How much did first-quarter results beat expectations?

  • Estée Lauder’s organic sales rose 6% year over year in the first quarter of fiscal 2027, above the market consensus of 4.3% and faster than the previous quarter’s 5%. Net sales were 3.715 billion US dollars, up 6.7% year over year.
  • Adjusted operating margin was 12.1%, above the market consensus of 9.5% and the prior-year figure of 7.3%; adjusted earnings per share were 0.72 US dollars, above the consensus of 0.51 US dollars.

Which regions and categories drove growth?

  • Organic sales in Asia-Pacific rose 10%, above the market consensus of 8.2%, supported by an improvement in travel retail; mainland China grew 9%, also above the consensus of 7.4%.
  • The Americas and the Europe, Middle East, Africa and India region each grew 4%, both exceeding market consensus but growing more slowly than Asia-Pacific.
  • By category, fragrance organic sales grew 20%, well ahead of skincare’s 4%; makeup grew 1%, while haircare was flat, making growth uneven.

How does Bernstein view the outlook after the full-year guidance increase?

  • The company raised its fiscal 2027 organic sales growth guidance from 3%–5% to 4%–5.5%, and its adjusted operating margin guidance from 12.7%–13.5% to 12.9%–13.7%; adjusted earnings per share guidance was raised from 3.10–3.35 US dollars to 3.20–3.45 US dollars.
  • Bernstein noted that the updated guidance remains consistent with prior expectations and implies weaker performance in the second half of the fiscal year. The first-quarter organic sales growth rate of 6% should therefore not simply be extrapolated to the full year.
  • Bernstein assigns a Market-Perform rating and a price target of 114 US dollars, based on second-year forward earnings per share of 3.79 US dollars and a price-to-earnings multiple of 30 times. The firm believes normalization in China and travel retail can support multiyear growth; weaker consumer demand, share losses, and cost or currency fluctuations are downside risks to the price target.