Company raised fiscal 2026 outlook, narrowing organic sales growth to 1-3%.
Estee Lauder reported strong Q2 FY26 results with 4% organic growth and raised its full-year guidance. Management highlighted the success of its 'Beauty Reimagined' strategy, particularly in China and online channels, while managing a transition in Asian travel retail. The tone was optimistic and confident, with management explicitly targeting the top end of the raised guidance. Q2 organic sales grew 4%, with 6% growth in skincare and fragrance; EPS grew 43% to $0.89.
Buzzberg readCompany raised fiscal 2026 outlook, narrowing organic sales growth to 1-3%.Estee Lauder reported strong Q2 FY26 results with 4% organic growth and raised its full-year guidance. Management highlighted the success of its 'Beauty Reimagined' strategy, particularly in China and online channels, while managing a transition in Asian travel retail. The tone was optimistic and confident, with management explicitly targeting the top end of the raised guidance. Q2 organic sales grew 4%, with 6% growth in skincare and fragrance; EPS grew 43% to $0.89.Read full analysisCollapse analysis
Estee Lauder reported strong Q2 FY26 results with 4% organic growth and raised its full-year guidance. Management highlighted the success of its 'Beauty Reimagined' strategy, particularly in China and online channels, while managing a transition in Asian travel retail. The tone was optimistic and confident, with management explicitly targeting the top end of the raised guidance. Q2 organic sales grew 4%, with 6% growth in skincare and fragrance; EPS grew 43% to $0.89.
Full-year FY26 guidance raised: organic sales growth narrowed to 1-3%, EPS to $2.05-$2.25, and operating margin to 9.8-10.2%.
China remains a standout, delivering double-digit growth and gaining share for the fourth consecutive quarter, with an explicit goal to outperform the market.
The transition of duty-free retailers in Beijing/Shanghai airports and the temporary shutdown of Universal App are identified as transitory Q3 headwinds.
Revenue$4.238B
+22% QoQ
EPS$0.89
reported
Gross margin76.55%
reported
Op margin13.85%
reported
What changed this quarter
01
Guidance
Company raised fiscal 2026 outlook, narrowing organic sales growth to 1-3%.
Guidance · revenue to 2%
02
Guidance
Targeting top end of guidance, driven by strong first-half momentum.
Guidance · revenue to 2%
03
China
Outperforming prestige beauty in China with double-digit growth and share gains.
Full-year FY26 guidance raised: organic sales growth narrowed to 1-3%, EPS to $2.05-$2.25, and operating margin to 9.8-10.2%.
04
Travel Retail
Travel retail transition in Asia creates transitory headwind in H2.
China remains a standout, delivering double-digit growth and gaining share for the fourth consecutive quarter, with an explicit goal to outperform the market.
AI, capex & demand read
AI
Platform & monetization
Management discussed the acceleration of AI deployment throughout the organization as part of building its operating ecosystem, partnering with Microsoft, Google, and Shopify to fuel ambition.
Demand
Bookings & conversion
Management raised fiscal 2026 guidance and explicitly stated the goal to hit the top end of the range, signaling strong confidence in the turnaround's momentum.
Capex
Investment and capacity
Capital expenditures for the first half were down 25% versus last year, reflecting phasing of projects. Management continues to prioritize consumer-facing investments while optimizing all other CapEx.
Tone · Confident
Management expressed confidence in the turnaround, raised guidance, and highlighted strong momentum and market share gains across key regions.
Supply-chain alpha
A1
The shutdown of the Universal App in Hainan associated with the Sunrise duty-free transition is a significant transitory headwind that will impact Q3 sales before normalizing.
“the universal app that was a significant part of the business was shut down in Q2 and remains shut down as we speak.”
The gap between retail sales and net sales in North America is narrowing but will persist due to 'Agency Media Partnerships' (AMP) accounting on platforms like Amazon, which reduces reported revenue despite not impacting profit.
“the media that we are investing... which is the amp on these channels is gets a reduction from sales line versus an opex line so this is not this doesn't impact profitability”
CDFG is a key strategic partner taking over travel retail concessions in Beijing/Shanghai airports, creating a transitional headwind but expected to be a long-term growth driver.
“we are in the process of putting the right GDP to make sure that we can accelerate in the course, the remaining course of this fiscal year, but frankly, beyond.”
Morning, Filippo. Hi, good morning, everyone. Good morning. Stefan, I was hoping you could expand a bit on the travel retail business, if you can give us a state of the union of the total travel retail business. And especially in Ainan, we've seen clearly an improvement in conversion rates, in spending. in duty-free stores. So what's the outlook as you think going forward for that part of the business? And maybe can you comment a bit on the other parts of the travel retail business in North Asia, especially South Korea and Japan? And especially as we think about the back half of the year where when you think about on a two-year basis, you're comping more normalized shipment level. So how…
… of Shanghai and Beijing and the Universal App. Obviously, you know that all of this business is being in the midst of being transferred from Sunrise, like I said, to CDF, OneFujing and Avolta. There's a bit of a disruption in the market happening in this moment in time as we are transitioning. And that's the normal course of doing business. Concessions sometimes move from one retailer to another. But the universal app that was a significant part of the business was shut down in Q2 and remains shut down as we speak. So obviously, our ability to just convert is more limited. Now, if you look at China mainland and travel retail, we outperform in China mainland in Q2. And in the total travel retail, to your expectation, maybe we delivered less. My point is it's an entire ecosystem that we need to look at where we are capturing the sales. Going forward is very strong. I want to be very clear. It is actually this change is a good thing, especially at the time where we are managing our inventory very carefully. We are shipping only to the demand, and we see this change being the right thing. We have very strong partnership with CDF, with OneFujing, with Ovalta. locally and globally. And we are in the process of putting the right GDP to make sure that we can accelerate in the course, the remaining course of this fiscal year, but frankly, beyond. And the second part of your question, obviously, like, you know, Japan and the rest, you know, Japan, actually, I'm really happy because we are demonstrating in this moment in time that even the in a disrupted market because, you know, there's some geopolitical tension between various markets in the region. We've seen a dramatic reduction of traffic, even though we've been able to just gain market share. And this is the number one thing that we are focused, no matter if there is growth or no growth, We want to be in a market share position, in a market share growth. And that's what we are demonstrating. Now, early into this calendar year, we're seeing a shift from Japan to Korea and over market in the region. And we are ready to welcome the consumers with all our brands really fully deployed. So I want to make, even though there's a bit of a disruption in Q4 into Q2, we remain extremely confident about the momentum that we are building and our ability to just convert. uh, traffic into sales, uh, across all our brands.
Morning, Filippo. Hi, good morning, everyone. Good morning. Stefan, I was hoping you could expand a bit on the travel retail business, if you can give us a state of the union of the total travel retail business. And especially in Ainan, we've seen clearly an improvement in conversion rates, in spending. in duty-free stores. So what's the outlook as you think going forward for that part of the business? And maybe can you comment a bit on the other parts of the travel retail business in North Asia, especially South Korea and Japan? And especially as we think about the back half of the year where when you think about on a two-year basis, you're comping more normalized shipment level. So how…
… of Shanghai and Beijing and the Universal App. Obviously, you know that all of this business is being in the midst of being transferred from Sunrise, like I said, to CDF, OneFujing and Avolta. There's a bit of a disruption in the market happening in this moment in time as we are transitioning. And that's the normal course of doing business. Concessions sometimes move from one retailer to another. But the universal app that was a significant part of the business was shut down in Q2 and remains shut down as we speak. So obviously, our ability to just convert is more limited. Now, if you look at China mainland and travel retail, we outperform in China mainland in Q2. And in the total travel retail, to your expectation, maybe we delivered less. My point is it's an entire ecosystem that we need to look at where we are capturing the sales. Going forward is very strong. I want to be very clear. It is actually this change is a good thing, especially at the time where we are managing our inventory very carefully. We are shipping only to the demand, and we see this change being the right thing. We have very strong partnership with CDF, with OneFujing, with Ovalta. locally and globally. And we are in the process of putting the right GDP to make sure that we can accelerate in the course, the remaining course of this fiscal year, but frankly, beyond. And the second part of your question, obviously, like, you know, Japan and the rest, you know, Japan, actually, I'm really happy because we are demonstrating in this moment in time that even the in a disrupted market because, you know, there's some geopolitical tension between various markets in the region. We've seen a dramatic reduction of traffic, even though we've been able to just gain market share. And this is the number one thing that we are focused, no matter if there is growth or no growth, We want to be in a market share position, in a market share growth. And that's what we are demonstrating. Now, early into this calendar year, we're seeing a shift from Japan to Korea and over market in the region. And we are ready to welcome the consumers with all our brands really fully deployed. So I want to make, even though there's a bit of a disruption in Q4 into Q2, we remain extremely confident about the momentum that we are building and our ability to just convert. uh, traffic into sales, uh, across all our brands.
Launching MAC at Sephora in the US is a major strategic move to regain distribution in the high-growth specialty multi channel, potentially a significant volume and share driver.
“We are about to enter, we are weeks away to enter Sephora US with Mac, which is going to be a big game changer for the brand.”
Great. Good morning. Thank you. Good morning. I wanted to pivot, if I could, to profitability in the quarter, which, as you highlighted, was strong, both on gross and operating margin. If I drill in on there a bit, though, skincare delivered most of the upside, if not all of the upside. Fragrance was also positive, but more in line, I think. I think On the other side of the coin was makeup, which is still essentially kind of operating at a break-even level. Maybe you could just talk about what you're seeing in that segment and how you see the progression of profitability for makeup to contribute more as we go forward. Thank you.
Just one thing, Steve, on the makeup, because I think it's very important. Look, we've been always transparent. We have a lot more work to do on makeup, and we are with the team here in New York, and frankly, with all our teams around the world, we're continuing to just improve things. I'm not going to repeat what Akhil said, but a lot of things that we're doing in this moment in time related to our strategy on Beauty Reimagined is to expand distribution. We've entered TikTok shop in the US with Clinique and Mac, which has allowed actually Mac to just already be in the market share gain in the leap category, which is so important for Mac in the US. Mac has entered TikTok shop in Germany. I said it again, We are about to enter, we are weeks away to enter Sephora US with Mac, which is going to be a big game changer for the brand. And we are working on more opportunities. Innovation is being ramping up. One other thing I've mentioned in my opening remark is the fast acceleration of the innovation coming in less than a year. Remember, I've committed to triple that. We are already exceeding our expectation this year. We were thinking... About 16% of our innovation was going to come in less than a year. It's going to be 19%. The majority of this innovation is coming from makeup. Obviously, we can go much faster in makeup than we can do in the other categories. We are going fast. We are deploying our maker brand in the right distribution. We are rationalizing distribution. I think I also mentioned it in my prepared remark in terms of the freestanding store to make sure that we are more profitable. And we are going to have all the added benefit of the PRGP that continues to flow through, like the P&L this year and in fiscal 27. Because while the PRGP ends at the end of this fiscal year, the execution of it will continue into fiscal 27, fiscal 27, and we will basically get some benefits. So we are on the path for recovery. It is true that skincare is going faster because of the scale. We're very pleased with the progress that we are doing in fragrances. I think makeup requires more scale, and this is why we are deploying our brand and accelerating innovation to be able to just resolve also this issue that we have with the makeup category. Thanks, Steve.
Thank you. And good morning, everyone. Good morning. I guess I have a question on Americas where, you know, you just mentioned that you expect growth to be flat in the year. I guess, you know, it does appear a little light in context, I guess, of the much easier comps from last year and then the progress you've been making with, you know, launches on Amazon, et cetera. So, you know, just curious how you're thinking about the underlying performance in the Americas and, you know, What are some of the key moving parts to keep in mind? And then if you could just also provide any color on the cadence of growth, will it be more balanced or skewed towards FQ4? Just think about the context of the…
… talk about the Americas in total. We come out of 10 years of market share loss in the Americas. And I'm really proud of actually the momentum that the team have put into this market because When you look at the calendar 25, we've been able to gain share in volume. And that was very important. And I've said it multiple times. We needed to reengage our brand to recruit consumers. And we've been able to do it across many of our categories and many of our brands. So we are now in a volume market share gain. And on top of it, we are also in a share gain economy. in value in skincare led by the ordinary and many of our brands that are pulling the total. So we are seeing some momentum, but we are coming out of obviously having a lot of market loss over the years. So we still have the number one brand and the number two brand in skincare, the number one and the number two brands in makeup. you know, Clinique and The Ordinary in skincare and Clinique and MAC in makeup. We're seeing a lot of strong performance with Estée Lauder and MAC at Ulta. We're very excited and I've communicated it in October, November that we were entering MAC US at C4. And this is actually a big milestone for us after many, many years of not playing in like All specialty multi-universe. So, yes, we are seeing great momentum and we are moving in the right direction when it comes to North America. That being said, there's still a rebalancing of all the channels that we are in the process of doing as highlighted by Beauty or Imagine. We've moved fast with Amazon. We are rebalancing. positioning the department stores, and we are exiting distribution as the distribution erodes, and we are moving fast into the specialty multi. So I believe there is great momentum, and I see a lot of more momentum going forward for our brand overall. Now, the Americas is also a combination of North America and also Latin America. while latin america has been very strong at the beginning of the calendar 25 we've seen a slowdown of consumer consumption in the market and i think one of the main challenges that we see is the enacted tariffs are starting to hurt consumer confidence in latin america but overall i want to say i feel very strong we have momentum in the market Volume share is back, and we are moving our brand. So I do believe we will see additional momentum going forward into the market. And to the second …
… prestige beauty. We also grew value share for the quarter and calendar 25 in skincare led by The Ordinary and haircare. In addition, Estée Lauder gained share in makeup for calendar 25. This retail result and share trend reflects the exceptional execution of Beauty Reimagined over the last year. For our first action plan priority, we moved rapidly to expand our portfolio presence in consumer-preferred, high-growth channels, market, media, and price tiers. We expanded our presence on Amazon Premium beauty stores, now with 12 brands across 10 markets. We also announced our brand reach on TikTok shop in the US and Southeast Asia and launched our first brand in the UK and Germany. This work, coupled with strong performance on Timo, Douyin, Jelly, Notino, and Trendyol, drove high single-digit online organic sales growth in the first half, leading us to believe we outperformed Prestige Beauty in the channel. For fiscal 26, online is on track to exceed the 31% of reported sales reach in fiscal 25 as we increasingly tap into the full potential of this high growth channel. We increased our presence in travel retail across the West, including with Duty Free America, as well as new and …
BYTEDANCE
Private company
Partners
Expanding into TikTok Shop is a key initiative to capture growth in emerging social commerce channels, particularly for makeup brands like MAC and Clinique.
… haircare. In addition, Estée Lauder gained share in makeup for calendar 25. This retail result and share trend reflects the exceptional execution of Beauty Reimagined over the last year. For our first action plan priority, we moved rapidly to expand our portfolio presence in consumer-preferred, high-growth channels, market, media, and price tiers. We expanded our presence on Amazon Premium beauty stores, now with 12 brands across 10 markets. We also announced our brand reach on TikTok shop in the US and Southeast Asia and launched our first brand in the UK and Germany. This work, coupled with strong performance on Timo, Douyin, Jelly, Notino, and Trendyol, drove high single-digit online organic sales growth in the first half, leading us to believe we outperformed Prestige Beauty in the channel. For fiscal 26, online is on track to exceed the 31% of reported sales reach in fiscal 25 as we increasingly tap into the full potential of this high growth channel. We increased our presence in travel retail across the West, including with Duty Free America, as well as new and upgraded doors for our luxury fragrances in European and Middle Eastern airports, contributing to double-digit …
A major new outsourcing partnership with Accenture to transform Estee Lauder's shared services, expected to drive significant efficiencies but will incur near-term transition costs.
… silos along with clearer ownership to make it easier to get things done and done well. And guided by our newly announced beauty commitment to our team, we are leaning into one culture of bold thinking, accountability, agility, unity, and focus. Lastly, we have advanced our work to create a robust operating ecosystem for more connected and scalable enterprise. In the second quarter, we've established our new enterprise business services. selecting Accenture to transform how we deliver select shared services globally as we accelerate the deployment of AI throughout the organization. This exciting partnership adds to the ecosystem we are building with leading technology providers, including Microsoft, Google, and Shopify, to fuel our ambition to be the best consumer-centric prestige beauty company. With the momentum of Beauty Reimagined and our first half results, we are raising our fiscal 26 outlook today by narrowing the organic sales growth range towards the high end, increasing operating margin expansion from 165 to 200 basis points at the midpoint, reflecting previously expected headwind-like tariffs, and now greater consumer-facing investment and growth. raising EPS growth …
… of bold thinking, accountability, agility, unity, and focus. Lastly, we have advanced our work to create a robust operating ecosystem for more connected and scalable enterprise. In the second quarter, we've established our new enterprise business services. selecting Accenture to transform how we deliver select shared services globally as we accelerate the deployment of AI throughout the organization. This exciting partnership adds to the ecosystem we are building with leading technology providers, including Microsoft, Google, and Shopify, to fuel our ambition to be the best consumer-centric prestige beauty company. With the momentum of Beauty Reimagined and our first half results, we are raising our fiscal 26 outlook today by narrowing the organic sales growth range towards the high end, increasing operating margin expansion from 165 to 200 basis points at the midpoint, reflecting previously expected headwind-like tariffs, and now greater consumer-facing investment and growth. raising EPS growth from 33% to 43% at the midpoint. This outlook reflects the confidence in our turnaround as well as the significant work that we still have ahead to drive better performance in the …
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