Shares of The Estée Lauder Companies Inc. (NYSE: EL) were up over 3% on Wednesday. The stock has gained 14% in the past three months. The company has been making progress on its turnaround strategy with revenue and earnings increasing for the most recent quarter. It remains optimistic on the strength of its turnaround despite certain headwinds in the short term.
Q2 performance
Estee Lauder’s net sales increased 6% year-over-year to $4.2 billion in the second quarter of 2026. Organic sales grew 4%. On an adjusted basis, earnings per share rose 43% to $0.89 versus the prior-year period.
Strategic initiatives
Estee Lauder’s Beauty Reimagined strategy is progressing well. During the second quarter, the company recorded sales increases across all its categories and geographic regions on a reported basis. On an organic basis, all categories and regions saw sales growth, barring Makeup which dipped 1%, and the Americas which remained flat.
The cosmetics company has been expanding its portfolio presence across high growth channels, markets and price tiers. It increased its presence in the online, travel retail, and pharmacy channels while also entering new markets across Europe and the Middle East. It also benefited from innovative product launches in the skin care, fragrance, and makeup categories. In Q2, sales in Skin Care and Fragrance increased 6%, helped by strong sales during the holiday season as well as high-single-digit growth from luxury brands.
EL saw double-digit sales growth in Mainland China as well as its priority emerging markets in the EUKEM and the Americas regions in Q2. This growth was driven by strong performance during key shopping events and growth across product categories, helped by product innovation and expanded consumer reach.
Outlook
Estee Lauder updated its guidance for the full year of 2026, based on its performance in the first half of the year. The company continues to face headwinds from economic uncertainty and it anticipates a rise in consumer-facing investments in the second half of the year, especially the third quarter of 2026.
EL now expects reported sales growth of 3-5% and organic sales growth of 1-3% for fiscal year 2026. The organic sales outlook for the year assumes growth across nearly all geographic regions, led by mid-single-digit growth in Mainland China. The company anticipates low-single-digit increase in sales during the second half of the year.
EL raised its outlook for adjusted EPS in FY2026 to a range of $2.05-2.25, representing a growth of 36-49% from the previous year.