Launches Beauty Reimagined, a Strategic
Vision to Restore Sustainable Sales Growth and Achieve Stronger
Profitability
Expands the Profit Recovery and Growth Plan
to Enable the Vision
The Estée Lauder Companies Inc. (NYSE: EL) today launched
Beauty Reimagined, its new strategic vision, and reported
its financial results for the second quarter ended December 31,
2024.
“Today, we are excited to launch Beauty Reimagined, a
bold strategic vision to restore sustainable sales growth and
achieve a solid double-digit adjusted operating margin over the
next few years as we aim to become the best consumer-centric
prestige beauty company,” said Stéphane de La Faverie, President
and Chief Executive Officer. “While we recognize there is much work
to do, we are confident that Beauty Reimagined is the way to
realize our ambition. We are significantly transforming our
operating model to be leaner, faster, and more agile, while taking
decisive actions to expand consumer coverage, step-change
innovation, and increase consumer-facing investments to better
capture growth and drive profitability. Together with our talented
employees, fundamental values, and incredible brands, Beauty
Reimagined positions us to lead the prestige beauty industry
once again.”
THE COMPANY’S ACTION PLAN PRIORITIES
FOR BEAUTY REIMAGINED
- Accelerate best-in-class consumer coverage: Put the
consumer at the heart of our business and rapidly expand our
portfolio presence in consumer-preferred, high-growth channels,
markets, media and price tiers to participate in key growth
opportunities in prestige beauty.
- Create transformative innovation: Step-change innovation
across prestige price tiers, to deliver fast-to-market, on-trend
innovation focused on in-demand subcategories, benefits, and
occasions.
- Boost consumer-facing investments: Increase visible
advertising spending, optimize marketing programs and eliminate
low-return activities to accelerate new consumer acquisition.
- Fuel sustainable growth through bold efficiencies:
Expand Profit Recovery and Growth Plan to:
- Address the impact of further volume deleverage since its
inception, by (i) adopting a more competitive approach to
procurement by further consolidating spending and strategically
re-evaluating key supplier relationships, (ii) improving supply
chain network efficiencies, and (iii) outsourcing of select
services.
- Fund consumer-facing investments to drive sales growth and
position the Company for an accelerated return to a solid
double-digit adjusted operating margin over the next few
years.
- Reimagine the way we work: Remove complexity and
simplify how we work to (i) allow greater focus on execution
excellence for the consumer, (ii) unburden our smaller brands so
that they can be more successful in our organization, while driving
greater benefits of scale for our larger brands, and (iii) empower
faster decision-making, in part through a flatter and leaner
organization.
FISCAL 2025 SECOND QUARTER SELECT
FINANCIAL RESULTS (unaudited)1,2
Three Months Ended December
31
Percentage Change
($ in millions, except per share data)
2024
2023
Net Sales
$
4,004
$
4,279
(6
) %
Organic Net Sales, Non-GAAP1
$
4,022
$
4,280
(6
) %
Other Financial Results:
Gross Profit
$
3,047
$
3,125
(2
) %
Gross Margin
76.1
%
73.0
%
Adjusted Gross Profit, Non-GAAP1,2
$
3,047
$
3,126
(3
) %
Adjusted Gross Margin, Non-GAAP1,2
76.1
%
73.0
%
Operating Income (Loss)
$
(580
)
$
574
(100
+)%
Operating Margin
(14.5
)%
13.4
%
Adjusted Operating Income, Non-GAAP1,2
$
462
$
577
(20
) %
Adjusted Operating Margin, Non-GAAP1,2
11.5
%
13.5
%
Diluted Net Earnings (Loss) Per Common
Share
$
(1.64
)
$
.87
(100
+)%
Adjusted Diluted Net Earnings Per Common
Share, Non-GAAP1,2
$
.62
$
.88
(29
) %
- Net sales decreased 6% to $4.0 billion. Organic net
sales decreased 6%.
- As Reported and Adjusted Gross margin expanded 310 basis
points, to 76.1%, despite the decline in net sales, primarily
driven by net benefits from the Company’s Profit Recovery and
Growth Plan (“PRGP”).
- Operating margin declined to (14.5)% from 13.4% in the
prior-year period, primarily reflecting $861 million from goodwill
and other intangible asset impairments and $181 million from
charges associated with restructuring and other activities.
Adjusted operating margin contracted 200 basis points, to 11.5%.
The net benefits from the Company’s PRGP partially mitigated its
sales volume deleverage in the fiscal 2025 second quarter, while
the Company strategically increased investments in consumer-facing
activities.
- Effective tax rate was 9.2% compared with 37.6% in the
prior-year period and adjusted effective tax rate was 42.6%.
- Diluted net earnings per common share decreased to net
loss per common share of $1.64, compared with diluted net earnings
per common share of $.87 in the prior-year period. Adjusted diluted
net earnings per common share decreased to $.62.
- For the six months ended December 31, 2024, net cash flows
provided by operating activities decreased to $387 million,
compared with $937 million in the prior-year period, driven by
lower pre-tax earnings, excluding non-cash items.
- Capital expenditures decreased to $273 million from $527
million in the prior-year period primarily due to the prior-year
payments relating to the manufacturing facility in Japan.
- The Company paid dividends of $366 million.
________________________________
1See pages 17 and 18 for reconciliation
between GAAP and Adjusted Non-GAAP measures.
2Adjusted Non-GAAP measures are calculated
based on Net Sales adjusted only for Returns associated with
restructuring and other activities.
BEAUTY GAINS AND OPERATIONAL
HIGHLIGHTS3
- Achieved prestige beauty share gains for the fiscal 2025 second
quarter in some key markets:
- U.S.: Skin Care, led by Clinique, and Hair Care, led by Bumble
& bumble.
- China: Makeup, led by Estée Lauder, as well as La Mer in Skin
Care and Le Labo in Fragrance.
- Japan: Fragrance, led by Le Labo, and Skin Care, led by La Mer.
For calendar 2024, the Company newly ranked #1 in Fragrance in
Japan.
- Ranked highly for 11.11 Global Shopping Festival, as Estée
Lauder and La Mer held either #1 or #2 in Prestige Beauty and
Luxury and Jo Malone London held either #1 or #2 in Fragrance
across Douyin, JD, and TMall.
- Ranked highly during TikTok’s Black Friday and Cyber Monday
Campaigns in the U.S., with Estée Lauder and The Ordinary among
top-selling brands.
- Strengthened The Ordinary’s reach for new consumer acquisition:
- Expanded presence in fast-growing channels with its December
2024 launch on the U.K. TikTok Shop and January 2025 launch in
Amazon’s U.S. Premium Beauty store.
- Launched an anti-aging serum at disruptive pricing with its GF
15% Solution in January 2025.
- Expanded geographically with its January 2025 launch in
Thailand and expected February 2025 launch in mainland China.
- Expanded Fragrance distribution with over 20 net new
freestanding stores opened globally in the fiscal 2025 second
quarter, led by Jo Malone London and Le Labo.
- Launched exciting innovations, including:
- MACximal Sleek Satin Lipstick in October 2024.
- Clinique introduced Clinique CX, a new advanced post-procedure
treatment franchise for China in November 2024.
- Estée Lauder’s Re-Nutriv longevity expansion into eye in
January 2025.
- Jo Malone London partnered with GQ for the Men of Year Awards
2024 in November.
- Announced Fragrance Atelier location in Paris, France in
December 2024; slated to open in 2025.
- Announced the opening of a new BioTech Hub in Belgium in
December 2024 and a collaboration with the Massachusetts Institute
of Technology in January 2025, to further accelerate the Company’s
cutting-edge biotechnology innovations.
________________________________
3Since the Company’s last earnings
announcement.
FISCAL 2025 SECOND QUARTER RESULTS BY
PRODUCT CATEGORY AND BY REGION
Results by Product
Category
(Unaudited)
Three Months Ended December
31
Net Sales
Percentage Change1
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported
Basis
Skin Care
$
1,921
$
2,173
(12
)%
—
%
(12
)%
$
306
$
415
(26
) %
Makeup
1,150
1,167
(1
)
1
(1
)
(211
)
30
(100
+)
Fragrance
744
737
1
1
2
(446
)
131
(100
+)
Hair Care
159
173
(8
)
—
(8
)
(3
)
(3
)
—
Other
30
30
—
—
—
(45
)
9
(100
+)
Subtotal
$
4,004
$
4,280
(6
)%
—
%
(6
)%
$
(399
)
$
582
(100
+)%
Returns/charges
associated with
restructuring and
other activities
—
(1
)
(181
)
(8
)
Total
$
4,004
$
4,279
(6
)%
—
%
(6
)%
$
(580
)
$
574
(100
+)%
Non-GAAP Adjustments to As Reported
Operating Income (Loss):
Returns/charges associated with
restructuring and other activities
181
8
Makeup - Goodwill and other intangible
asset impairments
258
—
Fragrance - Other intangible asset
impairments
549
—
Other - Other intangible asset
impairments
54
—
Skin Care - Change in fair value of DECIEM
acquisition-related stock options
—
(5
)
Adjusted Operating Income -
Non-GAAP
$
462
$
577
(20
) %
1Percentages are calculated on an
individual basis.
The product category net sales commentary below reflects organic
net sales, excluding the negative impacts from foreign currency
translation that are reflected in the preceding table. In addition
to the Operational Highlights above, below are the drivers of the
Company’s performance.
Skin Care
- Skin Care net sales decreased 12%, primarily due to impacts
from the overall challenging retail environments in Asia/Pacific
and the Company’s Asia travel retail business, including ongoing
pressure from subdued sentiment from Chinese consumers, which drove
declines from Estée Lauder and La Mer.
- Skin Care operating income decreased, primarily due to the
decline in net sales, partially offset by lower cost of sales and
disciplined expense management.
Makeup
- Makeup net sales decreased 1%, primarily due to the declines
from TOM FORD, reflecting the impacts from the overall challenging
retail environment in Asia/Pacific and the Company’s Asia travel
retail business, as noted above. In addition, net sales decreased
from M·A·C and Smashbox, driven by their softness in the eye and
face subcategories, respectively.
- The declines noted above were partially offset by
high-single-digit growth from Clinique, reflecting growth across
each geographic region, driven by the brand’s launch in Amazon’s
U.S. Premium Beauty Store and the continued success from Almost
Lipstick in Black Honey.
- Makeup operating results decreased, driven by $258 million of
goodwill and other intangible asset impairments relating to TOM
FORD and Too Faced.
Fragrance
- Fragrance net sales increased 2%, driven by the Company’s
Luxury Brands4, led by Le Labo and its strong double-digit growth
across each geographic region, partially offset by the decline from
Estée Lauder, due in part to reduced shipments of holiday sets. The
growth from Le Labo benefited from both hero products, such as its
Classic Collection, innovation, such as Osmanthus 19, the City
Exclusive scent for Kyoto, and targeted expanded consumer
reach.
- Fragrance operating results decreased, primarily due to the
$549 million other intangible asset impairment relating to TOM
FORD.
Hair Care
- Hair Care net sales decreased 8%, primarily driven by Aveda,
reflecting continued softness in the Company’s salon channel and
the timing of shipments.
- Hair Care operating loss was flat, reflecting disciplined
expense management and lower cost of sales, partially offset by the
decline in net sales.
________________________________
4In fiscal 2025, the Company expanded its
Luxury fragrance brand portfolio with the launch of BALMAIN
Beauty.
Results by Geographic
Region
(Unaudited)
Three Months Ended December
31
Net Sales
Percentage Change1
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported
Basis
The Americas
$
1,223
$
1,242
(2
)%
1
%
—
%
$
(823
)
$
(55
)
(100
+)%
Europe, the
Middle East &
Africa
1,494
1,589
(6
)
—
(6
)
316
379
(17
)
Asia/Pacific
1,287
1,449
(11
)
—
(11
)
108
258
(58
)
Subtotal
$
4,004
$
4,280
(6
)%
—
%
(6
)%
$
(399
)
$
582
(100
+)%
Returns/charges
associated with
restructuring and
other activities
—
(1
)
(181
)
(8
)
Total
$
4,004
$
4,279
(6
)%
—
%
(6
)%
$
(580
)
$
574
(100
+)%
Non-GAAP Adjustments to As Reported
Operating Income (Loss):
Returns/charges associated with
restructuring and other activities
181
8
The Americas - Goodwill and other
intangible asset impairments
861
—
The Americas - Change in fair value of
DECIEM acquisition-related stock options
—
(5
)
Adjusted Operating Income -
Non-GAAP
$
462
$
577
(20
) %
1Percentages are calculated on an
individual basis.
The geographic region net sales commentary below reflects
organic net sales, excluding the negative impacts from foreign
currency translation that are reflected in the preceding table. In
addition to the Operational Highlights above, below are the drivers
of the Company’s performance.
The Americas
- Net sales were flat, primarily driven by the decline in North
America, reflecting retail softness from some brands that led to
lower replenishment orders, offset by the launch of several brands
in Amazon’s U.S. Premium Beauty Store. Net sales were flat in Latin
America.
- Operating loss increased, primarily driven by $861 million of
goodwill and other intangible asset impairments relating to TOM
FORD and Too Faced, partially offset by lower cost of sales and the
favorable year-over-year impact of net intercompany activity.
Europe, the Middle East &
Africa
- Net sales decreased 6%, driven by the double-digit decline in
the Company’s global travel retail business, reflecting the impacts
from an overall challenging retail environment, including subdued
sentiment from Chinese consumers. Mixed performance across the
region’s markets resulted in flat overall net sales growth.
- Operating income decreased, primarily due to the decline in net
sales and the unfavorable year-over-year impact of net intercompany
activity, partially offset by lower cost of sales.
Asia/Pacific
- Net sales decreased 11%, primarily driven by the impacts from
an overall challenging retail environment, including subdued
consumer sentiment in mainland China, Korea and Hong Kong SAR. The
net sales decline in Korea also reflects the strategic exit of
Dr.Jart+ from the travel retail channel in November 2024.
- Operating income decreased, primarily driven by the decline in
net sales and the year-over-year unfavorable impact of a change in
policy related to local government subsidies in China.
QUARTERLY DIVIDEND Today,
the Company announced a quarterly dividend of $.35 per share on its
Class A and Class B Common Stock, payable in cash on March 17, 2025
to stockholders of record at the close of business on February 28,
2025.
PROFIT RECOVERY AND GROWTH PLAN
(“PRGP”) Through the fiscal 2025 second quarter the
Company has realized more net benefits under the PRGP than
expected, however, these benefits have been more than offset by
sales volume deleverage, investments to restore sustainable growth,
and inflation. As a result, the Company today announced it is
expanding its PRGP, including the restructuring program. Actions
under the plan are expected to be substantially executed in fiscal
2025 and 2026 and completed in fiscal 2027, with nearly all of the
full run-rate benefits expected to be realized during fiscal 2027.
The expanded plan is designed to further transform the Company’s
operating model to fund a return to sales growth and restore a
solid double-digit adjusted operating margin over the next few
years, and continue to manage external volatility, such as
potential tariff increases globally.
The expansion is focused on three key areas. First, the Company
plans to adopt a more competitive approach to procurement, a key
pillar of savings, by further consolidating spending and
strategically re-evaluating key supplier relationships. Second, the
Company plans to further improve efficiencies within its supply
chain network through a zero-waste approach, aiming to improve
demand forecasting and innovation planning to minimize excess
inventory and product destruction. Third, the Company is
outsourcing select services to proven global partners.
Restructuring Program of
PRGP Inclusive of January 2025 approvals, the Company
has approved initiatives that account for approximately 90% of the
total estimated gross benefits of $500 million initially targeted
and communicated, demonstrating its ability and focus on
execution.
Today, the Company announced it is also significantly expanding
the restructuring component of the PRGP. Once fully implemented,
the Company expects to take restructuring and other charges of
between $1.2 billion and $1.6 billion, before taxes, consisting of
employee-related costs, contract terminations, asset write-offs,
and other costs associated with implementing these initiatives. The
restructuring program is expected to yield annual gross benefits of
between $0.8 billion and $1.0 billion, before taxes, to help
restore operating margin and also fuel reinvestment in consumer
facing areas to drive sustainable sales growth.
The Company now estimates a net reduction in positions of 5,800
to 7,000, including approvals to date. This net reduction takes
into account the elimination of positions after retraining and
redeployment of certain employees in select areas. Approvals for
specific initiatives under this restructuring program, in total,
are still expected to be completed by the end of fiscal 2026. The
restructuring program’s focus includes (i) reorganization and
rightsizing of certain areas and (ii) simplification and
acceleration of processes, along with the newly added focus on (i)
outsourcing of select services and (ii) evolution of go-to-market
footprint and selling models.
OUTLOOK FOR FISCAL 2025 THIRD
QUARTER Given challenges in the Company’s Asia travel
retail business, subdued consumer sentiment in China and Korea, and
evolving global geopolitical uncertainty, the Company anticipates
continued volatility and low visibility in the near term.
Therefore, it is solely providing a fiscal 2025 third quarter
outlook.
Reconciliation between GAAP
and Non-GAAP - Net Sales Growth
(Unaudited)
Three Months Ending
March 31, 2025(F)
As Reported - GAAP
(12%) - (10
%)
Impact of foreign currency translation
2
Returns associated with restructuring and
other activities(1)
—
Organic, Non-GAAP
(10%) - (8
%)
(F)Represents forecast, using spot rates
as of December 31, 2024.
(1)The net sales growth impact of returns
associated with restructuring and other activities includes
approvals to date. Additional returns associated with restructuring
and other activities are anticipated as initiatives are approved
throughout fiscal 2025.
Reconciliation between GAAP
and Non-GAAP - Diluted Net Earnings Per Common Share
(“EPS”)
(Unaudited)
Three Months Ending
March 31
2025(F)
2024
Growth
Forecasted/As Reported EPS -
GAAP
$.04 - $.17
$
.91
(96%) - (81
%)
Non-GAAP
Restructuring and other charges(1)
.13 - .16
.04
Change in fair value of DECIEM
acquisition-related stock options (less the portion
attributable to redeemable noncontrolling
interest)
—
.02
Forecasted/Adjusted EPS -
Non-GAAP
$.20 - $.30
$
.97
(79%) - (69
%)
Impact of foreign currency translation
.04
Forecasted/Adjusted Constant Currency
EPS - Non-GAAP
$.24 - $.34
$
.97
(75%) - (65
%)
(F)Represents forecast, using spot rates
as of December 31, 2024.
(1)The diluted net earnings per common
share impact of restructuring and other charges includes approvals
to date. Additional restructuring charges are anticipated as
initiatives are approved throughout fiscal 2025.
Stéphane de La Faverie, President and Chief Executive Officer,
said “While we are not satisfied with our third quarter outlook, it
primarily reflects weak retail sales trends in our Asia travel
retail business, which deteriorated in our second quarter driven by
Korea. While our retail sales trends in Hainan were still negative
in the second quarter, they improved sequentially, fueled by our
retail activations. For the third quarter, we expect overall soft
retail trends to persist in Asia travel retail, significantly
pressuring our organic net sales despite the improvement we made
with in-trade inventory levels in the first half of fiscal 2025,
which we intend to maintain around current levels.”
de La Faverie emphasized, “In order to reignite our retail sales
growth, we are strategically increasing consumer-facing investments
around the world in the third quarter. We expect the benefits of
the PRGP to both fund these investments and modestly offset the
meaningful operating deleverage from the sales decline.”
The Company has reflected the following assumptions in its
fiscal 2025 third quarter outlook:
- Strong double-digit net sales decline in the Company’s global
travel retail business, reflecting the impacts from the overall
challenging retail environment in Asia travel retail, including
incremental pressures from changes in selling policies at several
Korean retailers. This decline also reflects a difficult comparison
to the prior-year period due to the resumption of replenishment
orders.
- Excluding the Company’s global travel retail business: The
Company’s net sales decline in the fiscal 2025 third quarter is
expected to moderate from the second quarter, as retail trends,
which while still negative, improved from the fiscal 2025 first
quarter to the second. Given the Company’s increased investments in
consumer-facing activities, it expects significant retail sales
improvement in the fiscal 2025 third quarter.
- Moderate adjusted gross margin expansion, reflecting a
favorable comparison due to a charge in the prior-year period
triggered by the previous pull-down of production, partially offset
by sales volume deleverage.
- An effective tax rate of approximately 36%, primarily
reflecting the anticipated change in the Company’s geographical mix
of earnings.
- Adjusted EPS decline, primarily due to the challenges in the
Company’s global travel retail business.
The Company continues to monitor the effects of the global macro
environment, including the risk of recession; currency volatility;
inflationary pressures; supply chain challenges; social and
political issues; competitive pressures; legal and regulatory
matters, including the imposition of tariffs and sanctions;
geopolitical tensions; and global security issues. The Company is
also mindful of inflationary pressures on its cost base and is
monitoring the impact on consumer preferences and the impact of
changes being made in the organization, including those related to
the PRGP. The Company is also mindful of, and monitoring, the
potential impact of changes expected to be made as part of the PRGP
on suppliers, retailers and others, and challenges relating to
successfully outsourcing select services. Declines in net sales and
profitability have, and may continue to, adversely impact the
goodwill and other intangible assets associated with our brands, as
well as long-lived assets, potentially resulting in
impairments.
CONFERENCE CALL AND WEBCAST
DETAILS The Estée Lauder Companies will host a
conference call at 8:30 a.m. (ET) today, February 4, 2025 to
discuss its results for the fiscal 2025 second quarter. The dial-in
number for the call is 877-883-0383 in the U.S. or 412-902-6506
internationally (conference ID number: 2499757).
The call and presentation will also be webcast live at
http://www.elcompanies.com/investors/events-and-presentations and
will be available for replay until February 18, 2025.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS Statements in this press
release, in particular those in “Outlook,” as well as remarks by
the CEO and other members of management, may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements may
address the Company’s expectations regarding sales, earnings or
other future financial performance and liquidity, other performance
measures, product introductions, entry into new geographic regions,
information technology initiatives, new methods of sale, the
Company’s long-term strategy, restructuring and other charges and
resulting cost savings, and future operations or operating results.
These statements may contain words like “expect,” “will,” “will
likely result,” “would,” “believe,” “estimate,” “planned,” “plans,”
“intends,” “may,” “should,” “could,” “anticipate,” “estimate,”
“project,” “projected,” “forecast,” and “forecasted” or similar
expressions. Although the Company believes that its expectations
are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, actual results may differ
materially from the Company’s expectations.
Factors that could cause actual results to differ from
expectations include, without limitation:
(1)
increased competitive activity
from companies in the skin care, makeup, fragrance and hair care
businesses;
(2)
the Company’s ability to develop,
produce and market new products on which future operating results
may depend and to successfully address challenges in the Company’s
business;
(3)
consolidations, restructurings,
bankruptcies and reorganizations in the retail industry causing a
decrease in the number of stores that sell the Company’s products,
an increase in the ownership concentration within the retail
industry, ownership of retailers by the Company’s competitors or
ownership of competitors by the Company’s customers that are
retailers and the Company’s inability to collect receivables;
(4)
destocking and tighter working
capital management by retailers;
(5)
the success, or changes in timing
or scope, of new product launches and the success, or changes in
timing or scope, of advertising, sampling and merchandising
programs;
(6)
shifts in the preferences of consumers as
to how they perceive value and where and how they shop;
(7)
social, political and economic
risks to the Company’s foreign or domestic manufacturing,
distribution and retail operations, including changes in foreign
investment and trade policies and regulations of the host countries
and of the United States;
(8)
changes in the laws, regulations
and policies (including the interpretations and enforcement
thereof) that affect, or will affect, the Company’s business,
including those relating to its products or distribution networks,
changes in accounting standards, tax laws and regulations,
environmental or climate change laws, regulations or accords, trade
rules and customs regulations, and the outcome and expense of legal
or regulatory proceedings, and any action the Company may take as a
result;
(9)
foreign currency fluctuations
affecting the Company’s results of operations and the value of its
foreign assets, the relative prices at which the Company and its
foreign competitors sell products in the same markets and the
Company’s operating and manufacturing costs outside of the United
States;
(10)
changes in global or local
conditions, including those due to volatility in the global credit
and equity markets, government economic policies, natural or
man-made disasters, real or perceived epidemics, supply chain
challenges, inflation, or increased energy costs, that could affect
consumer purchasing, the willingness or ability of consumers to
travel and/or purchase the Company’s products while traveling, the
financial strength of the Company’s customers, suppliers or other
contract counterparties, the Company’s operations, the cost and
availability of capital which the Company may need for new
equipment, facilities or acquisitions, the returns that the Company
is able to generate on its pension assets and the resulting impact
on funding obligations, the cost and availability of raw materials
and the assumptions underlying the Company’s critical accounting
estimates;
(11)
shipment delays, commodity
pricing, depletion of inventory and increased production costs
resulting from disruptions of operations at any of the facilities
that manufacture the Company’s products or at the Company’s
distribution or inventory centers, including disruptions that may
be caused by the implementation of information technology
initiatives, or by restructurings;
(12)
real estate rates and
availability, which may affect the Company’s ability to increase or
maintain the number of retail locations at which the Company sells
its products and the costs associated with the Company’s other
facilities;
(13)
changes in product mix to
products which are less profitable;
(14)
the Company’s ability to acquire,
develop or implement new information technology, including
operational technology and websites, on a timely basis and within
the Company’s cost estimates; to maintain continuous operations of
its new and existing information technology; and to secure the data
and other information that may be stored in such technologies or
other systems or media;
(15)
the Company’s ability to
capitalize on opportunities for improved efficiency, such as
publicly-announced strategies and restructuring and cost-savings
initiatives, and to integrate acquired businesses and realize value
therefrom;
(16)
consequences attributable to
local or international conflicts around the world, as well as from
any terrorist action, retaliation and the threat of further action
or retaliation;
(17)
the timing and impact of
acquisitions, investments and divestitures; and
(18)
additional factors as described
in the Company’s filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the fiscal
year ended June 30, 2024.
The Company assumes no responsibility to update forward-looking
statements made herein or otherwise.
The Estée Lauder Companies Inc. is one of the world’s leading
manufacturers, marketers and sellers of quality skin care, makeup,
fragrance and hair care products, and is a steward of luxury and
prestige brands globally. The Company’s products are sold in
approximately 150 countries and territories under brand names
including: Estée Lauder, Aramis, Clinique, Lab Series, Origins,
M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, Jo Malone London,
Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, AERIN Beauty,
Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN
PARIS, Too Faced, Dr.Jart+, the DECIEM family of brands, including
The Ordinary and NIOD, and BALMAIN Beauty.
ELC-F ELC-E
CONSOLIDATED STATEMENT OF
EARNINGS (LOSS)
(Unaudited)
Three Months Ended
December 31
Percentage Change
Six Months Ended
December 31
Percentage Change
($ in millions, except per share data)
2024
2023
2024
2023
Net sales(A)
$
4,004
$
4,279
(6
) %
$
7,365
$
7,797
(6
) %
Cost of sales(A)
957
1,154
(17
)
1,885
2,224
(15
)
Gross profit
3,047
3,125
(2
)
5,480
5,573
(2
)
Gross margin
76.1
%
73.0
%
74.4
%
71.5
%
Operating expenses
Selling, general and administrative(B)
2,585
2,544
2
4,883
4,893
—
Restructuring and other charges(A)
181
7
100
+
278
8
100
+
Impairment of goodwill and other
intangible assets(C)
861
—
100
861
—
100
Talcum litigation settlement
agreements(D)
—
—
—
159
—
100
Total operating expenses
3,627
2,551
42
6,181
4,901
26
Operating expense margin
90.6
%
59.6
%
83.9
%
62.9
%
Operating income (loss)
(580
)
574
(100
+)
(701
)
672
(100
+)
Operating income (loss) margin
(14.5
)%
13.4
%
(9.5
)%
8.6
%
Interest expense
90
98
(8
)
182
193
(6
)
Interest income and investment income,
net
23
40
(43
)
58
81
(28
)
Other components of net periodic benefit
cost
3
(3
)
100
+
5
(5
)
100
+
Earnings (loss) before income
taxes
(650
)
519
(100
+)
(830
)
565
(100
+)
Provision (benefit) for income taxes
(60
)
195
(100
+)
(84
)
205
(100
+)
Net earnings (loss)
(590
)
324
(100
+)
(746
)
360
(100
+)
Net earnings attributable to redeemable
noncontrolling
interest
—
(11
)
100
—
(16
)
100
Net earnings (loss) attributable to The
Estée Lauder
Companies Inc.
$
(590
)
$
313
(100
+)%
$
(746
)
$
344
(100
+)%
Net earnings (loss) attributable to The
Estée Lauder
Companies Inc. per common share
Basic
$
(1.64
)
$
.87
(100
+)%
$
(2.07
)
$
.96
(100
+)%
Diluted
$
(1.64
)
$
.87
(100
+)%
$
(2.07
)
$
.95
(100
+)%
Weighted-average common shares
outstanding
Basic
360.0
358.7
359.8
358.6
Diluted
360.0
360.0
359.8
360.3
(A)As a component of the Profit Recovery
and Growth Plan (“PRGP”), communicated on November 1, 2023, on
February 5, 2024, the Company announced a two-year restructuring
program. The restructuring program’s main focus included the
reorganization and rightsizing of certain areas of the Company’s
business as well as simplification and acceleration of processes.
The Company planned to substantially complete specific initiatives
under the restructuring program through fiscal 2026. The Company
expected that the restructuring program would result in
restructuring and other charges totaling between $500 million and
$700 million, before taxes, consisting of employee-related costs,
contract terminations, asset write-offs and other costs associated
with implementing these initiatives.
After reviewing additional potential
initiatives and the progress of previously approved initiatives, on
February 3, 2025, the Company committed to the expansion of the
PRGP, including an expansion of the restructuring program.
The expanded component of the
restructuring program will begin during the Company’s fiscal 2025
third quarter with all initiatives to be approved by the end of
fiscal 2026. Specific initiatives under the expanded component of
the restructuring program are expected to be substantially
completed by the end of fiscal 2027. The now expanded restructuring
program’s focus includes (i) reorganization and rightsizing of
certain areas and (ii) simplification and acceleration of
processes, along with the newly added focus on (i) outsourcing of
select services and (ii) evolution of go-to-market footprint and
selling models.
The Company now expects that the
restructuring program will result in restructuring and other
charges totaling between $1.2 billion and $1.6 billion, before
taxes, consisting of employee-related costs, contract terminations,
asset write-offs and other costs associated with implementing these
initiatives.
Under the Post-COVID Business Acceleration
Program (the “PCBA Program”), the Company approved specific
initiatives through fiscal 2022 and has substantially completed
those initiatives through fiscal 2023. Additional information about
the PCBA Program is included in the notes to consolidated financial
statements in the Company’s Annual Report on Form 10-K for the
fiscal year ended June 30, 2024.
(B)For the three and six months ended
December 31, 2023, the Company recorded $(5) million ($(4) million,
less the portion attributable to redeemable noncontrolling interest
and net of tax) and $3 million ($2 million, less the portion
attributable to redeemable noncontrolling interest and net of tax),
respectively, of expense (income) related to the change in fair
value of DECIEM acquisition-related stock options.
(C)During the fiscal 2025 second quarter,
the TOM FORD brand experienced lower-than-expected growth within
key geographic regions and channels, including in mainland China,
Asia travel retail and Hong Kong SAR. Also during the fiscal 2025
second quarter, the Too Faced reporting unit experienced
lower-than-expected results in key geographic regions and channels.
As a result, the Company made revisions to the internal forecasts
relating to its TOM FORD brand and Too Faced reporting unit.
Additionally, there were increases in the weighted average cost of
capital for the TOM FORD brand and Too Faced reporting unit as
compared to the prior-year annual goodwill and other
indefinite-lived intangible asset impairment testing as of April 1,
2024.
The Company concluded that the changes in
circumstances in the TOM FORD brand and Too Faced reporting unit,
along with increases in the weighted average cost of capital,
triggered the need for interim impairment reviews of the TOM FORD
trademark and the Too Faced trademark and goodwill. These changes
in circumstances were also an indicator that the carrying amounts
of Too Faced’s long-lived assets, including customer lists, may not
be recoverable.
Accordingly, the Company performed interim
impairment tests for the TOM FORD and Too Faced trademarks and Too
Faced goodwill as well as a recoverability test for the Too Faced
long-lived assets as of December 31, 2024. As a result of these
tests, the Company concluded that the carrying value of the
trademark intangible assets exceeded their estimated fair values,
and recorded an impairment charge of $773 million for TOM FORD and
$75 million for Too Faced. The Company concluded that the carrying
amounts of the long-lived assets for Too Faced were recoverable.
Additionally, as a result of the interim impairment review, the
remaining carrying value of Too Faced’s goodwill was not
recoverable and the Company recorded an impairment charge of $13
million, reducing the carrying value to zero.
For the three and six months ended
December 31, 2024, charges related to goodwill and other intangible
asset impairments were $861 million ($674 million, net of tax),
with an impact of $1.87 per common share.
(D)From the end of August 2024 through
October 2024, the Company reached agreements with certain plaintiff
law firms (collectively, the “talcum litigation settlement
agreements”) for: (i) the resolution of pending cosmetic talcum
powder matters handled by those firms as well as (ii) a process for
resolving potential future cosmetic talcum powder claims expected
to be brought on behalf of plaintiffs by those firms from January
1, 2025 through December 31, 2029, with annual capped amounts per
year for each participating law firm. To account for the talcum
litigation settlement agreements, the Company recorded a charge of
$159 million in the fiscal 2025 first quarter for the amount agreed
to settle the current claims and an estimated amount for potential
future claims.
Results by Product
Category
(Unaudited)
Six Months Ended December
31
Net Sales
Percentage Change1
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported
Basis
Skin Care
$
3,450
$
3,813
(10
)%
—
%
(10
)%
$
423
$
452
(6
) %
Makeup
2,188
2,229
(2
)
—
(1
)
(396
)
(10
)
(100
+)
Fragrance
1,374
1,373
—
—
—
(386
)
238
(100
+)
Hair Care
298
321
(7
)
—
(7
)
(21
)
(25
)
16
Other
55
62
(11
)
—
(11
)
(34
)
27
(100
+)
Subtotal
$
7,365
$
7,798
(6
)%
—
%
(6
)%
$
(414
)
$
682
(100
+)%
Returns/charges
associated with
restructuring and
other activities
—
(1
)
(287
)
(10
)
Total
$
7,365
$
7,797
(6
)%
—
%
(6
)%
$
(701
)
$
672
(100
+)%
Non-GAAP Adjustments to As Reported
Operating Income (Loss):
Returns/charges associated with
restructuring and other activities
287
10
Makeup - Goodwill and other intangible
asset impairments
258
—
Fragrance - Other intangible asset
impairments
549
—
Other - Other intangible asset
impairments
54
—
Makeup - Talcum litigation settlement
agreements
159
—
Skin Care - Change in fair value of DECIEM
acquisition-related stock options
—
3
Adjusted Operating Income -
Non-GAAP
$
606
$
685
(12
) %
1Percentages are calculated on an
individual basis.
Results by Geographic
Region
(Unaudited)
Six Months Ended December
31
Net Sales
Percentage Change1
Operating Income
(Loss)
Percentage Change
($ in millions)
2024
2023
Reported Basis
Impact of Foreign Currency
Translation
Organic Net Sales
(Non-GAAP)
2024
2023
Reported Basis
The Americas
$
2,410
$
2,450
(2
)%
1
%
(1
)%
$
(991
)
$
(237
)
(100
+)%
Europe, the
Middle East &
Africa
2,724
2,841
(4
)
(1
)
(5
)
406
523
(22
)
Asia/Pacific
2,231
2,507
(11
)
—
(11
)
171
396
(57
)
Subtotal
$
7,365
$
7,798
(6
)%
—
%
(6
)%
$
(414
)
$
682
(100
+)%
Returns/charges
associated with
restructuring and
other activities
—
(1
)
(287
)
(10
)
Total
$
7,365
$
7,797
(6
)%
—
%
(6
)%
$
(701
)
$
672
(100
+)%
Non-GAAP Adjustments to As Reported
Operating Income (Loss):
Returns/charges associated with
restructuring and other activities
287
10
The Americas - Goodwill and other
intangible asset impairments
861
—
The Americas - Talcum litigation
settlement agreements
159
—
The Americas - Change in fair value of
DECIEM acquisition-related stock options
—
3
Adjusted Operating Income -
Non-GAAP
$
606
$
685
(12
) %
1Percentages are calculated on an
individual basis.
This earnings release includes some non-GAAP financial measures
relating to charges associated with restructuring and other
activities and adjustments, as well as organic net sales. Included
herein are reconciliations between the non-GAAP financial measures
and the most directly comparable GAAP measures for certain
consolidated statements of earnings accounts before and after these
items. The Company uses certain non-GAAP financial measures, among
other financial measures, to evaluate its operating performance,
which represent the manner in which the Company conducts and views
its business. Management believes that excluding certain items that
are not comparable from period-to-period, or do not reflect the
Company’s underlying ongoing business, provides transparency for
such items and helps investors and others compare and analyze
operating performance from period-to-period. In the future, the
Company expects to incur charges or adjustments similar in nature
to those presented herein; however, the impact to the Company’s
results in a given period may be highly variable and difficult to
predict. The Company’s non-GAAP financial measures may not be
comparable to similarly titled measures used by, or determined in a
manner consistent with, other companies. While the Company
considers the non-GAAP measures useful in analyzing its results,
they are not intended to replace, or act as a substitute for, any
presentation included in the consolidated financial statements
prepared in conformity with U.S. GAAP.
The Company operates on a global basis, with the majority of its
net sales generated outside the United States. Accordingly,
fluctuations in foreign currency exchange rates can affect the
Company’s results of operations. Therefore, the Company presents
certain net sales, operating results and diluted net earnings per
common share information excluding the effect of foreign currency
rate fluctuations to provide a framework for assessing the
performance of its underlying business outside the United States.
Constant currency information compares results between periods as
if exchange rates had remained constant period-over-period. The
Company calculates constant currency information by translating
current-period results using prior-year period monthly average
foreign currency exchange rates and adjusting for the
period-over-period impact of foreign currency cash flow hedging
activities.
Reconciliation between GAAP
and Non-GAAP Net Sales
(Unaudited)
Three Months Ended December
31
Six Months Ended December
31
($ in millions, except per share data)
2024
2023
Percentage Change
2024
2023
Percentage Change
Net Sales
$
4,004
$
4,279
(6
)%
$
7,365
$
7,797
(6
)%
Non-GAAP
Adjustments
Returns associated with restructuring and
other activities
—
1
—
1
Adjusted Net Sales, Non-GAAP
4,004
4,280
7,365
7,798
Impact of foreign currency translation
18
—
—
—
Organic Net Sales, Non-GAAP1
$
4,022
$
4,280
(6
)%
$
7,365
$
7,798
(6
)%
1Organic net sales represents net sales
excluding returns associated with restructuring and other
activities; non-comparable impacts of acquisitions, divestitures
and brand closures; as well as the impact from foreign currency
translation. The Company believes that the Non-GAAP measure of
organic net sales growth provides year-over-year sales comparisons
on a consistent basis.
Reconciliation of Certain
Consolidated Statements of Earnings (Loss) Accounts
Before and After Returns,
Charges and Other Adjustments
(Unaudited)1
Three Months Ended December
31
Six Months Ended December
31
($ in millions, except per share data)
2024
2023
Percentage Change
2024
2023
Percentage Change
Gross Profit
$
3,047
$
3,125
(2
)%
$
5,480
$
5,573
(2
)%
Non-GAAP
Adjustments
Restructuring and other activities
—
1
9
2
Adjusted Gross Profit, Non-GAAP
$
3,047
$
3,126
(3
)%
$
5,489
$
5,575
(2
)%
Gross Margin
76.1
%
73.0
%
74.4
%
71.5
%
Non-GAAP
Adjustments
Restructuring and other activities
—
—
0.1
—
Adjusted Gross Margin, Non-GAAP
76.1
%
73.0
%
74.5
%
71.5
%
Operating Income (Loss)
$
(580
)
$
574
(100
+)%
$
(701
)
$
672
(100
+)%
Non-GAAP
Adjustments
Restructuring and other charges
181
8
287
10
Goodwill and other intangible asset
impairments
861
—
861
—
Talcum litigation settlement
agreements
—
—
159
—
Change in fair value of DECIEM
acquisition-related stock options
—
(5
)
—
3
Adjusted Operating Income, Non-GAAP
$
462
$
577
(20
)%
$
606
$
685
(12
)%
Operating Margin
(14.5
)%
13.4
%
(9.5
)%
8.6
%
Non-GAAP
Adjustments
Restructuring and other charges
4.5
0.2
3.9
0.1
Goodwill and other intangible asset
impairments
21.5
—
11.7
—
Talcum litigation settlement
agreements
—
—
2.2
—
Change in fair value of DECIEM
acquisition-related stock options
—
(0.1
)
—
—
Adjusted Operating Margin, Non-GAAP
11.5
%
13.5
%
8.2
%
8.8
%
Provision for Income Taxes
$
(60
)
$
195
(100
+)%
$
(84
)
$
205
(100
+)%
Effective Tax Rate ("ETR")
9.2
%
37.6
%
10.1
%
36.3
%
Tax Impact on
Non-GAAP adjustments
Restructuring and other charges
40
2
62
2
Goodwill and other intangible asset
impairments
187
—
187
—
Talcum litigation settlement
agreements
—
—
35
—
Adjusted Provision for Income Taxes,
Non-GAAP
$
167
$
197
$
200
$
207
Adjusted ETR, Non-GAAP
42.6
%
37.7
%
41.9
%
35.8
%
Diluted Net Earnings (Loss) Per Common
Share
$
(1.64
)
$
.87
(100
+)%
$
(2.07
)
$
.95
(100
+)%
Non-GAAP
Adjustments
Restructuring and other charges
.39
.02
.63
.02
Goodwill and other intangible asset
impairments
1.87
—
1.87
—
Talcum litigation settlement
agreements
—
—
.34
—
Change in fair value of DECIEM
acquisition-related stock options
(less the portion attributable to
redeemable noncontrolling
interest)
—
(.01
)
—
.01
Adjusted Diluted Net Earnings Per Common
Share, Non-GAAP2
$
.62
$
.88
(29
)%
$
.77
$
.98
(22
)%
1Percentages are calculated on an
individual basis.
2For the three and six months ended
December 31, 2024 the effects of potentially dilutive stock
options, performance share units, and restricted stock units of
approximately 1.1 million shares and 1.2 million shares,
respectively, were excluded from the computation of As Reported and
adjustments to Non-GAAP diluted loss per common share as they were
anti-dilutive due to the net loss incurred during the periods.
These shares were added to the weighted-average common shares
outstanding to calculate Non-GAAP diluted earnings per common
share.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, except where
noted)
December 31,
June 30, 2024
December 31,
($ in millions)
2024
(Audited)
2023
ASSETS
Cash and cash equivalents
$
2,586
$
3,395
$
3,939
Accounts receivable, net
1,611
1,727
1,752
Inventory and promotional merchandise
2,002
2,175
2,603
Prepaid expenses and other current
assets
697
625
621
Total current assets
6,896
7,922
8,915
Property, plant and equipment, net
3,049
3,136
3,220
Operating lease right-of-use assets
1,891
1,833
1,819
Other assets
7,924
8,786
9,329
Total assets
$
19,760
$
21,677
$
23,283
LIABILITIES AND EQUITY
Current debt
$
4
$
504
$
1,500
Accounts payable
1,133
1,440
1,252
Operating lease liabilities
397
354
366
Other accrued liabilities
3,497
3,404
3,456
Total current liabilities
5,031
5,702
6,574
Long-term debt
7,276
7,267
6,640
Long-term operating lease liabilities
1,706
1,701
1,695
Other noncurrent liabilities
1,578
1,693
1,812
Total noncurrent liabilities
10,560
10,661
10,147
Redeemable noncontrolling
interest
—
—
850
Total equity
4,169
5,314
5,712
Total liabilities and equity
$
19,760
$
21,677
$
23,283
SELECT CASH FLOW DATA
(Unaudited)
Six Months Ended December
31
($ in millions)
2024
2023
Net earnings (loss)
$
(746
)
$
360
Adjustments to reconcile net earnings
(loss) to net cash flows from operating activities:
Depreciation and amortization
415
408
Deferred income taxes
(292
)
(83
)
Impairment of goodwill and other
intangible assets
861
—
Other items
193
174
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable, net
79
(279
)
Decrease in inventory and promotional
merchandise
132
405
Decrease (increase) in other assets,
net
(47
)
44
Decrease in accounts payable and other
liabilities, net
(208
)
(92
)
Net cash flows provided by operating
activities
$
387
$
937
Other Investing and Financing Uses:
Capital expenditures
$
(273
)
$
(527
)
Settlement of net investment hedges
(20
)
(26
)
Payments to acquire treasury stock
(35
)
(33
)
Dividends paid
(366
)
(474
)
Proceeds of current debt, net
—
780
Repayments of commercial paper (maturities
after three months)
—
(785
)
Repayments of long-term debt
(502
)
(5
)
Supplemental cash flow information:
Cash paid for interest
$
179
$
188
Cash paid for income taxes
327
263
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250204923986/en/
Investors: Rainey Mancini rmancini@estee.com Media:
Jill Marvin jimarvin@estee.com
Estee Lauder Companies (NYSE:EL)
Gráfico Histórico do Ativo
De Fev 2025 até Mar 2025
Estee Lauder Companies (NYSE:EL)
Gráfico Histórico do Ativo
De Mar 2024 até Mar 2025
