Estée Lauder reported a 5% rise in third-quarter net sales to $3.7billion, though organic growth was a more modest 2%. The results were clouded by an $84 million charge tied to a potential securities class action settlement, which pushed reported operating income down 19% while cost savings helped widen gross margins to 76.4%.
By category, Fragrance stood out with a 10% organic sales increase, driven by Le Labo, Kilian, Balmain, and Tom Ford. Skincare was flat as double-digit gains from The Ordinary and high single-digit growth from La Mer were offset by declines at Clinique and Origins. Makeup also stalled, with Estée Lauder’s Double Wear relaunch boosting the namesake brand by double digits, but Clinique and Too Faced lost ground. Haircare was also flat.
Regionally, mainland China led with 6% organic growth, gaining share in prestige beauty for the third consecutive quarter. The Europe, UK, and Middle East region posted a 3% organic increase, while the Americas were flat. Asia Pacific excluding China slipped 1% organically, though operating income in the region improved.
For the full year, the company now expects organic sales growth of about 3%, at the top of its prior range, with adjusted operating margin between 10.7% and 11%. A preliminary view for fiscal 2027 forecasts sales growth of 3% to 5% and an adjusted margin approaching 13% assuming no material disruption from the Middle East conflict beyond May 2026.