Q4 2026 Estee Lauder Companies Inc Earnings Call Transcript
Key Points
- Organic sales grew 3% in fiscal 2026, with positive performance every quarter and a strong 5% growth in Q4, the best of the year.
- Operating margin expanded 320 basis points to 11.2%, and diluted EPS grew 66%, significantly exceeding initial outlook.
- Skincare and fragrance delivered strong growth, with fragrance up 10% and skincare up 4%, while makeup improved its trend by 500 basis points.
- Mainland China led regional growth with 9% organic sales growth, gaining prestige beauty share every quarter, and travel retail returned to growth.
- Online sales reached a record 34% of reported sales, up 3 points, with double-digit organic growth and strong share gains in key markets.
- Haircare remained a drag, failing to return to organic sales growth, though Aveda showed early turnaround signs in the US.
- EUKEM region faced business disruptions from the Middle East conflict, reducing Q4 growth by 2% and impacting second-half results.
- Fiscal 2027 organic sales growth guidance of 3% to 5% implies potential deceleration at the low end, with first-half growth expected to be stronger than second-half.
- Cash flow from operations is expected to decline to $1.3-$1.4 billion in fiscal 2027, down from $1.8 billion, due to higher restructuring payments and working capital needs.
- The company remains cautious on M&A, ruling out transformational deals, which may limit portfolio expansion opportunities.
Good day, everyone, and welcome to The Estée Lauder Companies fiscal 2026 fourth-quarter and full-year conference call. Today's webcast is being recorded. For opening remarks and introductions, I would like to turn the call over to the Senior Vice President of Investor Relations, Ms. Rainey Mancini.
Hello. On today's webcast are Stéphane de La Faverie, President and Chief Executive Officer; and Akhil Shrivastava, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC where you'll find factors that could cause actual results to differ materially from these forward-looking statements.
To facilitate the discussion of our underlying business, the commentary on our financial results and expectations is before restructuring and other charges and adjustments disclosed in our press release. Unless otherwise stated, references to net
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