Estée Lauder ((EL)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Estée Lauder’s recent earnings call conveyed a generally optimistic sentiment, highlighting a strong start to fiscal 2026. The company reported robust growth in China, emerging markets, and online sales, although challenges remain in the Americas and Western Europe, with continued volatility in Travel Retail.
Return to Growth with Strong Q1 Results
Estée Lauder marked a significant turnaround in the first quarter of fiscal 2026 with a 3% organic sales growth, recovering from a 13% decline in the previous quarter. This positive shift was complemented by a 300 basis point expansion in operating margin, reaching 7.3%.
Impressive Growth in China
Mainland China emerged as a standout performer, recording double-digit growth. Seven of Estée Lauder’s brands achieved double-digit increases, with Le Labo leading the charge with nearly triple-digit growth. The company successfully gained market share across all categories in the region.
Successful Expansion in Emerging Markets
Estée Lauder experienced high single-digit growth in its priority emerging markets. Notably, Mexico, Turkey, and India posted double-digit growth, underscoring the company’s strategic focus on these regions.
Strong Online Sales Performance
The company’s global online organic sales growth accelerated to double digits, driven by strong performances on platforms such as Tmall, JD, Douyin, and Notino, along with new investments in TikTok Shop.
Partnership with Shopify
In a strategic move to modernize and scale its direct-to-consumer business globally, Estée Lauder announced a partnership with Shopify. This collaboration aims to enhance the omnichannel consumer experience.
Decline in Americas
Despite global successes, the Americas region faced challenges, with sales in makeup and hair care categories declining, resulting in a low single-digit decrease in overall sales.
Challenges in Western European Markets
Western Europe presented a mixed picture for Estée Lauder, with Prestige Beauty experiencing slow growth and, in some cases, negative growth. While France and Spain gained market share, they continue to face significant challenges.
Volatility in Travel Retail
Travel Retail remains a volatile segment, particularly in Asia, where conversion rates have not kept pace with increased foot traffic, posing ongoing challenges for the company.
Forward-Looking Guidance
Estée Lauder’s guidance for fiscal 2026 reflects a promising start, with expectations of flat to 3% organic net sales growth for the full year. The company aims to enhance its operating margin to solid double digits over the coming years through strategic initiatives under its Beauty Reimagined plan, focusing on accelerating consumer coverage, driving innovation, and increasing consumer-facing investments.
In summary, Estée Lauder’s earnings call highlighted a positive outlook for fiscal 2026, driven by strong performances in China, emerging markets, and online sales. While challenges persist in the Americas, Western Europe, and Travel Retail, the company’s strategic initiatives and partnerships, such as with Shopify, position it well for future growth.