Pauline Brown, former chair of LVMH North America, weighed in on Estée Lauder's recent financial results and broader luxury market trends. While the exact content of her discussion on "The Close" was not fully transcribed, other search results indicate she has previously discussed LVMH's outlook, the global luxury market, and a "K-shaped recovery" within the luxury retail sector, suggesting diverging performance even among high-end brands. She noted a significant pickup in interest but questioned its conversion into actual sales.
Estée Lauder Companies reported strong fiscal 2026 results, with organic net sales growing 3% for the full year to $14.811 billion, accelerating to 5% in the fourth quarter. Net sales for the full year increased 5% to $15.049 billion, beating analyst expectations. The company achieved significant operating margin expansion, with adjusted operating margin increasing by 320 basis points to 11.2%. Gross margin also expanded by 150 basis points to 75.5%.
ELC's CEO, Stéphane de La Faverie, highlighted the success of the "Beauty Reimagined" strategy, leading to the company's strongest quarter in years. The company increased its portfolio of billion-dollar brands from four to six, adding Jo Malone London and Tom Ford. Fragrance sales were a bright spot, up 10% in Q4 to $618 million and 10% for the full year to $2.8 billion. Skincare sales rose 7% in Q4 to $1.85 billion and 4% for the full year to $7.3 billion. Makeup remained flat at $4.3 billion for the year but was up 2% in Q4.
Geographically, the Americas grew 1% to $4.5 billion, and Mainland China revenues increased 9% to $3.1 billion. Travel retail now accounts for 15% of the business, down from 28% in 2021. For fiscal 2027, Estée Lauder is forecasting net sales growth of 3% to 5% and expects continued growth in fragrance and skincare, with a return to growth in makeup.
Analyst Oliver Chen from TD Cowen noted that investor focus would shift to the durability of earnings acceleration in fiscal years 2027 and 2028, particularly concerning the sustainability of North America growth, China's performance against tougher comparisons, the pace of makeup recovery, and remaining margin opportunities.
