Estée Lauder’s first quarter of fiscal 2027 saw sales rise 7%, adjusted EPS double, and margin climb to 12.1%, keeping its 13‑quarter EPS‑beat streak alive and raising questions about China demand and future growth.
Estée Lauder posts 7% sales rise, EPS doubles, and margin climbs to 12.1%
On Monday, the Estée Lauder Companies (ELC) reported its first quarter of fiscal 2027—three months ending September 30, 2026—showing a 7% increase in net sales to $3.715 billion and adjusted earnings per share (EPS) that more than doubled to $0.72 from $0.32 a year earlier. The adjusted operating margin rose to 12.1%, the best for the quarter in four years, though still below the 17.0% margin seen in 2022. The results keep the company’s 13‑quarter EPS‑beat streak alive, a milestone few consumer‑staple firms can claim.
What the numbers reveal
Fragrance was the star driver, with sales up 19% and operating income up 93% to $166 million. Skin‑care grew 4% on an organic basis, led by La Mer and The Ordinary, while makeup rose 1% and hair‑care remained flat. Regionally, Asia/Pacific led growth at 10% on an organic basis, driven by duty‑free sales in mainland China’s airports; mainland China itself grew 9%, and the Americas and EUKEM each grew 4%.
Adjusted operating margin has climbed each year since the 3.1% low in 2023, reaching 12.1% in Q1 2026. The company’s president and CEO, Stéphane de La Faverie, said the firm is now building “diverse drivers for sustained profitable growth.” He also highlighted a planned 10,000‑job reduction and increased spend on advertising and stores to win shoppers.
Why it matters for investors and the beauty industry
EPS beat streak – A 13‑quarter run of beating consensus EPS is rare in consumer staples and can influence market sentiment ahead of the open.
Margin recovery – The jump to 12.1% shows the company’s restructuring and cost‑control measures are working, but the gap to 2022 levels signals room for improvement.
China demand – Mainland China’s 9% growth is a key variable for analysts; any slowdown could dent the company’s outlook.
Fragrance dominance – A 19% jump in fragrance sales underscores the premium segment’s resilience and could drive future margin expansion.
– The announced 10,000‑job cut and higher advertising spend are bets on long‑term growth that may affect short‑term earnings.
What to watch next
Estée Lauder raised its full‑year forecast, but the company still lags behind its 2022 performance. Investors will be watching how the brand navigates the evolving Chinese luxury market and whether the fragrance-led momentum can sustain higher margins. The earnings calendar for the week of November 2 also features other consumer‑sector names such as Marriott and Fox, so market positioning will be key.
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