impatient than me to just drive the growth in North America, and the entire team is really focused in '27 to take on the great momentum that we have had in Q4. So as far as what we are excited in North America, in China, we're excited about all the channels. We are exciting (sic) [ excited ] where the consumer is, and our objective is to delight the consumer wherever we can create the experience that it is online, that it's in specialty multi, that it's in our own direct-to-consumer as well as in department store where we can create right experience. So I think there is great momentum. We have great innovation behind our brands. We are excited. I mentioned it, a new exciting launch between -- behind the Lauder brand in Fragrances called Glimmer that we are signing -- shipping as we speak. We have great, exciting new launches on Clinique, Skin Care with a new smart cream serum tapping into like PDRN. So we have a slate of innovation that is really going to allow us to just like maintain, if not to accelerate our growth in North America in fiscal '27. Operator: Our next question comes from Rupesh Parikh with Oppenheimer. Rupesh Parikh: So just going back to your commentary that expectations for a return back to growth in the Makeup category. Just curious the bigger opportunities you see and then just confidence in being able to get back to growth in Makeup. Akhil Shrivastava: Yes. We are -- we have some of the leading brands in Makeup starting with M·A·C. So we are clearly planning to accelerate that business. On Makeup, of course, we play with Clinique, which is the #1 brand in Makeup in the U.S. We have M·A·C. We are also addressing the challenges we have had on some of the other brands in the past. So what we are exiting is a stronger performance on Makeup. And Makeup being our #2 category, we continue to believe that it will not only improve on sales trends, it will also improve as was -- question was asked earlier on profitability with all of the work we are doing. And that would be a critical part of continuing to build a broader, more diversified sales growth and also profitability in this segment. Stephane de la Faverie: Yes. And I think just one addition to what Akhil said, Rupesh, is, obviously, we are also and making sure that we are deploying our Makeup brand in the fast-growing channel where the Makeup consumers are shopping, mainly specialty multi as well as like social commerce. One of the reasons of the strong acceleration that we are seeing in M·A·C is the entire ecosystem that we've created from social commerce to specialty multi, department store and freestanding stores that are now all working in conjunction just to really activate the recruitment wheel and the retention wheel across the brand. So I think what was missing as part of our arsenal was to be everywhere where the consumer is from a recruitment and from the retention. Now that we have the right platform from a distribution standpoint, and then we are adding an acceleration on innovation like this outstanding lip stain that M·A·C launched has been like a blockbuster in many markets around the world. We believe that now we have the right recipe for us to just like accelerate in Makeup. At the moment, frankly, where we see in many markets, the Makeup category also starting to just accelerate especially like in China, we're seeing like acceleration in the U.S., which has been, as you know, the category pretty flattish for quite some time like since the exit of COVID. So this is also for us the right moment to accelerate. And the last thing I would say in Makeup, we are continuing to also rationalize the distribution where we don't have the right profitability and the right productivity per door. And we've closed a significant amount of freestanding stores in M·A·C around the world as we are pivoting to more growth and profitable channels. Operator: Today's final question comes from Olivia Tong with Raymond James. Olivia Tong Cheang: Great. I wanted to talk about margins because it's an exciting time as margins continue to move in the right direction. So as you think about expanding from about 200 basis points this year, where do you see the biggest opportunity? It seems like there's more opportunity for efficiency gains as well as delayering the organization. And if so, where -- which areas do you see the most opportunity? And then I also wanted to ask about cash uses now that you've taken transformational M&A off the table. PRGP is now closed. So how do you think about the deployment of cash from here? Akhil Shrivastava: Thank you, Olivia. So look, we are pleased with the 320 basis points of margin we expanded this year, which was coming from 2 big drivers, gross margin and the progress on nonconsumer-facing, which includes, as you pointed out, employee cost reduction and all of the infrastructure rationalization we have done, including real estate and so on and so forth and the work we have done on procurement. As we look forward on the guide that we have given of 150 to 230 basis points margin expansion, as we mentioned, that gross margin would be a modest driver, but a large part of the driver here will come, as you pointed out, from all of the SG&A, which includes employee cost and the announcement we made of the total restructuring that continues through '27. So what we do see a large opportunity even after this year's guide, which is what I said earlier that as we complete our execution, we will be exiting the year with full benefits starting to hit in the later part of the year, which will then have the full annualized benefit in '28. So that flow-through in margin should continue to come in '28. Of course, at 13.5% margin, we still believe we have runway to go further driven by that. Consumer-facing, we have continued to invest. And as Stephane has talked about, all of the work we are doing on media, one, from a better placement and better procurement of media, there should be runway there as well. But of course, right now, our focus is to build our brands, drive growth, drive share, but that would be another leg to add down the road. So it started with gross margin, passes to SG&A, but we'll have the full 360 approach to continuing to build margin. So that's what we believe, and this should have at least a good flow-through even in '28. Now on cash uses, our stated mission has been to deleverage the company beyond any other points on M&A. So we are continuing to use cash to drive down our debt. We have debt coming due later in the year, which we will -- for all practical purposes, we would continue to pay down. Of course, we are making sure that we -- our CapEx is fully funded to drive consumer CapEx. Secondly, of course, other one is dividend. And then thirdly is deleverage. And at the same time, we will look for any other opportunities to drive a better return on our cash. But first priority right now is to continue to build a stronger balance sheet and we made solid progress this year with the cash performance. Stephane de la Faverie: Yes. The only one thing, Olivia, that I would add to Akhil is, obviously, look at it as with the streamlining of our cost and the efficiency that we are building across like the company, it allows us to realize a lot more sales leverage. So as we are accelerating growth, you will see the flow-through in profitability and our ability to continue to accelerate. And this is also why to reinforce the earlier question that was asked, why we felt comfortable to raise our preliminary view from a margin standpoint and even go beyond on the top end at 13.5%, which is 50 basis points higher than our preliminary view that we have in the last quarter. So sales leverage now is at our disposal to be able to continue to invest in the business to fuel growth, but at the same time to continue to just increase in a sustainable way our profitability over time. Operator: Thank you. This concludes our allotted time for Q&A today. If you were unable to join for the entire webcast, a playback will be available at 1:00 p.m. Eastern Time today until October 30. Please visit the Investors section of the company's website to view a replay of the webcast. I would like to thank you all for joining and wish you a good day. Before you buy stock in Estée Lauder Companies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Estée Lauder Companies wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,461!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,307,633!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 26, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Estée Lauder (EL) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

The Estee Lauder Companies Inc. EL delivered impressive fourth-quarter fiscal 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate and increasing year over year. The beauty giant ended fiscal 2026 with accelerating organic sales growth, significant margin improvement and broad-based gains across geographic regions. The company also entered fiscal 2027 with continued momentum across key categories, markets and growth initiatives.Shares of Estee Lauder have gained 12.7% in the past three months compared with the industry’s growth of 16.1%. Image Source: Zacks Investment Research Adjusted earnings of 39 cents per share beat the Zacks Consensus Estimate of 32 cents in the fiscal fourth quarter. The bottom line increased from 9 cents in the year-ago quarter.The company's quarterly net sales of $3,627 million beat the Zacks Consensus Estimate of $3,551 million. The top line increased 6% year over year. Organic net sales increased 5% to reach $3,590 million.Skin Care sales increased 9% year over year to $1,853 million, with organic sales up 7%. Fragrance sales rose 10% to $618 million, with organic sales also up 10%. Makeup sales increased 3% to $1,010 million, while organic sales rose 2%. Hair Care sales slipped 1% to $140 million, with the same decline organically. Other sales fell 5% to $19 million. Among the four core categories, Skin Care, Makeup and Fragrance grew, while Hair Care declined.The Americas generated net sales of $995 million, up 6% on a reported basis and 5% organically. Asia/Pacific net sales climbed 7% to $970 million and rose 9% organically. Mainland China sales advanced 12% to $824 million, with organic growth of 7%. EUKEM sales increased 3% to $851 million and rose 1% organically. Adjusted gross profit increased 12% year over year to $2,750 million. Adjusted gross margin reached 75.5%, up from 72% in the prior-year quarter. Adjusted operating income rose 95% to $267 million from $137 million. The company exited the quarter with cash and cash equivalents of $3,498 million, long-term debt of $6,803 million and total equity of $3,806 million. The net cash flow provided for operating activities for the 12 months ended June 30, 2026, was $1,773 million. Capital expenditures during this time amounted to $457 million. For fiscal 2027, Estee Lauder expects organic net sales to rise 3-5%, with growth expected to be stronger in the first half, supported by new product launches, improving travel retail and favorable comparisons. Estee Lauder expects continued rise in Fragrance and Skin Care and a return to growth in Makeup.Adjusted operating margin is projected at 12.7-13.5%, while adjusted earnings are expected to reach $3.10-$3.35 per share, representing 24-34% growth from fiscal 2026. Estee Lauder’s Beauty Reimagined strategy is reshaping how it operates and competes. The One ELC model is helping create a more streamlined organization with fewer layers and silos, clearer roles and greater accountability. The company is also using AI-enabled consumer insights and a unified global media approach to support innovation and improve campaign personalization.Innovation remains another important pillar of the strategy. Estee Lauder is accelerating launch cycles across Skin Care, Makeup and Fragrance while placing greater emphasis on locally relevant products. In China, the company is increasingly developing products specifically for local consumers through the Shanghai research capabilities, while globally it is supporting hero franchises with new formats, ingredients and product extensions.The company is also expanding where consumers can discover and purchase its brands. Estee Lauder is increasing exposure to specialty-multi retailers, social commerce and direct-to-consumer platforms while modernizing its digital infrastructure. M·A·C’s expansion into additional channels, its U.S. brand.com launch on Shopify and broader presence on Amazon and TikTok Shop illustrate the company’s push toward a more diversified and consumer-focused distribution model. While these strategic initiatives are strengthening Estee Lauder’s growth platform, execution remains an important risk as it carries out a broad organizational transformation. Estee Lauder is simultaneously modernizing digital platforms, transitioning enterprise-service roles and implementing a unified global media model. Meanwhile, brands such as Bobbi Brown, Too Faced and Aveda continue to face category-specific softness or distribution challenges, keeping the focus on improving brand positioning and channel productivity.Channel optimization and external uncertainty add another layer of risk. Estee Lauder continues to rationalize underperforming doors while shifting distribution toward specialty retail, social commerce and other growth channels, making execution across channels an area to watch. Tariffs, geopolitical developments and changes in consumer sentiment also remain potential headwinds that could affect demand, costs and the company’s ability to sustain its improving business momentum. Estee Lauder remains well-positioned for further improvement, supported by stronger business momentum, ongoing innovation and broader channel expansion under its Beauty Reimagined strategy. While execution risks, weakness across select brands and external pressures such as tariffs and geopolitical uncertainty remain concerns, the company’s improving operating backdrop supports a balanced outlook.Given this mix of opportunities and risks, Estee Lauder appears to be a stock worth holding. The company currently carries a Zacks Rank #3 (Hold). Five Below, Inc. FIVE operates as a specialty value retailer in the United States and currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 15.1% and 36.1%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.Dollar Tree Inc. DLTR is an operator of discount variety stores offering a broad assortment of everyday consumables and discretionary merchandise. The company currently carries a Zacks Rank of 2. DLTR delivered a trailing four-quarter earnings surprise of 32.1%, on average.The Zacks Consensus Estimate for Dollar Tree’s current fiscal-year sales and EPS indicates growth of 6.5% and 21.7%, respectively, from the year-ago reported numbers. Dollar General Corporation DG is one of the largest discount retailers in the United States, selling low-priced merchandise, typically $10 or less. The company currently has a Zacks Rank of 2. DG delivered a trailing four-quarter earnings surprise of 21%, on average.The Zacks Consensus Estimate for Dollar General’s current fiscal-year sales and EPS is expected to rise 3.9% and 7.6%, respectively, from the year-ago reported figures. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report Five Below, Inc. (FIVE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The Estée Lauder Companies Inc. EL used its fiscal 2026 fourth-quarter call to frame fiscal 2027 around broader growth and higher profitability after restructuring approvals were completed. Fiscal 2027 guidance pairs 3% to 5% organic sales growth with a higher adjusted operating margin range of 12.7% to 13.5%, with North America, Makeup and early-year innovation in focus. Executive vice president and CFO Akhil Shrivastava said the higher margin outlook reflects fiscal 2026 strength, optimization of non-consumer-facing expenses and modest gross margin expansion. The prior preliminary range was 12.5% to 13.0%. Fourth-quarter adjusted earnings were 39 cents per share, above the Zacks Consensus Estimate of 32 cents for a 21.90% surprise. Revenues were $3.627 billion, up 6%, and exceeded the consensus by 2.20%. The Estee Lauder Companies Inc. price-consensus-eps-surprise-chart | The Estee Lauder Companies Inc. Quote A Deutsche Bank analyst asked what changed since May. CFO Shrivastava said SG&A opportunities emerged after PRGP approvals were completed, while the full run-rate benefit of savings will extend into fiscal 2028. CFO Shrivastava said organic sales growth should be stronger in the first half than the second, reflecting more early innovation, improving travel retail shipments and a lower prior-year shipment base. President and CEO Stéphane de La Faverie said fiscal 2027 growth should be more diversified across categories, geographies and channels. He expects continued Fragrance and Skin Care growth and a return to growth in Makeup. CEO De La Faverie said innovation should rise 200 to 250 basis points as a percentage of sales in fiscal 2027, led by Skin Care, while One ELC supports faster execution. A Barclays analyst questioned how much the outlook depends on travel retail shipment timing. CEO De La Faverie said inventories are in a good position and EL is shipping to demand. CEO De La Faverie added that global travel retail returned to positive retail growth in June and July, with Hainan posting double-digit growth in the fourth quarter. Travel retail represented approximately 15% of fiscal 2026 sales. A Wells Fargo analyst asked how EL manages mainland China and Asia travel retail together. CEO De La Faverie described coordinated leadership and launch planning, including alignment around major shopping events. CEO De La Faverie said North America is a fiscal 2027 focus after returning to organic growth in the fourth quarter. He described the improvement as retail-driven and highlighted continued U.S. volume-share gains. An Oppenheimer analyst asked about confidence in a Makeup recovery. CFO Shrivastava said Makeup is EL's second-largest category and should improve in both sales trends and profitability. CEO De La Faverie tied that recovery to specialty-multi distribution, social commerce, faster innovation and pruning lower-productivity doors. He highlighted M·A·C's U.S. channel expansion and new lip innovation. CEO De La Faverie said EL will not pursue transformational deals for the foreseeable future. Core growth remains the focus, while minority investments and single-brand transactions can still fit the portfolio strategy. On capital allocation, CFO Shrivastava told a Raymond James analyst that deleveraging remains the priority after funding capital expenditures and the dividend. Fiscal 2027 operating cash flow is expected at $1.3 billion to $1.4 billion. CFO Shrivastava said higher restructuring payments and working capital needs will weigh on operating cash flow, while capital expenditures should be approximately 4% of sales. Most PRGP cash payments are expected to be behind EL after fiscal 2027. CEO De La Faverie said Beauty Reimagined and One ELC are intended to convert a leaner cost base into faster execution, more innovation and stronger sales leverage. He emphasized core business growth over large-scale M&A. CFO Shrivastava's message centered on completing the PRGP savings ramp, reinvesting in growth and improving profitability across categories and regions. EL currently carries a Zacks Rank #3 (Hold), with a Value Score of D, Growth Score of B, Momentum Score of B and VGM Score of B. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Under the Zacks framework, B grades are favorable, while D is comparatively weaker. The mix points to stronger growth and momentum characteristics than value characteristics, but the Zacks Rank is not in the #1 or #2 tier that Style Scores are designed to complement most effectively. The Zacks Rank can change as earnings estimates are revised after the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Organic Net Sales Growth: Organic sales rose 3% for fiscal 2026, with reported sales up 5%. Fourth-Quarter Organic Sales Growth: Organic sales grew 5% in the fourth quarter, the strongest quarterly performance of the year. Gross Margin: Full-year gross margin expanded 150 basis points to 75.5%; fourth-quarter gross margin expanded 360 basis points to 75.5%. Operating Margin: Full-year operating margin expanded 320 basis points to 11.2%; fourth-quarter operating margin expanded 330 basis points. Diluted EPS: Full-year diluted EPS increased 66% to $2.51; fourth-quarter diluted EPS increased to $0.39 from $0.09 last year. Cash Flow from Operations: Net cash flows from operations were $1.8 billion, up from $1.3 billion last year. Capital Expenditures: CapEx was $457 million for fiscal 2026, compared to $602 million last year. Skincare Organic Sales Growth: Skincare delivered 4% organic sales growth. Fragrance Organic Sales Growth: Fragrance organic sales grew 10%. Makeup Organic Sales Trend: Makeup improved organic sales trend by 500 basis points. Mainland China Organic Sales Growth: Mainland China led with broad-based 9% organic sales growth. Online Sales: Online organic sales rose double digits, reaching 34% of reported sales, up 3 percentage points from fiscal 2025. Adjusted Effective Tax Rate: Full-year adjusted effective tax rate improved to 35.7%, down from 38.8% last year. Fiscal 2027 Outlook: Expects organic net sales growth of 3% to 5%, operating margin between 12.7% and 13.5%, and diluted EPS between $3.10 and $3.35. Warning! GuruFocus has detected 3 Warning Signs with EL. Is EL fairly valued? Test your thesis with our free DCF calculator. Release Date: August 19, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Organic sales grew 3% in fiscal 2026, with positive performance every quarter and a strong 5% growth in Q4, the best of the year. Operating margin expanded 320 basis points to 11.2%, and diluted EPS grew 66%, significantly exceeding initial outlook. Skincare and fragrance delivered strong growth, with fragrance up 10% and skincare up 4%, while makeup improved its trend by 500 basis points. Mainland China led regional growth with 9% organic sales growth, gaining prestige beauty share every quarter, and travel retail returned to growth. Online sales reached a record 34% of reported sales, up 3 points, with double-digit organic growth and strong share gains in key markets. Haircare remained a drag, failing to return to organic sales growth, though Aveda showed early turnaround signs in the US. EUKEM region faced business disruptions from the Middle East conflict, reducing Q4 growth by 2% and impacting second-half results. Fiscal 2027 organic sales growth guidance of 3% to 5% implies potential deceleration at the low end, with first-half growth expected to be stronger than second-half. Cash flow from operations is expected to decline to $1.3-$1.4 billion in fiscal 2027, down from $1.8 billion, due to higher restructuring payments and working capital needs. The company remains cautious on M&A, ruling out transformational deals, which may limit portfolio expansion opportunities. Q: Can you break down the 5% organic sales growth in North America in the quarter into how much was sell-through or consumption, and what was the magnitude of the timing of shipments impact? What are you most excited about in terms of channels, retailers, or brands in North America for next year? A: Stephane De La Faverie (CEO): North America is a key focus, and we finished Q4 on a high note with sequential improvement. The growth is retail-driven, though there was a timing shift with Prime Day moving from July to June. The most important indicator is that we resumed volume share gains, reigniting the recruitment wheel. Brands like The Ordinary are performing outstandingly, and MAC regained the number one ranking in Q4 and gained market share thanks to our deployment in new channels like Sephora. Early signals for July are extremely strong, led by Clinique and MAC, and we are excited about our innovation slate, including new launches for Estee Lauder and Clinique. Q: What has changed in the mainland China market and in your execution that has transformed the business and allowed you to consistently gain market share? A: Stephane De La Faverie (CEO): The market is strong, growing in high single digits, and we have gained market share in every single quarter and category for six consecutive quarters. We have 11 brands in retail sales growth, with six in double digits, including Le Labo growing over 50%. We are accelerating innovation with 30% of our global innovation now coming from China for China via our Shanghai R&D center. We are also first movers in new channels like Douyin, where we now have 11 brands, and we have pushed valorization to be less promotional, allowing us to recruit new consumers and sustain strong investment. Q: What has improved since May that allowed you to upgrade the fiscal '27 margin outlook, and what is the timeline for makeup, fragrances, haircare, and the Americas to contribute more meaningfully to profitability improvement? A: Akhil Shrivastava (CFO): We had a strong '26 beat that we flowed into next year. We also see further opportunities for SG&A optimization as we complete our PRGP work. We are continuing to invest to fuel growth, and the full run rate of savings will be reflected in '28. While profitability is currently concentrated in skincare and Asia, we have a clear plan to improve profitability in makeup, haircare, and fragrances, and you should see clear sequential improvement in all segments over the coming years. Q: The organic sales guide for '27 is 3% to 5% growth versus the comment that you expect to accelerate growth. Can you explain the low end, and can you comment on the stability of inventory levels in Asia travel retail? A: Stephane De La Faverie (CEO): We are building a much more diversified growth across geographies, categories, and channels. We are accelerating in the West, especially North America, while continuing to build on strengths in China and Asia-Pacific. At the midpoint, the guidance represents a 100 basis point improvement over fiscal '26. Regarding travel retail, we are shipping to demand and inventory is in a very good place. For the first time in three years, global travel retail returned to positive territory in June and July, led by double-digit growth in Hainan. Q: Can you provide perspective on where fiscal '26 results came in relative to expectations and whether you have embedded similar levels of flexibility in the 2027 guidance? A: Akhil Shrivastava (CFO): We significantly beat our initial margin guidance due to outstanding execution of PRGP and progress on reducing non-consumer-facing expenses. Positive surprises included North America returning to growth, consistent share gains in China, and travel retail returning to positive retail. For '27, we are demonstrating strong execution against controllables, but we keep scenario planning in mind for the macro environment. Stephane De La Faverie (CEO) added that the company is very different entering '27, with streamlined costs giving greater flexibility to manage sales volatility and realize more sales leverage. Q: Can you talk about the bigger opportunities and your confidence in returning the makeup category to growth? A: Akhil Shrivastava (CFO): We have leading brands in makeup, starting with MAC, and we are clearly planning to accelerate that business. Makeup is our number two category, and we expect it to improve on both sales trends and profitability. Stephane De La Faverie (CEO) added that we are deploying our makeup brands in fast-growing channels like specialty multi and social commerce. The success of MAC's new lip stain has been a blockbuster, and we are rationalizing distribution to focus on profitable doors, positioning us to accelerate as the makeup category starts to pick up in many markets. Q: As you think about expanding margins, where do you see the biggest opportunity, and how do you think about the deployment of cash now that transformational M&A is off the table? A: Akhil Shrivastava (CFO): The 320 basis points of margin expansion came from gross margin and progress on non-consumer-facing expenses. For '27, gross margin will be a modest driver, with the large part coming from SG&A, including employee costs and restructuring. We see a large opportunity even after this year's guide, with full benefits hitting in '28. On cash, our first priority is to deleverage the company and pay down debt. We are also funding consumer-facing CapEx and maintaining the dividend, while looking for opportunities to drive a better return on cash. Q: You talked about faster organic sales growth in the front half of the year. Can you dimensionalize that, and how have you evolved the management of the broader Asia ecosystem between mainland China and travel retail? A: Stephane De La Faverie (CEO): We have a stronger innovation pipeline in the first half, which was by design, so growth will be higher in the first half than the second half. On travel retail, we have transformed the leadership team and accelerated experiential retail. We have a sophisticated model for coordinating activities between mainland China and travel retail China, with leaders meeting regularly to coordinate launches and activities like 11.11 and 618. This allows us to manage the total China ecosystem and delight the Chinese consumer wherever they are, while continuing to ship to demand. For the complete transcript of the earnings call, please refer to the full earnings call transcript.