Estee Lauder’s (EL) Beauty Reimagined strategy is paying off, a few points to note

Shares of The Estée Lauder Companies Inc. (NYSE: EL) stayed green on Friday. The stock has gained 20% year-to-date. After going through a challenging phase, the company witnessed a rebound in the first quarter of 2026, with growth in sales and earnings. Although the environment remains dynamic, the cosmetics leader remains optimistic as its efforts under its Beauty Reimagined strategy continue to yield benefits.

Strong Q1

Estee Lauder’s net sales increased 4% year-over-year to $3.5 billion in the first quarter of 2026. Organic sales growth was 3%. On an adjusted basis, earnings more than doubled to $0.32 per share from $0.14 per share in the year-ago period. Adjusted gross margin expanded 60 basis points to 73.3% in the quarter, helped by benefits from the Profit Recovery and Growth Plan.  

Beauty Reimagined progress

EL’s measures under the Beauty Reimagined plan to expand consumer coverage, create innovation, and boost consumer-facing investment are helping drive retail sales growth in key markets.

In Q1, Mainland China saw sales grow by 9%, helped by innovation and existing products, expanded consumer reach and key activations. Retail sales increased double-digits in China and the company gained share in every category.

In US prestige beauty, EL saw retail sales growth accelerate sequentially. In Western Europe, the company gained share within prestige beauty in France and Spain. In the UK, its largest market in the region, it saw strong sequential improvement in retail sales trends.

The company expanded its coverage on Amazon, TikTok Shop as well as several stores in the US and international markets. It also launched several new products in skin care and fragrance. EL has also partnered with Shopify to modernize its digital technology infrastructure and improve its omnichannel consumer experiences.

 In its European travel retail business, EL saw significant progress in consumer coverage expansion in the fragrance category through new retail activation, new doors, and upgrading the existing fleet across its luxury portfolio. This helped drive double-digit retail sales growth in the category across several major retailers in Q1. The company expects fragrance to be prestige beauty’s fastest-growing category for fiscal year 2026, driven by luxury.

EL continues to boost its consumer-facing investment to drive new consumer acquisition by focusing on high-return opportunities like brand-building freestanding stores and demand generation media activation. Looking ahead, the company is focusing on investing in holiday activation and expanding consumer coverage.

Outlook

For fiscal year 2026, Estee Lauder expects net sales to grow 2-5% on a reported basis. Organic sales growth is projected to be 0-3%. Adjusted EPS is expected to range between $1.90-2.10, representing YoY growth of 26-39%.