Estée Lauder’s first quarter of 2025 saw revenue and non-GAAP profit outperform Wall Street expectations, even as the company faced a nearly 10% year-over-year decline in sales. Management pointed to ongoing weakness in travel retail and softer consumer sentiment in China and the U.S. as primary factors impacting results. CEO Stéphane de La Faverie emphasized that, despite these headwinds, the company gained market share in the U.S., China, and Japan, with brands like Clinique, The Ordinary, and La Mer driving momentum. Travel retail continued to shrink as a share of the business, but disciplined expense management and gross margin expansion—supported by restructuring efforts—helped mitigate some of the sales pressure.
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Estée Lauder (EL) Q1 CY2025 Highlights:
- Revenue: $3.55 billion vs analyst estimates of $3.51 billion (9.9% year-on-year decline, 1.2% beat)
- Adjusted EPS: $0.65 vs analyst estimates of $0.31 (significant beat)
- Adjusted EBITDA: $607 million vs analyst estimates of $439.1 million (17.1% margin, 38.2% beat)
- Adjusted EPS guidance for the full year is $1.43 at the midpoint, beating analyst estimates by 2%
- Operating Margin: 8.6%, down from 13.5% in the same quarter last year
- Organic Revenue fell 9% year on year (5.9% in the same quarter last year)
- Market Capitalization: $27.9 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Estée Lauder’s Q1 Earnings Call
- Steve Powers (Deutsche Bank): Asked about alignment of trade inventory across categories and geographies. CFO Akhil Shrivastava responded that trade inventory challenges are mostly behind, particularly in travel retail, but acknowledged ongoing volatility and tight inventory management in North America.
- Bonnie Herzog (Goldman Sachs): Inquired about expectations for market trends and growth in the next year. CEO Stéphane de La Faverie emphasized confidence in returning to growth, citing share gains in key markets and ongoing efficiency initiatives, but cautioned that consumer sentiment remains subdued.
- Lauren Lieberman (Barclays): Requested details on tariff mitigation and supply chain shifts. De La Faverie and Shrivastava outlined steps to regionalize production, especially moving supply for China to Japan and Europe, and reducing U.S. exposure to China-sourced goods.
- Filippo Falorni (Citi): Sought clarity on further PRGP savings and reinvestment plans. Management noted ongoing expansion of the program, with focus on outsourcing, procurement, and operational efficiencies to drive margin gains.
- Bryan Spillane (Bank of America): Asked about balancing margin targets with revenue growth ambitions. De La Faverie described organizational changes to clarify responsibilities, accelerate innovation, and ensure disciplined investment in growth initiatives.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace and sustainability of market share gains in the U.S., China, and Japan, (2) further progress on PRGP restructuring and its impact on operating margins, and (3) the effectiveness of supply chain regionalization in mitigating tariff headwinds. We will also look for signs of improved consumer sentiment and successful rollouts of new product innovations.
Estée Lauder currently trades at $77.56, up from $59.89 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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