Estée Lauder reports growth in Q1, driven by fragrance; sees recovery in China

After several months of weakened momentum, The Estée Lauder Companies reported stronger-than-expected sales for the first quarter of its fiscal year.

Sales for the period from July to September 2025 reached USD3.48 billion, representing a 4% rise from the prior year, the company said in a statement on Thursday, October 30. This figure surpassed analysts’ estimates of USD3.38 billion.

Perfumes drive growth

Fragrance net sales rose 14% year over year, driven by Tom Ford innovations — including the launches of Voyager Oud and Black Orchid Reserve, fronted by Tilda Swinton — as well as strong performance from Jo Malone London’s colognes.

Skincare net sales increased 3%, whereas makeup sales declined 1% and haircare sales were down 7%.

Restart in China?

The company, which owns Clinique, The Ordinary, Kilian Paris, and M·A·C, had struggled in recent quarters amid weak consumer spending, especially in China. On this latter front, the group is seeing improvement.

In the first quarter of its fiscal year, The Estée Lauder Companies reported an 9% increase in sales in China compared to the same period last year, driven in part by strong performances from La Mer, Le Labo, and Tom Ford.

“Growth in Mainland China, primarily driven by innovation and existing products,” as well as “targeted expanded consumer reach” the company stated.

The group had also announced a restructuring plan in February, the final cost of which is expected to be between USD1.2 and USD1.6 billion before taxes. It also planned to eliminate 5,800 to 7,000 positions by the end of 2026.

“We had a strong start to fiscal 2026 (…), gaining prestige beauty share in a few key strategic areas of focus, and improving profitability,” said Stéphane de La Faverie, President and CEO. “These results reinforce the confidence we have in our fiscal 2026 outlook—a pivotal year—as we restore organic sales growth and expand our operating margin for the first time in four years,” he added.

For fiscal 2026, Estée Lauder continues to forecast a 2% to 5% increase in net profit per share. The company also warned that new trade tariffs could reduce future earnings by nearly USD100 million, but said it is closely monitoring trade policy changes and implementing measures to mitigate potential impacts.

“The Company has implemented a range of actions,” including “further optimizing its regional manufacturing footprint to bring production closer to the consumer,” the group added.