The Estée Lauder Companies Inc.

Fiscal 2026 reported sales rose 5% and organic sales grew 3%. Full-year gross margin was 75.5%, up 150 basis points, and operating margin was 11.2%, up 320 basis points. Diluted EPS increased 66% to $2.51 for the full year, while Q4 EPS was $0.39 versus $0.09 last year. Net cash flows from operations were $1.8 billion, up from $1.3 billion, cash on hand ended at $3.5 billion, and CapEx was $457 million versus $602 million last year. For fiscal 2027, management expects organic sales growth of 3% to 5%, operating margin of 12.7% to 13.5%, an effective tax rate of approximately 33% to 34%, EPS of $3.10 to $3.35, operating cash flow of $1.3 billion to $1.4 billion, and CapEx of about 4% of sales. They also said the first half of fiscal 2027 should grow faster than the second half, and the Middle East conflict is not expected to be material to fiscal 2027 results based on current information.

Stephane de la Faverie struck an upbeat tone and framed fiscal 2026 as proof that Beauty Reimagined is working. He emphasized that the company is becoming more consumer-centric, faster, and more disciplined, and said the focus now is on accelerating the core business rather than transformational M&A. He highlighted broader growth across brands and geographies, stronger innovation, and greater operating leverage from a slimmer organization.

Akhil Shrivastava focused on the financial execution behind the turnaround: gross margin reached 75.5%, operating margin reached 11.2%, and operating cash flow rose to $1.8 billion despite higher restructuring payments. He said PRGP approvals were completed as of June 30, with $823 million of cumulative fiscal 2026 charges, and noted CapEx fell to $457 million as the company prioritized consumer-facing investments. For fiscal 2027, he raised the margin outlook to 12.7% to 13.5%, guided to EPS of $3.10 to $3.35, and said most restructuring cash payments will be behind the company after fiscal 2027, while deleveraging remains a cash priority.

Analysts pressed on whether the higher fiscal 2027 margin guide implies more upside from PRGP and SG&A savings; management said the beat in fiscal 2026, continued nonconsumer-facing optimization, and PRGP run-rate benefits support the higher outlook, with more of the full benefit showing in 2028. Questions also focused on why sales guidance of 3% to 5% is described as acceleration; management said the midpoint and top end represent acceleration versus fiscal 2026, driven by a stronger first-half innovation pipeline and faster North America growth. Several questions challenged travel retail volatility and China inventory management, and management responded that inventories are aligned to demand, travel retail has returned to positive growth recently, and China/travel retail are managed through a coordinated ecosystem with localized launches and channel coordination.