Estée Lauder Is Having Some Trouble at Home

For once, Estée Lauder Companies’ problems are in its largest market: the US.

Despite posting a second consecutive quarter of sales growth on Thursday, business at home was flat, and is forecast to stay that way for the rest of the fiscal year. Following the release of its second-quarter earnings, the firm’s stock fell 20 percent; the following day, it began a partial rebound.

The company has been trading at a premium of around 32 times its peers, per Barclays, with its stock up some 40 percent. But given that Estée Lauder is a year into chief executive Stéphane de La Faverie’s turnaround plan, investors were hoping to see ongoing and more balanced growth.

It raised its outlook, but also warned of a $100 million tariff-related hit to its profits. Makeup as a unit also grew just 1 percent.

But there were some bright spots. Overall sales for its brands, which include MAC Cosmetics, The Ordinary and Clinique, increased 4 percent. It saw a meaningful rally in Mainland China, and its fragrance division, which houses popular names like Le Labo and Tom Ford, also continued to grow.

“We have had 10 years of market share loss in the US,” de La Faverie told The Business of Beauty on a media call ahead of its earnings conference. “The first stage is stabilising the share and growing in volume to show that we are able to recruit new consumers,” he said.

Lauren Lieberman, a managing director in Barclays investment bank, said she felt Wall Street expectations had been overly optimistic, which was reflected in the higher share price. She said the market had also priced in more optimism about Estée Lauder’s ability to return to double-digit operating margins. At its peak in 2022, margins peaked as high as 19 percent; they now hover around 9 percent.

“The turnaround is global, it’s lots of brands, it’s lots of categories. It’s hard, and it takes time,” she said.

A Long Road

There’s no doubt that Estée Lauder Companies’ leadership is making all the right steps. It’s looking to cut poorer-performing brands Too Faced, Smashbox and Dr. Jart and investing heavily in growing channels like TikTok Shop and Amazon. Its profit recovery plan has also realised savings of $904 million, primarily thanks to the reduction of 6,000 staffers. Analysts, including Raymond James’ Olivia Tong said this quarter’s organic sales growth acceleration was still healthy.

Executives were keen to highlight what’s still to come. Just-launched product innovations from top brands including Clinique and La Mer are proving popular, it will continue to invest in marketing, and realise annualised sales from TikTok Shop and Amazon. MAC Cosmetics will soon enter Sephora, a vote of confidence from the US’s most dynamic beauty retailer.

But its organic sales growth is currently too spotty to move some investors off the sidelines. Skincare, its biggest division and closely linked to its China business, grew 7 percent. But more the muted performance from makeup, as well as the sluggishness in the US and travel retail segments disappointed.

Per Citi, duty free sales in the key shopping hub of Hainan accelerated 13 percent and 27 percent in October and November 2025, with an even stronger rebound of 54.9 percent in December. However, Estée Lauder’s Asia Pacific sales, which include travel retail, only grew 1 percent. On the earnings call, de La Faverie said there was a mismatch between footfall and conversion and disruptions in other key hubs like Beijing and Shanghai.

With a company like Estée Lauder that makes its money selling cosmetics to often fickle shoppers, the path to rebuilding margins, sales and in turn, its stock price, has a lot to do with regaining relevancy. The company has not added a new line to its portfolio since 2021, when it acquired Deciem.

“It’s so hard to be top of mind, and to develop a constant cycle of newness and activity,” said Lieberman, noting the ever constant churn of new brands that are found in places like Sephora.

“It asks the question of what’s a realistic growth rate for a business of this size in the long term?”

Editor’s Note: This story was updated on Feb. 6 2026 to reflect a slight improvement in the company’s stock price.

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