The new Estée Lauder Companies full-year forecast now expects sales to drop by as much as 9% in 2025 but sees a return to growth next year. As restructuring continues, the company estimates a net reduction in positions of 5,800 to 7,000.
Travel retail continues to be an Achilles heel, experiencing a significant decline in Q3 2025, with organic sales dropping by 28% year over year, driven by ongoing challenges in the Asia travel retail market. The segment decline was a major contributor to the company’s overall organic sales drop for the quarter. Excluding travel retail, the rest of Estée Lauder’s business saw a much smaller 3% decline in organic sales.
Stéphane de La Faverie, President and Chief Executive Officer, said, “In the third quarter of fiscal 2025, we delivered our organic sales outlook and exceeded profitability expectations. We are moving decisively and building momentum as we bring our “Beauty Reimagined” strategic vision to life across its five key priorities. This is evidenced by our prestige beauty share gains in strategic markets like the US, China, and Japan and our mid-single-digit organic net sales growth online.
“Our global business organic sales trends, excluding travel retail, showed sequential improvement. With the strategic reset of our travel retail business well underway to better reflect recent industry trends and market conditions, and provided there is meaningful resolution of the recently enacted tariffs to mitigate potential related negative impacts, we are confident in our ability to return to sales growth in fiscal 2026.”
The company reported a profit for third quarter that decreased from last year but beat the Street estimates. The 310 basis points expansion in gross margin for the fiscal 2025 third quarter was primarily driven by operational efficiencies and cost-cutting measures, reduction of excess inventory, and strategic pricing actions. These actions are all part of Estée Lauder’s multiyear turnaround strategy.
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