Updated Version 2 - Estée Lauder Raises Annual Target, Luxury Fragrance Drives Pre-Holiday Sales Growth

Paragraphs 4-8 and 10-13 provide background information; paragraphs 9, 17, and 18 offer details; paragraph 16 discusses the share price.

Arriana McLymore

Reuters, November 2 - Estée Lauder (EL.N) on Monday raised its annual sales and profit forecasts, counting on resilient demand for its premium skincare and fragrance brands ahead of the holiday shopping season, as CEO Stephane de La Faverie’s year-long business restructuring initiative is fueling company growth.

“Growth is accelerating, profitability has strengthened significantly, and the impact of the ‘Beauty Reimagined’ strategy is becoming increasingly evident across our entire business,” de La Faverie said in a statement.

Despite economic uncertainty, demand from affluent consumers and younger shoppers has remained strong, supporting sales of brands such as Le Labo, Tom Ford, and Jo Malone London.

Mainland China stands out as a highlight in Estée Lauder's transformation efforts. With increased consumer-focused investments, the company expects robust organic sales growth from both new and existing products. In August, de La Faverie also stated that the company had reduced discounts and promotional activities in this market.

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Analysts note that Chinese consumers are becoming more selective in their luxury spending and are increasingly favoring brands that resonate with local culture.

Luxury conglomerates including Kering PRTP.PA (the parent of Gucci), LVMH LVMH.PA, and Hermes HRMS.PA are facing new challenges from escalating Middle East tensions and China’s increased tax scrutiny of high-net-worth consumers, intensifying the pressure from weakening demand in key markets such as China and the US (link).

However, premium beauty products (link) have shown greater resilience, as China’s middle-class consumers shift their focus from entry-level luxury goods to more upscale skincare, makeup, and fragrance items.

In the Americas, Estée Lauder’s organic sales grew by 4%, versus a 2% decline in the same period last year. In China, organic sales increased by 9%, matching the growth rate from a year earlier.

Analysts expect Estée Lauder (link)—which has said acquisitions remain a way to reshape its product portfolio across regions, categories, and price points—will focus on smaller, niche deals after ending talks to acquire Spanish fashion beauty group Puig.

The company has further expanded its distribution channels by bringing select brands to Amazon US’s “Premium Beauty” section and taking full advantage of events such as Prime Day.

Through Shopee and TikTok Shop, Estée Lauder has grown its online business in Southeast Asia, complementing growth on platforms such as Tmall and Douyin, and helping to boost online organic sales.

Under the “Beauty Reimagined” strategy, Estée Lauder is committed to accelerating innovation, expanding into new channels and markets, leveraging artificial intelligence to enhance consumer insights and marketing effectiveness, increasing consumer-focused investments, optimizing operations, and reducing costs.

The company now expects organic sales growth for fiscal year 2027 to reach 4% to 5.5%, up from an earlier forecast of 3% to 5%.

The company expects adjusted annual earnings per share to be between $3.20 and $3.45, higher than the previous range of $3.10 to $3.35.

The company’s shares rose nearly 3% in pre-market trading. Year to date, the stock has gained about 4%.

According to data from London Stock Exchange Group (LSEG), first-quarter sales rose 7% to $3.72 billion, outpacing analysts’ expectations of a 5% increase (to $3.65 billion).

Adjusted earnings per share of 72 cents also surpassed the 51-cent estimate.

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