On August 19, U.S. high-end beauty giant Estée Lauder Companies Inc released its 2026 fiscal year results ending June 30: net sales increased by 5% year-on-year to US$15 billion (organic growth of 3%), and organic net sales in the mainland of China achieved a high single-digit growth of 9%, making it one of the core driving markets.

In fiscal year 2026, the group's billion-dollar brands will expand from four (Clinique, Estee Lauder, Sea Blue Mystery, and M.A.C) to six, adding two major brands: Jo Malone London and TOM FORD. The Ordinary is fast approaching this milestone

The annual growth was jointly driven by perfumes, skin care, and cosmetics categories. Among them, the perfume category grew organically by 10%, ranking among the top in the industry; the skin care category grew by 4%. The trend of organic sales in the cosmetics category has improved and is basically flat throughout the year. Relying on stronger innovative products and expanding consumer coverage in high-growth channels, the cosmetics category is expected to resume growth in fiscal year 2027.

Stéphane de La Faverie, President and CEO of Estee Lauder Group, said: "I am extremely proud of the team's 2026 fiscal year results, and the actual performance exceeded our expectations at the beginning of the year. Our organic sales increased by 3%, restarting growth; all brands achieved widespread growth and significantly improved operating margins. We ended the year with a strong performance, with organic sales growth accelerating to 5%, achieving growth for four consecutive quarters, and further enhancing profitability. We are fully implementing the strategic vision of 'Beauty Reimagined'. The integrated operating ecosystem is continuing to empower the entire organization to achieve efficient and standardized collaborative operations.

For fiscal year 2027, we are confident to further accelerate organic sales. At the same time, we raised our expectations and targeted stronger adjusted operating margins. The Group will leverage its core advantages to promote more diversified growth in different product categories and different regional markets, including accelerating business expansion in the North American market."

As of the close on August 19, Estee Lauder Group's share price rose 16.3% from the previous trading day to US$98.01. The latest market value was US$35.46 billion. The share price has increased by 9.06% in the past 12 months.

In fiscal year 2026, the Group achieved an increase in its share in multiple core high-end beauty markets, with the the mainland of China market achieving value share growth in the fourth quarter and the whole year. At present, the mainland of China has achieved market share growth for six consecutive quarters.

Specifically, throughout the fiscal year, in the the mainland of China market, skin care brands achieved high single-digit growth, cosmetics achieved medium single-digit growth, and perfumes grew in double digits. The group pointed out that the mainland of China's Double Eleven and 618 promotion nodes performed well: relying on brands such as Estée Lauder, La Mer, and Jo Malone London, they won the first place in the categories of high-end beauty, luxury and high-end perfumes on multiple platforms.

"In each quarter of fiscal year 2026, Estee Lauder Group outperformed the high-end beauty market in the mainland of China, achieving market share growth throughout the year, mainly driven by La Mer, Le Labo and TOM FORD," Stéphane de La Faverie pointed out in an analyst conference call.

In the fourth financial situation, the Group has a total of 11 brands that have achieved retail sales growth in the the mainland of China market, of which 6 brands have achieved double-digit growth, reflecting the increasingly diversified growth of the brand portfolio.

Stéphane de La Faverie pointed out that the reason why the group was able to win in the China market is not only the team's excellent implementation execution capabilities, but also another key factor-we are "accelerating the innovation of 'in China, for China.' With the comprehensive acceleration of various work in China's Innovation R & D Center, about 30% of innovations currently come from China and serve the China market. This also allows us to further customize products based on the needs of China consumers in skin care and makeup."

Other markets that perform well include:

Japan: Value share growth was achieved in the fourth quarter and the full year; full-year growth was driven by perfumes and cosmetics.

South Korea: Value share growth returned in the fourth quarter, with retail sales accelerating from mid-to-high single digits to double digits, with cosmetics and skin care as the main driving forces.

United States: Sales share increased in the fourth quarter and the full year, with all categories contributing to full-year results.

Western Europe: Value share growth returned in the fourth quarter (including the UK), with skin care and perfumes driving the overall share increase.

Throughout the fiscal year, Estee Lauder Group added a net of 33 independent stores in the fragrance category around the world, with Le Labo and Jo Malone London expanding most prominently.

By channel, online organic sales achieved double-digit growth, accounting for a record 34% of sales. Among them, online sales channels in mainland China have achieved strong double-digit growth, and online business has accounted for more than 50% of the Group's China business.

Estee Lauder Group emphasized the importance and contribution of "product and business innovation". This fiscal year, the Group continued to shorten the launch cycle of new products, launching breakthrough innovative products in various categories that closely follow consumer trends and have commercial potential. In fiscal year 2026, 23% of sales will come from new product innovation.

Profitability improved faster than expected throughout the year

The group also pointed out that PRGP-related measures are expected to be basically completed in fiscal year 2027, and most of the full-cycle revenue is expected to be released in the new fiscal year.

In fiscal year 2026, the group's free cash flow reached US$1.32 billion, compared with US$670 million in the previous year, benefiting from strong operating cash flow and reduced capital expenditures. The Group will continue to improve free cash flow through operational efficiency improvement and investment structure optimization.

In addition, the Group paid a deferred consideration of US$300 million in this fiscal year, corresponding to the acquisition of the TOM FORD brand in fiscal year 2023 (including an early payment of US$150 million in the third quarter of fiscal year 2026, which was originally scheduled to expire in July 2026); At the same time, dividend expenditure was US$508 million.

Regarding whether there are new M & A targets, Stéphane de La Faverie pointed out in an analyst conference call: "Our core focus has been and will continue to be to strengthen our main business. We will continue to carry out minority investment and single-brand acquisition transactions to enrich the brand matrix. Invested parties can use our capabilities to build business and expand scale, and obtain a considerable return on invested capital (ROIC). KILIAN PARIS, Le Labo, and The Ordinary are good examples. They are the company's three fastest-growing brands in fiscal year 2026. We are confident that Forest Essentials, which has just been officially announced to be included under our command, will also repeat this success. Be clear: For the foreseeable future, we will not consider large disruptive M & A transactions that will distract us from investing in mature winning strategies."

--By geographical market--

* The following net sales are calculated based on organic changes in net sales, excluding the positive impact of foreign currency exchange rate conversion

Net sales grew organically by 3%, and all regional markets achieved growth. The core drivers are as follows:

the mainland of China market: Organic net sales achieved high single-digit growth (+9%), driven by new products and existing products, and the performance was particularly outstanding during the promotion node and the holiday season; consumer-oriented marketing investment drove sales, targeted customer base expansion also contributed to growth, and online and all-channel combined achieved strong double-digit growth.

Asia-Pacific market: Organic net sales achieved mid-single digit growth (+4%), mainly from Asian tourism retail business: tourism retail sales in South Korea and tourism retail sales in the Special Administrative Region of China Hong Kong increased, retailers turned to profit-oriented duty-free business models, narrowed discounts, and combined with a rebound in the number of outbound tourists;

Hainan's tourism retail sales increased, and retail sales improved due to warmer passenger flow and offline marketing activities;

The decline in tourism retail sales in other the mainland of China was mainly due to the periodic pressure brought by the replacement of duty-free operators at Beijing and Shanghai airports (including supporting online businesses).

Adjusted operating results achieved growth, driven by:

Americas: Adjusted operating profit increased 17%. Benefiting from the increase in net sales and PRGP net income helped reduce non-consumer-facing expenses, although employee incentive costs returned to normal; increased consumer-facing investment to drive sales partially offset profits.

EUKEM (Europe, Middle East, Africa) market: Adjusted operating profit increased by 35%, and higher sales led to an increase in gross profit, which was partially offset by two factors: first, an increase in non-consumer-facing expenses, including a return to normal employee incentive costs; Second, increased consumer-facing investment to drive sales, new product launches, and targeted customer base expansion.

Asia-Pacific market: Adjusted operating profit increased by 48%, higher sales pushed up gross profit, while benefiting from PRGP net income and changes in business structure, the cost of sales fell.

the mainland of China market: Adjusted operating profit rose by 92%, mainly due to increased sales, combined with differences in the confirmation of local government subsidies and year-on-year benefits brought by relevant policy changes in the 2025 fiscal year; increased consumer-side investment was used for marketing activities, new products and customer base expansion, partially offsetting the increase in profit.

--By product category--

* The following net sales are calculated based on organic changes in net sales, excluding the positive impact of foreign currency exchange rate conversion

--Skin Care

Net sales increased by 4%, driven mainly by La Mer, The Ordinary and Estée Lauder.

Adjusted operating profit increased by 52%. Driven mainly by net sales growth and net benefits from PRGP, which helped reduce non-consumer expenses; although employee incentive costs returned to normal levels, they were partially offset. At the same time, the Group has increased its investment in consumer-oriented activities, new product launches and targeted customer base expansion, which has partially eroded profits.

La Mer's net sales growth was driven by new product innovations, including The new The NEW Rejuvenating Eye Cream, and mature star product lines such as The Treatment Lotion and The Moisturizing Soft Cream, which performed strongly during the promotion and holiday season.

The increase in The Ordinary's net sales is due to targeted customer base expansion, key marketing activities (including DECIEM's Abnormal Birthday Party event in April 2026), and the delivery rhythm of major promotion nodes.

Est

The increase in M.A.C's net sales was mainly due to the increase in shipments brought by the entry into some Sephora offline stores, online channels and Sephora counters in Kohl's shopping malls in the United States in March 2026; the lip category continued to perform well, with core major items including the Powder Kiss Lipstick series of lipstick and Lip Pencil lip liner.

TOM FORD achieved growth in net sales, the innovation of Eye Color Quad eye shadow disk drove the growth of the eye category; two foundations, Architecture Soft Matte Blurring Foundation and the new Architecture Radiation Hydrating Foundation, drove the growth of the base makeup category.

Bobbi Brown's net sales declined. On the one hand, the weak retail market caused the lip and eye categories to continue to weaken. On the other hand, the group's strategic resources were tilted towards products with better makeup performance.

The decline in Too Faced's net sales was mainly due to the sluggish brand retail environment, the high contrast pressure brought by the high shipment base of innovative products in the same period last year, and the closure of stores in some multi-brand collective retail stores.

--Fragrance

Net sales increased by 10%, high-end brands achieved double-digit growth, many of their brands improved in an all-round way, and all regional markets achieved growth;Le Labo, TOM FORD, and KILIAN PARIS were the main growth engines.

Adjusted operating profit increased by 27%, mainly due to the increase in gross profit driven by rising sales; increased investment in consumers was used for marketing activities, channel expansion and new product launches, which partially offset profits.

Le Labo's net sales growth mainly comes from classic collections, including the new Violette 30 and scented hand cream; the growth also comes from the expansion of targeted customer bases and the improvement of sales in existing channels.

TOM FORD's net sales increased, and new products such as Soleil Neige, Oud Voyager, and Figue Érotique created a halo effect, driving sales of older products in the Private Blend and Signature series.

KILIAN PARIS 'net sales increased due to the mature product lines of Angels' Share, Love, don't be shy, the launch of new products from Angels 'Share on the Rocks and the expansion of targeted customer base.

--Hair Care

Net sales fell 1%, and Aveda fell, but The Ordinary's growth largely offset this pressure.

The adjusted operating results turned from loss in the previous year to profit. Thanks to strict expense control and PRGP net income, a drop in non-consumer expenses and sales costs was achieved.

The decline in Aveda's net sales stems from the brand's strategic adjustments focusing on long-term results: including a planned reduction in online promotions, the closure of inefficient stores (including some self-owned independent stores), and continued pressure on the salon channel. The above decline completely offset the benefits brought by the arrival of popular new products such as Amazon's high-end beauty stores and Miracular Oil in the United States in the fourth quarter of fiscal 2025.

Growth in The Ordinary hair care business comes from channel expansion and the market success of the Multi‑Peptide Serum for Hair Density hair care essence.

The Group expects that for the fiscal year 2027 ending June 30, 2027:

Organic net sales grew by 3% − 5%. Growth is expected to be more diversified. Perfume and skin care categories will continue to grow, cosmetics will resume growth, and the North American market will accelerate growth.

Adjusted operating profit margin of 12.7%‑13.5%;

Net cash flow from operating activities US$1.3 - 1.4 billion

In fiscal year 2027, Estee Lauder Group said it will further strengthen its advantages: enhance brand appeal, launch larger and more breakthrough innovations, increase investment in consumers, and expand high-growth channels and markets.

Appendix: Breakdown of net sales and operating profit by geographical market and product category for fiscal year 2026

|Source: Official earnings report, analyst conference call minutes

|Photo source: Official financial report

|Editor in charge: LuxeCO

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