The Estee Lauder Companies Inc. EL reported first-quarter fiscal 2027 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year.
Adjusted earnings of 72 cents per share surpassed the Zacks Consensus Estimate of 52 cents. The bottom line increased 125% from 32 cents in the year-ago quarter.
Quarterly net sales of $3,715 million beat the consensus mark of $3,647 million and increased 7% year over year. Organic net sales advanced 6% to $3,696 million.
The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise
The Estee Lauder Companies Inc. price-consensus-eps-surprise-chart | The Estee Lauder Companies Inc. Quote
EL's Category-Wise Q1 Revenue Results
Skin Care sales increased 5% year over year to $1,651 million, with organic sales rising 4%. Growth was driven by La Mer and The Ordinary, supported by product innovations, expanded consumer reach and continued strength in established product franchises.
Fragrance sales surged 19% to $861 million, with organic sales climbing 20%. Double-digit growth across luxury brands, including Le Labo, TOM FORD, Jo Malone London and KILIAN PARIS, supported the category's performance.
Makeup sales increased 2% to $1,048 million, while organic sales rose 1%. Growth at M·A·C, supported by distribution expansion and product launches, was partly offset by lower Estée Lauder brand sales.
Hair Care sales declined 1% to $128 million but remained flat organically. Other sales advanced 12% to $28 million.
EL's Q1 Regional Revenue Results
The Americas generated net sales of $1,227 million, up 5% year over year on a reported basis and 4% organically. Asia/Pacific sales climbed 9% to $952 million, with organic growth of 10%.
Mainland China sales advanced 15% to $614 million, with organic sales increasing 9%. EUKEM sales increased 2% to $923 million, while organic sales rose 4%.
EL’s Q1 Margin Breakdown: Key Insights
Adjusted gross profit increased 10% year over year to $2,814 million. Adjusted gross margin expanded 240 basis points to 75.7% from 73.3% in the prior-year quarter. Procurement savings, manufacturing efficiencies, strategic pricing and operating leverage helped offset inflation.
Adjusted operating income surged 76% to $449 million from $255 million. Adjusted operating margin expanded 480 basis points to 12.1%.
EL’s Financial Health Snapshot
The company exited the quarter with cash and cash equivalents of $3,198 million, long-term debt of $6,748 million and total equity of $4,038 million.
Net cash used in operating activities totaled $166 million. Capital expenditures declined to $69 million from $96 million.
Free cash flow improved to negative $235 million from negative $436 million. Dividend payments amounted to $126 million during the quarter.
EL's Transformation Initiatives Gain Momentum
Estee Lauder continued advancing its Beauty Reimagined strategy through innovation, distribution expansion and operational efficiencies. The company expanded its Amazon presence to 13 brands across 17 markets and TikTok Shop presence to 15 brands across 11 markets.
Estee Lauder also strengthened its digital infrastructure through Shopify deployments for M·A·C and Clinique. Meanwhile, its PRGP continued supporting expense optimization and operational efficiency, helping fund investments in product innovation and consumer engagement.
EL Partners With Microsoft to Boost AI Capabilities
Estee Lauder announced a strategic partnership with Microsoft to strengthen its cloud, data and AI capabilities. The collaboration aims to accelerate innovation, enhance consumer personalization and improve operational efficiency, supporting long-term growth and margin expansion.
What to Expect From EL in Fiscal 2027?
Management raised its fiscal 2027 organic net sales growth forecast to 4-5.5% from the previously projected 3-5%.
Adjusted operating margin is now anticipated at 12.9-13.7%, up from the previous guidance of 12.7-13.5%.
Adjusted earnings are projected at $3.20-$3.45 per share, compared with the earlier outlook of $3.10-$3.35, representing year-over-year growth of 28-38%.
This Zacks Rank #3 (Hold) stock has gained 29% in the past three months compared with the industry’s growth of 28.4%.
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Stocks to Consider
Five Below, Inc. FIVE operates as a specialty value retailer in the United States and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 20.1% and 57.6%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 68.3%, on average.
Dollar General Corporation DG is one of the largest discount retailers in the United States, selling low-priced merchandise, typically $10 or less. The company currently has a Zacks Rank of 2 (Buy). DG delivered a trailing four-quarter earnings surprise of 19.1%, on average.
The Zacks Consensus Estimate for Dollar General’s current fiscal-year sales and EPS is expected to rise 4.3% and 15.9%, respectively, from the year-ago reported figures.
Target Corporation TGT operates as a general merchandise retailer in the United States. The company currently carries a Zacks Rank of 2. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.
The Zacks Consensus Estimate for Target Corporation’s current fiscal-year sales and EPS indicates growth of 5.1% and 38.8%, respectively, from the year-ago reported numbers.
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The Estee Lauder Companies Inc. (EL): Free Stock Analysis Report
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