Beauty products company Estée Lauder (NYSE:EL) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 11.9% year on year to $3.41 billion. Its non-GAAP profit of $0.09 per share was in line with analysts’ consensus estimates.
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Estée Lauder (EL) Q2 CY2025 Highlights:
- Revenue: $3.41 billion vs analyst estimates of $3.42 billion (11.9% year-on-year decline, in line)
- Adjusted EPS: $0.09 vs analyst estimates of $0.09 (in line)
- Adjusted EBITDA: -$180 million vs analyst estimates of $318.8 million (-5.3% margin, significant miss)
- Adjusted EPS guidance for the upcoming financial year 2026 is $2 at the midpoint, missing analyst estimates by 9.7%
- Operating Margin: -11.4%, down from -6% in the same quarter last year
- Free Cash Flow Margin: 11.6%, down from 17.4% in the same quarter last year
- Organic Revenue fell 13% year on year vs analyst estimates of 12.7% declines (29.5 basis point miss)
- Market Capitalization: $32.33 billion
Stéphane de La Faverie, President and CEO, said, “Having closed fiscal 2025 as expected, we remain wholly focused on continuing to execute our strategic vision of Beauty Reimagined with excellence. Despite continued volatility in the external environment, we embarked on fiscal 2026 with signs of momentum and confidence in our outlook to deliver organic sales growth this year after three years of declines and to begin rebuilding operating profitability in pursuit of a solid double-digit adjusted operating margin over the next few years.”
Company Overview
Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE:EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.
With $14.33 billion in revenue over the past 12 months, Estée Lauder is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing brands have penetrated most of the market. To accelerate sales, Estée Lauder likely needs to optimize its pricing or lean into new products and international expansion.
As you can see below, Estée Lauder’s revenue declined by 6.9% per year over the last three years, a rough starting point for our analysis.
This quarter, Estée Lauder reported a rather uninspiring 11.9% year-on-year revenue decline to $3.41 billion of revenue, in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months. Although this projection implies its newer products will spur better top-line performance, it is still below the sector average.
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Organic Revenue Growth
When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.
Estée Lauder’s demand has been falling over the last eight quarters, and on average, its organic sales have declined by 4.8% year on year. 
In the latest quarter, Estée Lauder’s organic sales fell by 13% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.
Key Takeaways from Estée Lauder’s Q2 Results
It was encouraging to see Estée Lauder beat analysts’ gross margin expectations this quarter. On the other hand, its EBITDA missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 10.5% to $80.52 immediately after reporting.
The latest quarter from Estée Lauder’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.