The Estée Lauder Companies Inc. EL used its fiscal 2026 fourth-quarter call to frame fiscal 2027 around broader growth and higher profitability after restructuring approvals were completed.
Fiscal 2027 guidance pairs 3% to 5% organic sales growth with a higher adjusted operating margin range of 12.7% to 13.5%, with North America, Makeup and early-year innovation in focus.
EL Raises the Margin Bar for Fiscal 2027
Executive vice president and CFO Akhil Shrivastava said the higher margin outlook reflects fiscal 2026 strength, optimization of non-consumer-facing expenses and modest gross margin expansion. The prior preliminary range was 12.5% to 13.0%.
Fourth-quarter adjusted earnings were 39 cents per share, above the Zacks Consensus Estimate of 32 cents for a 21.90% surprise. Revenues were $3.627 billion, up 6%, and exceeded the consensus by 2.20%.
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The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
The Estee Lauder Companies Inc. price-consensus-eps-surprise-chart | The Estee Lauder Companies Inc. Quote
A Deutsche Bank analyst asked what changed since May. CFO Shrivastava said SG&A opportunities emerged after PRGP approvals were completed, while the full run-rate benefit of savings will extend into fiscal 2028.
Estée Lauder Front-Loads the Growth Plan
CFO Shrivastava said organic sales growth should be stronger in the first half than the second, reflecting more early innovation, improving travel retail shipments and a lower prior-year shipment base.
President and CEO Stéphane de La Faverie said fiscal 2027 growth should be more diversified across categories, geographies and channels. He expects continued Fragrance and Skin Care growth and a return to growth in Makeup.
CEO De La Faverie said innovation should rise 200 to 250 basis points as a percentage of sales in fiscal 2027, led by Skin Care, while One ELC supports faster execution.
EL Defends Travel Retail Discipline
A Barclays analyst questioned how much the outlook depends on travel retail shipment timing. CEO De La Faverie said inventories are in a good position and EL is shipping to demand.
CEO De La Faverie added that global travel retail returned to positive retail growth in June and July, with Hainan posting double-digit growth in the fourth quarter. Travel retail represented approximately 15% of fiscal 2026 sales.
A Wells Fargo analyst asked how EL manages mainland China and Asia travel retail together. CEO De La Faverie described coordinated leadership and launch planning, including alignment around major shopping events.
Estée Lauder Pushes North America and Makeup
CEO De La Faverie said North America is a fiscal 2027 focus after returning to organic growth in the fourth quarter. He described the improvement as retail-driven and highlighted continued U.S. volume-share gains.
An Oppenheimer analyst asked about confidence in a Makeup recovery. CFO Shrivastava said Makeup is EL's second-largest category and should improve in both sales trends and profitability.
CEO De La Faverie tied that recovery to specialty-multi distribution, social commerce, faster innovation and pruning lower-productivity doors. He highlighted M·A·C's U.S. channel expansion and new lip innovation.
EL Keeps M&A Narrow and Cash Priorities Clear
CEO De La Faverie said EL will not pursue transformational deals for the foreseeable future. Core growth remains the focus, while minority investments and single-brand transactions can still fit the portfolio strategy.
On capital allocation, CFO Shrivastava told a Raymond James analyst that deleveraging remains the priority after funding capital expenditures and the dividend. Fiscal 2027 operating cash flow is expected at $1.3 billion to $1.4 billion.
CFO Shrivastava said higher restructuring payments and working capital needs will weigh on operating cash flow, while capital expenditures should be approximately 4% of sales. Most PRGP cash payments are expected to be behind EL after fiscal 2027.
Estée Lauder Enters Fiscal 2027 Leaner
CEO De La Faverie said Beauty Reimagined and One ELC are intended to convert a leaner cost base into faster execution, more innovation and stronger sales leverage. He emphasized core business growth over large-scale M&A.
CFO Shrivastava's message centered on completing the PRGP savings ramp, reinvesting in growth and improving profitability across categories and regions.
EL's Zacks Rank and Style Scores
EL currently carries a Zacks Rank #3 (Hold), with a Value Score of D, Growth Score of B, Momentum Score of B and VGM Score of B. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Under the Zacks framework, B grades are favorable, while D is comparatively weaker.
The mix points to stronger growth and momentum characteristics than value characteristics, but the Zacks Rank is not in the #1 or #2 tier that Style Scores are designed to complement most effectively. The Zacks Rank can change as earnings estimates are revised after the just-reported results.
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