Estée Lauder predicts 2026 sales rebound after challenging year
Estée Lauder Companies Inc. expects to return to sales growth in 2026, even as it faces a sharper revenue decline than anticipated this year. The beauty group behind brands such as The Ordinary and Clinique forecasts an 8% to 9% drop in annual sales, deeper than Wall Street projections.
While trade turmoil and a clouded economic outlook are adding to the deep-seated challenges the beauty giant was already facing, the company said it sees early signs its turnaround plans are working and that it can return to growth 'provided there is meaningful resolution of the recently enacted tariffs to mitigate potential related negative impacts,' CEO Stéphane de La Faverie said in a statement.
The stock rose 5% in Thursday premarket trading in New York. Estée Lauder had dropped 20% for the year through Wednesday's close, compared with a 5.3% decline in the S&P 500 index.
The company had pulled its guidance in October, well before the trade war escalated, because of weak and choppy demand for its products in China and the appointment of de La Faverie. Executives didn't provide an outlook when the company reported its second-quarter results on Feb. 4.
When he took over as CEO on Jan. 1, De La Faverie was already digging Estée Lauder out of a financial hole. Sales had been falling because of plummeting demand for the company's beauty products in duty-free stores across Asia and slipping market share in the U.S., as competitors L'Oréal SA and smaller upstarts have been faster to seize on social media trends.
With the trade war and the economic uncertainty that has ensued, the challenges facing de La Faverie are mounting. According to research from Oliver Chen at TD Cowen, Chinese consumers increasingly prefer local brands to foreign ones like those owned by Estée Lauder. And U.S. shoppers are feeling bleak about the economic outlook and watching their wallets.
De La Faverie is trying to boost sales and profitability by expanding on a turnaround plan set by his predecessor, which includes layoffs and other cost-cutting measures.
While many companies that sell nice-to-have items such as apparel and beauty products are starting to see a more cautious consumer, Estée Lauder has been faring worse than its peers.
Rival L'Oréal reported stronger-than-expected sales in its most recent quarter, which ended in March, driven by demand for its high-end makeup and perfumes. The company stuck with its goal to increase sales and profit this year.
At luxury conglomerate LVMH, the perfumes and cosmetics unit reported a slight decline in organic sales during the first quarter. That's the first time the division has had a dip in revenue since the pandemic. In the U.S., sales at cosmetics retailer Sephora slowed. LVMH executives, in part, blamed Amazon.com for being 'very aggressive' on pricing.
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