Estée Lauder’s fourth quarter results for 2025 met Wall Street’s revenue expectations but were met with a significant negative market reaction. Management cited strong growth in skincare and fragrance, especially in Mainland China and travel retail, as well as improved operating margins compared to the prior year. However, the company acknowledged ongoing challenges in its makeup segment and structural shifts in North America, with CEO Stephane de La Fabri noting, “We have a lot more work to do on makeup, and we are with the team in New York and frankly, with all our teams around the world, we're continuing just improve things.” The market’s reaction reflects investor concerns regarding the sustainability of margin improvements and the pace of recovery in key regions.
Is now the time to buy EL? Find out in our full research report (it’s free for active Edge members).
Estée Lauder (EL) Q4 CY2025 Highlights:
- Revenue: $4.23 billion vs analyst estimates of $4.22 billion (5.6% year-on-year growth, in line)
- Adjusted EPS: $0.89 vs analyst estimates of $0.83 (6.6% beat)
- Adjusted EBITDA: $805 million vs analyst estimates of $751.9 million (19% margin, 7.1% beat)
- Management raised its full-year Adjusted EPS guidance to $2.15 at the midpoint, a 7.5% increase
- Operating Margin: 9.5%, up from -14.5% in the same quarter last year
- Organic Revenue rose 4% year on year (beat)
- Market Capitalization: $38.12 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Estée Lauder’s Q4 Earnings Call
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Bonnie Herzog (Goldman Sachs) asked about the expected flat growth in the Americas despite easier comparisons and new channel launches. CEO Stephane de La Fabri highlighted momentum in share gains but acknowledged channel rebalancing and consumer headwinds in Latin America, citing active tariffs as a challenge.
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Filippo Folorni (Citi) inquired about the state of the travel retail business, especially in Hainan and North Asia. CEO de La Fabri described strong market share gains in Hainan but detailed ongoing disruption in Beijing and Shanghai due to retailer transitions, expecting normalization later in the year.
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Steve Powers (Deutsche Bank) questioned profitability trends in makeup. CFO Akhil Shrivastava explained that makeup margins were temporarily impacted by new product launch costs but emphasized ongoing efforts to improve category profitability through innovation and distribution changes.
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Lauren Lieberman (Barclays) asked about the sustainability of China’s growth outside major promotional periods. CEO de La Fabri pointed to gains across all categories and noted efforts to diversify sales beyond holiday events through freestanding stores and experiential retail.
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Chris Carey (Wells Fargo) sought clarity on European market trends and the medium-term outlook for the UK. CEO de La Fabri acknowledged sequential improvements but highlighted ongoing consumer sentiment challenges in Western Europe, while expressing optimism about emerging markets.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will closely monitor (1) the pace of new product adoption and innovation-led growth, (2) stabilization and normalization in North Asia travel retail as retailer transitions conclude, and (3) further margin improvements from operational efficiency and cost-saving initiatives. Progress in expanding online and specialty retail channels, as well as sustained market share gains in China and emerging markets, will also be key areas of focus.
Estée Lauder currently trades at $104.45, down from $119.61 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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