Estée Lauder (EL) earnings preview: what to watch in Q1 FY2027

Estée Lauder reports its fiscal 2027 first-quarter results (the quarter ending September 30, 2026) on Monday, November 2, 2026, with a webcast at 8:30 a.m. ET hosted by CEO Stéphane de La Faverie and CFO Akhil Shrivastava, per the company's October 19, 2026 press release. Estée Lauder's fiscal year runs July to June, so this is the July–September 2026 quarter.

What fiscal 2026 showed

Our analysis of Estée Lauder's fiscal 2026 annual report found a recovery driven mostly by cost cuts rather than demand:

Organic growth strips out currency moves and acquisitions to show underlying demand. On that basis sales grew only 3%, and the growth was narrow: Mainland China rose 9% organically and Asia/Pacific (which includes travel retail, the airport and duty-free business) 4%, while the Americas and EUKEM (Europe, the UK and emerging markets) each grew 1%. Higher sales in Mainland China and travel retail added about $531 million of the year's $723 million increase.

The year ended better than it started: fourth-quarter (April–June 2026) organic sales rose 5%, including a return to growth in North America. That quarter included an $18 million one-time gain from releasing unused gift-card liabilities.

What management guided for fiscal 2027

As quoted in our report, management's fiscal 2027 outlook is:

• Organic net sales growth: 3% to 5% (FY2026: 3%)
• Adjusted operating margin: 12.7% to 13.5%, raised from 12.5%–13.0% (FY2026: 11.2%)
• Adjusted diluted EPS: $3.10 to $3.35 (FY2026: $2.51)
• GAAP diluted EPS: $2.52 to $2.85 (FY2026: $0.50)
• Operating cash flow: $1.3B to $1.4B (FY2026: $1.77B)

Management expects growth to be stronger in the first half of the year, helped by earlier product launches, improving travel retail trends and an easy travel retail comparison, with makeup returning to growth for the full year. The outlook assumes no worsening in geopolitics, tariffs or consumer sentiment. The company did not give a separate first-quarter figure in the material our report covered.

Three things to watch

1. Whether organic growth holds near the fourth quarter's 5%, and where it comes from. Management said the first half should be the stronger half, so a first quarter well below 5% would put the full-year 3%–5% range at risk early. The more telling detail is the mix. In fiscal 2026 the Americas grew just 1% organically; our report called this quarter "the first real test." If North America keeps growing, the recovery is broadening. If growth again rests mostly on Mainland China and travel retail, it is still the narrow recovery fiscal 2026 showed.

2. Makeup. Makeup sales were flat at $4.28 billion in fiscal 2026 and the category posted an adjusted operating loss as marketing spend rose. M·A·C's launch in US Sephora stores offset declines at Bobbi Brown and Too Faced. Management expects makeup to return to growth this year, so watch whether the category moves above flat and whether its loss narrows.

3. How much margin gain is left from cost cuts. Adjusted operating margin (the share of sales left after running the business, before interest and tax, excluding restructuring and other one-off items) rose from 8.0% to 11.2% largely on the Profit Recovery and Growth Plan, the restructuring program that cuts about 10,000 jobs and targets about $1.2 billion of annual gross savings. The company says most of the remaining savings land in fiscal 2027, which is how it gets to 12.7%–13.5%. Watch whether the first quarter's adjusted margin is running ahead of last year's, and how big the gap to GAAP is: restructuring charges were $813 million in fiscal 2026, and tariffs cost $102 million gross, of which $38 million was refunded in the fourth quarter. A further tariff refund in this quarter would flatter the margin rather than show stronger operations.

A useful check on cash: operating cash flow is guided down to $1.3–1.4 billion from $1.77 billion because of higher restructuring payments and working capital, so a weak cash quarter on its own would be in line with the plan, not a new problem.