Shares rose as much as 18% after the beauty giant beat quarterly expectations and issued an upbeat annual outlook, with luxury fragrance and a recovering China business underpinning Chief Executive Officer Stéphane de La Faverie’s turnaround strategy.
Estée Lauder has returned to annual sales growth for the first time in four years, offering one of the clearest signs yet that its efforts to revive the business are gaining traction. The US beauty group reported a 6% increase in fourth-quarter net sales to US$3.63 billion and 5% growth for the full fiscal year, as stronger fragrance demand and a recovery across key markets helped improve its outlook.
For fiscal 2027, Estée Lauder forecast adjusted earnings per share of US$3.10 to US$3.35, with the midpoint above analyst consensus of US$3.18, according to LSEG data reported by Reuters. Shares of the Clinique and MAC owner rose as much as 18% in early trading following the results, months after merger talks with Jean Paul Gaultier and Rabanne owner Puig collapsed in May.
Fragrance remained a standout category, with net sales rising 10% during the quarter, led by luxury fragrance brands Le Labo and Tom Ford. Sky Canaves, Principal Analyst at eMarketer, told Reuters that prestige fragrance continued to hold strong appeal among younger consumers, with Estée Lauder’s portfolio of niche brands well positioned to capture that demand.
Makeup net sales remained flat overall, although the company said MAC’s expansion into Sephora stores in the US supported the category. Hair care net sales fell 1% on weaker Aveda sales, while skincare benefited from growth at The Ordinary. De La Faverie said the company was “doubling down” on expanding its brands across distribution channels and markets, and would apply lessons from fragrance and skincare to strengthen makeup and hair care.
China is also emerging as a key part of the recovery. Estée Lauder expects high-single-digit organic sales growth in mainland China in fiscal 2027 after reducing discounts and promotions and increasing consumer-facing investment. The company said mainland China delivered double-digit organic sales growth in fiscal 2026, with growth accelerating in the second half of the year.
Trade pressures nevertheless continue to weigh on the business. Estée Lauder recorded a US$38 million benefit in cost of sales from tariff refunds during the fourth quarter, partly offsetting a US$102 million full-year impact from incremental tariffs. Disruption related to conflict in the Middle East also weighed on fiscal 2026 net earnings per share.
The results add momentum to de La Faverie’s Beauty Reimagined strategy, introduced in February 2025 to restore sustainable sales growth and rebuild profitability through increased consumer investment, faster innovation and broader distribution.