01—Abstract
Summary
Summary of the 10-K filed August 20, 2025. Cited figures are marked; the original filing is the authoritative source.
The Estée Lauder Companies Inc. reported fiscal 2025 (year ended June 30, 2025) net sales of $14.33 billiona, down 8% from $15.61 billion in fiscal 2024, with volume declines of 10% partially offset by 2% pricing.
Declines were concentrated in skin care (down 12%) and were driven mainly by lower travel retail sales, plus softness in mainland China, North America and Korea. The company swung to an operating loss of $785 millionb (operating margin of -5.5%) and a net loss attributable to the company of $1.13 billion, or $(3.15) per diluted share, compared with net earnings of $390 million in fiscal 2024. Results were weighed down by $1.27 billion of goodwill and other intangible asset impairments, primarily relating to the TOM FORD, Too Faced and Dr.Jart+ brands, a $159 million talcum litigation settlement charge, and $486 million of restructuring and other charges.
Management's Beauty Reimagined strategy and the expanded Profit Recovery and Growth Plan (PRGP) are central to the outlook. The Restructuring Program now estimates a net reduction of approximately 5,800 to 7,000 positions, total charges of $1.2 billion to $1.6 billionc, and annual target gross benefits of $800 million to $1 billion. The company expects a return to a double-digit operating margin over the next few years.
Management expects continued challenges in travel retail, the U.S. and Western Europe, and anticipates higher tariff rates to adversely affect fiscal 2026 profitability and cash flows. Total debt as a percent of total capitalization rose to 65% from 59%, cash and cash equivalents fell to $2.92 billiond, and the quarterly dividend was declared at $0.35 per share.
02—Key points
Key Highlights
- Net sales declined 8% to $14.33 billion, with volume down 10% and pricing up 2%; skin care sales fell 12%, led by Estée Lauder and La Mer.
- Operating loss of $785 million versus operating income of $970 million in fiscal 2024; operating margin was (5.5)%.
- Net loss attributable to The Estée Lauder Companies Inc. of $1.13 billion, or $(3.15) per diluted share, compared with $390 million in fiscal 2024.
- Impairments of $1.27 billion on other intangible assets, including a $773 million TOM FORD trademark impairment, and a $13 million goodwill impairment for Too Faced.
- Restructuring Program expanded to an estimated 5,800 to 7,000 net position reductions, $1.2 billion to $1.6 billion in total charges, and $800 million to $1 billion in annual target gross benefits.
- Gross margin increased to 74.0% from 71.7%, reflecting PRGP benefits, lower obsolescence charges and manufacturing cost efficiencies.
- Total debt as a percent of total capitalization rose to 65% from 59%; cash and cash equivalents were $2.92 billion, and S&P (A-) and Moody's (A3) both carry negative outlooks.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2025, Estée Lauder Companies lost $0.08.
- Revenue$14.33B100.0%
- Cost of revenue−$3.73B26.0%
- Gross profit$10.60B74.0%
- Operating costs−$11.38B79.4%
- Operating income−$785.0M5.5%
- Interest, other & tax−$348.0M2.4%
- Net income−$1.13B7.9%
04—Financials
Financial Highlights
Figures from 10-KFY2025filed August 20, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $14.33B$15.61B | −8.2% |
| Cost of Revenue | $3.73B$4.42B | −15.7% |
| Gross Profit | $10.60B$11.18B | −5.2% |
| SG&A Expenses | $9.46B$9.62B | −1.7% |
| Operating Expenses | $11.38B$10.21B | +11.4% |
| Operating Income | -$785.00M$970.00M | −180.9% |
| Net Income | -$1.13B$390.00M | −390.5% |
| EPS (Basic) | $-3.15$1.09 | −389.0% |
| EPS (Diluted) | $-3.15$1.08 | −391.7% |
| Shares Outstanding (Basic) | 360.10M359.00M | +0.3% |
| Shares Outstanding (Diluted) | 360.10M360.80M | −0.2% |
05—Questions
Frequently Asked Questions
Why did the company report a net loss in fiscal 2025?
The net loss of $1.13 billion was driven by $1.27 billion of goodwill and other intangible asset impairments, primarily TOM FORD, Too Faced and Dr.Jart+, along with a $159 million talcum litigation settlement charge, $486 million of restructuring and other charges, and a 8% decline in net sales. The company also established a $172 million U.S. valuation allowance against tax credit carryforwards.
What is driving the decline in net sales?
The company attributed the decline mainly to lower travel retail net sales, especially in Asia, along with weaker sales in mainland China, North America and Korea. Skin care was the most affected category, with Estée Lauder and La Mer driving much of the decrease, while makeup sales fell 6% led by M·A·C.
What is management's plan to restore profitability?
Management is implementing Beauty Reimagined and the expanded Profit Recovery and Growth Plan, including a Restructuring Program targeting 5,800 to 7,000 net position reductions and $800 million to $1 billion in annual target gross benefits. The company expects these actions to enable a return to a double-digit operating margin over the next few years.
What are the key risks for fiscal 2026?
The company expects continued volatility, weak travel retail, and subdued sentiment in the U.S. and Western Europe. It anticipates that higher U.S. and other tariff rates will adversely affect fiscal 2026 profitability and cash flows, potentially materially. The company also noted ongoing exposure to a securities class action and talcum litigation.
How is the balance sheet and dividend position?
Total debt as a percent of total capitalization increased to 65% from 59%, and cash and cash equivalents fell to $2.92 billion from $3.40 billion. The company declared a $0.35 per share dividend on August 19, 2025, payable September 16, 2025, and repurchases of Class A stock have been suspended since December 2022.
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