Estée Lauder Companies Inc. (NYSE:EL) Reports Q4 Revenue Miss and Pre-Market Selloff

The Estée Lauder Companies Inc.-CL A (NYSE:EL) reported fiscal fourth-quarter results that fell short of analyst revenue expectations, contributing to a sharp pre-market selloff. The prestige beauty giant posted net sales of $3.41 billion for the quarter ended June 30, 2025, missing the consensus estimate of $3.50 billion. Adjusted diluted earnings per share came in at $0.09, slightly above the $0.09 analyst forecast but down significantly from the prior-year period.

Financial Performance Versus Expectations

• Revenue Miss: The 12% decline in reported net sales to $3.41 billion underscores the persistent challenges in the company’s global travel retail business and softer demand in mainland China. This result was approximately $88 million below what analysts had projected, indicating that the headwinds were more severe than anticipated.
• EPS In-Line on Adjusted Basis: While the company reported a net loss on a GAAP basis due to significant restructuring and impairment charges, the adjusted EPS of $0.09 met the Street's modest expectations. This suggests that beneath the substantial one-time charges, the underlying operational performance was in line with a lowered bar, though it represents a steep drop from the $0.64 reported in the same quarter last year.

Market Reaction and Strategic Context

The market’s negative reaction, with shares falling over 7% in pre-market trading, appears to be driven more by the disappointing top-line performance and a cautious outlook than by the bottom-line figure. The revenue miss confirms concerns about the pace of recovery in key Asian markets and the travel retail channel. Furthermore, the company’s forward guidance introduced a new, significant headwind: an expected $100 million hit to fiscal 2026 profitability from recently enacted global tariffs, net of mitigation efforts.

Key Takeaways from the Fiscal 2025 Report

Beyond the quarterly figures, the full-year results and strategic updates paint a picture of a company in the midst of a profound transformation.

• Full-Year Declines: Fiscal 2025 concluded with an 8% drop in net sales to $14.33 billion and a GAAP net loss per share of $3.15, compared to earnings of $1.08 per share in the prior year. Adjusted operating margin contracted by 220 basis points to 8.0%.
• Progress on Profit Recovery Plan: The company highlighted progress on its Profit Recovery and Growth Plan (PRGP), noting an expansion in adjusted gross margin to 74.0% despite lower sales, driven by operational efficiencies and strategic pricing. The plan aims to restore a solid double-digit adjusted operating margin over the next few years.
• Impairment and Restructuring Charges: The results were heavily impacted by $815 million in goodwill and other intangible asset impairment charges related to brands including Dr.Jart+, TOM FORD, and Too Faced, alongside $362 million in charges associated with restructuring activities.
• Regional and Category Performance: Skin Care and Makeup categories saw significant declines, while Fragrance sales were flat. Geographically, all regions reported lower sales, with the Europe, Middle East & Africa region experiencing the largest drop.
• Dividend and Outlook: The company announced a quarterly dividend of $0.35 per share. For fiscal 2026, it expects organic sales growth after three years of decline and provided an adjusted operating margin outlook of 9.4% to 9.9%, which factors in the anticipated tariff impact.

The earnings release presents a mixed but challenging quarter. While cost-control measures allowed the company to meet bottom-line expectations, the significant revenue miss and the new, unforeseen financial burden of tariffs have dampened investor confidence in the near-term recovery trajectory. The company’s ability to navigate these external pressures while successfully executing its extensive restructuring plan will be critical to watch.

For a detailed breakdown of historical earnings, future estimates, and analyst projections, review the earnings and estimates page for EL.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial advice, or any recommendation to buy or sell securities.