The Estée Lauder Companies (ELC) reported a 4% year-over-year increase in net sales, reaching $3.48 billion for the first quarter of fiscal 2026, signaling a steady recovery led by strong momentum in Mainland China and the Asia-Pacific region.

After several turbulent quarters marked by shifting consumer behavior and sluggish travel retail, Estée Lauder appears to be regaining its stride. The company’s operating margin improved from -3.6% to 4.9%, reflecting early benefits from its ongoing “Beauty Reimagined” transformation plan.

“Our start to fiscal 2026 demonstrates real progress in returning to organic growth, gaining market share in prestige beauty, and improving profitability,” said Stéphane de La Faverie, President and CEO. “We are becoming faster and more agile across the organization.”

China and Asia-Pacific Drive Growth

Sales in Asia-Pacific rose 9%, buoyed by the rebound in Mainland China’s travel retail sector, which has been gradually recovering since pandemic restrictions lifted. China’s government has also introduced favorable policies, including the upcoming expansion of the duty-free purchase allowance in Hainan, set to take effect in December, further stimulating consumer spending in luxury beauty.

Fragrance Leads, Haircare and Makeup Lag

Fragrance continues to be ELC’s strongest category, up 13% organically, thanks to high-performing brands like Le Labo, Tom Ford Beauty, and Jo Malone.
Skincare, long the company’s cornerstone, grew 3%, with La Mer and Estée Lauder seeing renewed strength supported by travel retail.

However, not all segments fared equally well:

• Haircare declined 7%, as Aveda scaled back retail presence and online discounts to prioritize margins.

• Makeup slipped 2%, with Bobbi Brown underperforming due to reduced color palette launches and promotional activity.

To reinvigorate the category, MAC Cosmetics will launch at Sephora U.S. in early 2026—a move analysts say could capture a new generation of beauty consumers.

Restructuring and Outlook

Under its profit recovery and growth plan, Estée Lauder is set to cut between 5,800 and 7,000 jobs, with anticipated savings of $1.2–1.6 billion by fiscal 2027. The company aims to achieve a double-digit operating margin within the next few years.

Despite modest declines in the Americas (-2%), and only moderate growth in Europe, the UK, and emerging markets (+4%), the company reaffirmed its 2026 guidance, projecting overall net sales growth between 2% and 5%.

“These results strengthen our confidence in fiscal 2026 as a pivotal year,” de La Faverie added. “We are rebuilding our growth momentum and expanding margins for the first time in four years.”