The Estée Lauder Companies Inc. Q3 FY2026 earnings call

Today, Estee Lauder raised its fiscal 26 outlook and offered preliminary view on fiscal 27. Third quarter organic sales rose 2%, operating margin expanded, EPS grew 40%. Nine months of fiscal 26: three of four regions grew organically, led by mainland China and priority emerging markets; Americas stabilized. Categories: France rose double-digit, skincare low single digits, hair care stabilized, makeup decline slowed. Action plan priorities: accelerated consumer coverage, delivered transformative innovation, boosted consumer-facing investment, achieved restructuring milestones, established one ELC operating model.

For the third quarter, organic sales rose 2%, operating margin expanded significantly, bolstered in part by gross margin expansion, and EPS grew 40%. For the nine months of fiscal 26, three of four regions grew organically, led by high single-digit growth in mainland China and double-digit growth in priority emerging markets. Americas stabilized. Fiscal year to date, France rose double-digit organically, skincare grew low single digits, hair care stabilized and makeup rate of decline slowed.

Raised fiscal 26 outlook; expects organic sales growth of 3% at high end of prior range, operating margin 10.7% - 11%; EPS range $2.35 - $2.45. Preliminary view on fiscal 27: net sales growth 3% - 5%, operating margin 12.5% - 13%.

Disruption in the Middle East negatively impacted third quarter sales growth in UChem by approximately one percentage point; current geopolitical and macroeconomic environment remains uncertain and drives global volatility.

Q: Perspective on long-term margin potential; A: Stefan discussed margin expansion from 8% to expected 13% by fiscal 27 with leverage from growth and cost efficiencies.

Q: Acceleration in global prestige category; A: Stefan and Akhil talked about category resilience, emerging market growth, online growth, and market share gain.

Q: Americas growth in FY27; A: Stefan said expected to turn corner with rebalancing channels and innovation.

Q: UK market strategy; A: Chris was told UK sequential improvement, emerging markets have double-digit growth.

Q: EBIT margins and duty-free; A: Bonnie was answered on margin drivers and travel retail improvement.