Estee Lauder Companies Inc (NYSE:EL, XETRA:ELAA) shares tumbled nearly 22% in early trading Thursday, as investors weighed the company’s mixed signals on growth and profit pressures despite a solid quarterly performance.
The luxury cosmetics maker raised its full-year adjusted earnings forecast on strong second-quarter results but reiterated that tariff-related headwinds could slice roughly $100 million from its profits, mostly in the second half of fiscal 2026.
Estée Lauder reported Q2 revenue of $4.23 billion, slightly above analysts’ estimates of $4.22 billion, and adjusted earnings per share of $0.89, beating Street forecasts of $0.83. Organic sales rose 4% year-on-year, accelerating from a 3% gain in Q1, powered by a 13% surge in Mainland China.
The company’s turnaround strategy, dubbed the Profit Recovery and Growth Plan (PRGP), helped lift adjusted operating margin by 290 basis points to 14.4%, offsetting some of the tariff pressures. Management cited progress on cost-cutting initiatives, workforce reductions, and operational improvements, while signaling that the most acute inventory and travel retail volatility is behind them.
For fiscal 2026, Estée Lauder now expects adjusted EPS of $2.05 to $2.25, slightly below Street consensus of $2.19. Organic net sales growth is projected at 1% to 3%, with the company expecting modest growth in Mainland China and flat performance in the Americas. Tariff-related costs are expected to reduce operating profit by about $100 million.
Segment-wise, skincare led sales at $2.05 billion, up 7% year-over-year (YoY), followed by fragrance at $812 million (+9%), makeup at $1.16 billion (+1%), and hair care at $168 million (+6%). Geographically, the Americas contributed $1.22 billion in sales, Europe/Kem $1.18 billion, Asia/Pacific $900 million, and Mainland China $928 million.
Jefferies noted that while Q2 sales and EPS beat expectations, the company’s full-year EPS guidance came in below Street models. “Q2 organic sales came in ahead of estimates, and EPS was above on strong operating margin versus Street models,” the firm wrote.
Looking ahead, investors will be watching Estée Lauder’s commentary on travel retail consumption in Asia, operating margin levers, cash flow allocation, and ongoing innovation initiatives across its brands.