01—Abstract
Summary
Summary of the 10-Q filed May 1, 2026. Cited figures are marked; the original filing is the authoritative source.
The Estée Lauder Companies Inc. reported net sales of $3.71 billiona for the three months ended March 31, 2026, up 5% from $3.55 billion a year earlier (2% in constant currency), while operating income fell to $249 million from $306 million.
Net earnings were $89 millionb, or $0.24 per diluted share, compared with $159 million, or $0.44, in the prior-year quarter. Results were weighed down by $224 million of restructuring and other charges and an $84 million securities class action litigation settlement charge. On a non-GAAP basis, diluted earnings per share were $0.91, up 40% from $0.65.
For the nine months ended March 31, 2026, net sales were $11.42 billionc, up 5% (3% in constant currency), and net earnings were $298 million, or $0.82 per diluted share, versus a net loss of $587 million in the prior-year period, which included an $861 million goodwill and intangible impairment and a $159 million talcum litigation charge. Operating income was $819 million, and non-GAAP diluted EPS was $2.12, up 50%. Growth was led by fragrance, skin care and Mainland China, while the Americas was virtually flat for the nine months.
The balance sheet shows cash of $3.13 billiond and total debt of $7.31 billion, with total equity of $3.99 billion. Net cash from operations was $1.20 billion for the nine months, against $671 million a year earlier.
The company raised its estimated restructuring charges to $1.5–1.7 billion (from $1.2–1.6 billion) and expanded its estimated net workforce reduction to 9,000–10,000 positions. It also disclosed that the One Big Beautiful Bill Act lifted its effective tax rate to 50.3% for the quarter, and that a $210 million securities class action loss contingency was recorded in accrued liabilities, with the $84 million charge in the income statement being net of estimated insurance recoveries.
02—Key points
Key Highlights
- Q3 FY2026 net sales rose 5% to $3.71 billion, with 2% constant-currency growth, led by fragrance (up 13%), skin care and makeup.
- Q3 reported operating income fell 19% to $249 million, reflecting $224 million of restructuring charges and an $84 million securities class action settlement charge.
- Q3 diluted EPS was $0.24 versus $0.44 a year ago; non-GAAP diluted EPS rose 40% to $0.91.
- Nine-month net earnings were $298 million ($0.82 per diluted share), compared with a net loss of $587 million in the prior-year period that included an $861 million impairment.
- Restructuring Program cost estimate raised to $1.5–1.7 billion, and targeted net workforce reduction raised to 9,000–10,000 positions; annual target gross benefits raised to $1.0–1.2 billion.
- Effective tax rate reached 50.3% for the quarter, driven by the One Big Beautiful Bill Act; the nine-month impact was $51 million.
- Total debt was $7.31 billion at March 31, 2026, and nine-month operating cash flow improved to $1.20 billion from $671 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Estée Lauder Companies kept $0.02.
- Revenue$3.71B100.0%
- Cost of revenue−$876.0M23.6%
- Gross profit$2.84B76.4%
- Operating costs−$2.59B69.7%
- Operating income$249.0M6.7%
- Interest, other & tax−$160.0M4.3%
- Net income$89.0M2.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed May 1, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $3.71B$3.55B | +4.6% |
| Cost of Revenue | $876.00M$889.00M | −1.5% |
| Gross Profit | $2.84B$2.66B | +6.6% |
| SG&A Expenses | $2.28B$2.26B | +0.9% |
| Operating Expenses | $2.59B$2.35B | +9.9% |
| Operating Income | $249.00M$306.00M | −18.6% |
| Net Income | $89.00M$159.00M | −44.0% |
| EPS (Basic) | $0.25$0.44 | −43.2% |
| EPS (Diluted) | $0.24$0.44 | −45.5% |
| Shares Outstanding (Basic) | 362.70M360.30M | +0.7% |
| Shares Outstanding (Diluted) | 365.40M361.40M | +1.1% |
05—Questions
Frequently Asked Questions
What drove the decline in third-quarter operating income despite higher sales?
Operating income fell to $249 million from $306 million because restructuring and other charges rose to $224 million from $97 million and the company recorded an $84 million securities class action litigation settlement charge, which more than offset higher gross profit and net sales.
How much has the restructuring program cost and how many jobs will be cut?
The company now expects restructuring and other charges of $1.5–1.7 billion before taxes, up from $1.2–1.6 billion, and a net reduction of about 9,000–10,000 positions globally, up from 5,800–7,000. Cumulative charges approved through April 29, 2026 total $1.417 billion.
Why did the effective tax rate jump so much this quarter?
The effective tax rate was 50.3% for the three months ended March 31, 2026, versus 34.0% a year earlier. The company attributed the increase primarily to the estimated unfavorable impact of the One Big Beautiful Bill Act, which increased tax-deductible interest expense and excess foreign tax credits requiring a valuation allowance.
What is the status of the securities class action and talcum litigation?
On April 2, 2026, the parties reached an agreement in principle to settle the securities class action, and the company recorded a $210 million loss contingency in accrued liabilities. For talcum matters, 130 cases were pending as of March 31, 2026, up from 84 at June 30, 2025, and additional charges beyond the initial $159 million are not expected to be material.
Is the company still buying back shares and paying dividends?
Share repurchases under the public program have been suspended since December 2022, though the company may resume them. The Board declared a $0.35 per share quarterly dividend on April 30, 2026, payable June 15, 2026, and nine-month dividends paid totaled $381 million.
06—Continue