Estée Lauder Companies (NYSE: EL) saw its shares climb approximately 13% in premarket trading Wednesday, following a fourth-quarter earnings report that surpassed analyst expectations and an upward revision to its fiscal 2027 operating margin forecast. The beauty giant's results signal continued momentum in its turnaround strategy, driven by robust demand in premium fragrance and skincare categories.
Q4 earnings and revenue beat
For the fourth quarter, Estée Lauder reported adjusted earnings of $0.39 per share, comfortably ahead of the $0.32 consensus estimate. Revenue rose 6% year-over-year to $3.6 billion, matching analyst projections. Organic sales grew 5%, marking the fourth consecutive quarter of organic growth, a key indicator of underlying demand strength.
For the full fiscal year, adjusted EPS climbed to $2.51 from $1.51 in the prior year, topping the $2.43 consensus. Net sales increased 5% to $15.1 billion, while organic net sales grew 3%. CEO Stéphane de La Faverie highlighted the company's stronger organic sales growth and improved profitability, noting efforts to diversify growth across product categories and geographies.
The results come after several analysts had positioned for improvement. Citi had placed Estée Lauder on a 90-day upside catalyst watch ahead of the earnings, maintaining a Buy rating, while Jefferies had raised its price target. Piper Sandler had also anticipated a rebound in skincare growth after a flat previous quarter.
Fragrance and skincare drive growth
The company's recovery has been underpinned by strong demand for luxury fragrances and skincare products. Estée Lauder reported that its premium fragrance brands, including Le Labo and Tom Ford, drove a 10% increase in net sales during the fourth quarter. Le Labo benefited from expanded distribution and efforts to broaden its customer base.
As part of its Beauty Reimagined strategy, the company has accelerated premium product launches and increased investment in innovation and marketing. Management noted that resilient spending among affluent and younger consumers, particularly on trending products, has supported demand for its luxury offerings.
Looking ahead, Estée Lauder expects continued growth in fragrance and skincare during fiscal 2027, with a return to full-year growth in makeup anticipated. The Middle East conflict reduced fourth-quarter consolidated sales growth by 1 percentage point, but the company expects no material impact on fiscal 2027 results. It also received $38 million in tariff refunds during the quarter, partially offsetting the $102 million full-year gross impact of incremental tariffs.
Margin outlook raised
Profitability improved alongside the sales rebound. Full-year adjusted operating margin expanded by 320 basis points to 11.2%, aided by restructuring and efficiency initiatives. For fiscal 2027, the company maintained its organic sales growth outlook at a 4% midpoint but raised its adjusted operating margin guidance to a midpoint of 13.1%, up from 12.75% previously. The new range is 12.7% to 13.5%, compared with the earlier 12.5% to 13%.
Estée Lauder now expects adjusted EPS of $3.10 to $3.35, with the midpoint above analysts' estimate of $3.18. The restructuring plan is expected to deliver about $1.2 billion in gross benefits and result in a net reduction of approximately 10,000 positions.
Despite the latest gains, Estée Lauder shares have declined about 19.5% in 2026, underperforming the benchmark index's 12.4% increase. The sharp earnings-driven move underscores the market's reaction to the company's progress, with many retail investors likely to respond quickly through trading apps that enable real-time trading.
The improved margin outlook and strong quarterly results provide investors with fresh evidence of the company's turnaround trajectory. As the beauty sector continues to evolve, Estée Lauder's focus on premium products and operational efficiency appears to be yielding tangible results.
This article is for informational purposes only and does not constitute financial advice.
