Estée Lauder (EL) Stock Soars 13% on Strong Q3 Results and Upgraded Forecast

TLDR

• Estée Lauder’s third-quarter adjusted earnings per share reached $0.91, surpassing the $0.65 Wall Street estimate
• Quarterly revenue totaled $3.71 billion, reflecting a 5% increase compared to last year
• Company increased full-year adjusted EPS forecast to $2.35–$2.45, exceeding the $2.22 analyst consensus
• Beauty giant plans an additional 3,000 workforce reductions, pushing total cuts to 9,000–10,000 employees
• Shares climbed approximately 13% during premarket hours Friday

Shares of Estée Lauder surged approximately 13% in Friday’s premarket session following the beauty conglomerate’s third-quarter earnings report that exceeded Wall Street expectations and an upward revision to its annual forecast.

The Estée Lauder Companies Inc., EL

The company delivered adjusted earnings per share of $0.91, significantly outpacing the analyst estimate of $0.65. Quarterly revenue reached $3.71 billion, topping forecasts of $3.69 billion and marking a 5% climb from the previous year’s $3.55 billion. On an organic basis, net sales expanded 2% year-over-year.

The impressive results were largely fueled by robust fragrance sales, which saw organic revenue jump 10%. High-end brands such as Le Labo, KILIAN PARIS, BALMAIN Beauty, and TOM FORD each recorded double-digit percentage increases.

Meanwhile, skin care revenue remained essentially unchanged, while makeup and hair care segments both recorded flat organic performance during the quarter.

China Market Shows Continued Strength

From a regional perspective, Mainland China demonstrated 6% organic expansion. This marked the third straight quarter in which Estée Lauder exceeded the broader prestige beauty sector’s performance in that critical market.

The company’s Priority Emerging Markets segment achieved double-digit growth, while three of its four geographic regions posted overall gains.

Adjusted operating margin widened by 360 basis points to 15.0%, compared to 11.4% in the same period last year. Adjusted gross margin improved 140 basis points to 76.4%.

Analysts from Vital Knowledge highlighted the operating margin expansion as the most impressive aspect of the quarterly report, emphasizing that aggressive expense reduction initiatives played a central role.

Expanded Workforce Reduction Plan

Coinciding with the earnings announcement, Estée Lauder revealed intentions to eliminate up to an additional 3,000 positions worldwide. This expansion increases the total anticipated workforce reduction to between 9,000 and 10,000 employees, up from the previously announced target of up to 7,000.

At the upper end of this range, the reductions would account for roughly 17.5% of the company’s total headcount of 57,000 as of June 2025.

Over 70% of these additional eliminations will affect department store personnel, reflecting the company’s strategic pivot toward digital platforms and specialty retail partners like Ulta, Sephora, Amazon, and TikTok Shop.

The restructuring initiative is designed to generate up to $1.2 billion in cost savings.

CEO Stéphane de La Faverie attributed the quarterly progress to the company’s “Beauty Reimagined” strategic initiative, highlighting improved results in luxury segments across China and Europe.

Estée Lauder is also reportedly engaged in merger discussions with Puig, which owns Jean Paul Gaultier. One industry analyst suggested the enlarged job reduction target could indicate preparations to eliminate redundant positions on Estée Lauder’s side in anticipation of a potential transaction.

The company lifted its full-year adjusted EPS guidance to a range of $2.35–$2.45, up from the previous outlook of $2.05–$2.25. Management also anticipates organic net sales growth will land at the upper end of its prior 1%–3% range.

Looking ahead to fiscal 2027, Estée Lauder provided preliminary guidance projecting organic net sales growth of 3%–5% and an adjusted operating margin between 12.5% and 13.0%.

The company cautioned that its current projections assume no worsening of geopolitical conditions, including tariff policies and consumer confidence levels, and no additional business interruptions in the Middle East beyond May 2026.

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