Beauty products company Estée Lauder (NYSE: EL) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 5.6% year on year to $4.23 billion. Its non-GAAP profit of $0.89 per share was 6.6% above analysts’ consensus estimates.
Is now the time to buy EL? Find out in our full research report (it’s free for active Edge members).
Estée Lauder (EL) Q4 CY2025 Highlights:
- Revenue: $4.23 billion vs analyst estimates of $4.22 billion (5.6% year-on-year growth, in line)
- Adjusted EPS: $0.89 vs analyst estimates of $0.83 (6.6% beat)
- Adjusted EBITDA: $805 million vs analyst estimates of $751.9 million (19% margin, 7.1% beat)
- Management raised its full-year Adjusted EPS guidance to $2.15 at the midpoint, a 7.5% increase
- Operating Margin: 9.5%, up from -14.5% in the same quarter last year
- Organic Revenue rose 4% year on year (beat)
- Market Capitalization: $34.83 billion
StockStory’s Take
Estée Lauder’s fourth quarter results for 2025 met Wall Street’s revenue expectations but were met with a significant negative market reaction. Management cited strong growth in skincare and fragrance, especially in Mainland China and travel retail, as well as improved operating margins compared to the prior year. However, the company acknowledged ongoing challenges in its makeup segment and structural shifts in North America, with CEO Stephane de La Fabri noting, “We have a lot more work to do on makeup, and we are with the team in New York and frankly, with all our teams around the world, we're continuing just improve things.” The market’s reaction reflects investor concerns regarding the sustainability of margin improvements and the pace of recovery in key regions.
Looking forward, Estée Lauder’s raised profit guidance is built on expectations for continued momentum in online channels, accelerated product innovation, and further operational efficiency gains. Management highlighted plans to increase consumer-facing investments and expand reach in high-growth channels, with a particular focus on China and emerging markets. CFO Akhil Shrivastava cautioned about potential headwinds, stating, “We remain cautious of potential near-term headwinds including those from macroeconomic, geopolitical and retailer-specific uncertainties.” The company’s strategy includes launching new products in skincare and makeup, while also addressing margin pressures from tariffs and higher consumer investments.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to strength in skincare and fragrance, a rebound in China, and ongoing transformation initiatives, but pointed to margin pressure and underperformance in makeup as key challenges.
-
China and Emerging Market Momentum: Estée Lauder gained market share and saw double-digit growth in Mainland China, with brands like Tom Ford and La Mer leading the way. Priority emerging markets also delivered double-digit growth, driven by targeted innovation and increased investments.
-
Travel Retail Shifts: The company reported high single-digit retail sales growth in Hainan duty-free, but noted disruptions in North Asia travel retail due to ongoing changes in airport concessions and retailer transitions, especially in Beijing and Shanghai airports. Management expects normalization as these transitions settle.
-
Online Channel Expansion: The company expanded its presence across Amazon’s premium beauty stores, TikTok Shop, and other e-commerce platforms, contributing to high single-digit online organic sales growth. Management views online as a key growth channel, expecting it to exceed 31% of reported sales in the coming year.
-
Makeup Segment Underperformance: Makeup profitability lagged due to upfront costs related to new product launches and continued restructuring. Management is accelerating innovation and distribution changes, including MAC’s entry into Sephora US, to address this underperformance.
-
Operational Efficiency Initiatives: The PRGP (profit recovery and growth plan) delivered ongoing cost savings, supporting margin expansion despite headwinds from tariffs and increased consumer-facing investments. Strategic partnerships, like the new enterprise services agreement with Accenture, aim to further streamline operations.
Drivers of Future Performance
Estée Lauder’s forward guidance is driven by product innovation, expansion in high-growth channels, and a continued focus on operational efficiency, balanced against macro and market-specific risks.
-
Product Innovation Pipeline: Management is emphasizing rapid launch cycles, aiming for 30% of innovations launched within a year. Notable new products include next-generation foundations, eye creams, and new fragrance lines, which are expected to support both topline growth and improved market share.
-
Channel and Market Diversification: The company is shifting away from traditional department stores in favor of specialty retail, online, and direct-to-consumer channels. Penetration in high-growth markets like China, India, and the Middle East is a key focus, with management noting ongoing strength in these regions.
-
Efficiency and Margin Management: The PRGP is expected to continue yielding cost savings, but management flagged potential headwinds from tariffs and increased investment in consumer-facing activities. Strategic outsourcing and technology partnerships are designed to mitigate these pressures, though management remains cautious about volatility in certain markets.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will closely monitor (1) the pace of new product adoption and innovation-led growth, (2) stabilization and normalization in North Asia travel retail as retailer transitions conclude, and (3) further margin improvements from operational efficiency and cost-saving initiatives. Progress in expanding online and specialty retail channels, as well as sustained market share gains in China and emerging markets, will also be key areas of focus.
Estée Lauder currently trades at $95.38, down from $119.61 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
Stocks That Trumped Tariffs
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
