Estée Lauder Forecasts Return to Sales Growth in 2026

Esteee Lauder products at a store. Photographer: Yuki Iwamura/Bloomberg Photo by Yuki Iwamura /Bloomberg

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(Bloomberg) — Estée Lauder Cos. said it expects to return to sales growth next year despite a sharp revenue decline at the cosmetics maker. 

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The owner of The Ordinary and Clinique brands is forecasting sales to drop between 8% to 9% this year, a bigger drop than what Wall Street was expecting.

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But the company said there are nascent signs its turnaround plans are working, fueling its forecast to get back to growth in the next fiscal year, which begins in July, “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.   

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President Donald Trump hasn’t indicated that his trade war will end soon. The company’s stock fell 0.7% at 9:44 a.m. in Thursday trading in New York. Estée Lauder had dropped 20% for the year through Wednesday’s close, compared with an S&P 500 index decline of 5.3%.

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Estée Lauder said 75% of what it sells in the US is sourced domestically or from Canada and the rest comes mainly from Europe. Around one-quarter of what the company sells in China comes from the US and executives said the company is working to reduce that figure to below 10%.  

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Estée Lauder “recorded a solid earnings beat in the third quarter driven by better gross margin expansion and tighter expense control,” Telsey Advisory Group’s Dana Telsey wrote in a research note. “However, we still see significant challenges ahead given the company’s exposure to Asia travel retail along with a normalizing North American beauty market.” 

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Estée Lauder 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. 

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De la Faverie was already digging Estée Lauder out of a financial hole when he took over as CEO on Jan. 1. 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 US, as competitors L’Oreal SA and smaller upstarts have been faster to seize on social media trends. 

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With the trade war, and the economic uncertainty that’s ensued, the challenges facing de la Faverie are mounting. Chinese consumers increasingly prefer local brands to foreign ones like those owned by Estée Lauder, according to research from Oliver Chen at TD Cowen. And US shoppers are feeling bleak about the economic outlook and watching their wallets. 

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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. 

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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.  

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Rival L’Oreal reported stronger-than-expected sales in its most recent quarter that ended in March, driven by demand for its high-end make-up and perfumes. The company stuck with its goal to increase sales and profit this year.