:max_bytes(150000):strip_icc()/GettyImages-2259408842-e8280ba8bb6d4b63ab9d2c338e53c913.jpg "Estée Lauder Stock Tumbled 20% Today. Here’s What Dragged the Shares Lower")
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Key Takeaways
- Estée Lauder’s latest results beat expectations, and the company raised its outlook. Investors, however, didn’t like what they saw.
- After rising more than 45% in the past year, the shares dropped today, finishing 19% lower.
Estée Lauder’s latest forecast wasn’t a winning look.
The cosmetics company reported second-quarter results Thursday that sent investors running—and the stock to its lowest close since December—despite results that beat expectations and an improved outlook for the year. The company’s reiteration of a $100 million expected second-half tariff hit to profits, along with the stock’s steady climb off April lows that may have led to high expectations, likely weighed on the shares.
Why This News Matters to Consumers
Economists have long said consumers will shoulder most of the cost of tariffs. There has been debate about how long this process may take, as some companies, such as Estée Lauder, acknowledge they have not yet offset the expense.
Estée Lauder Cos. (EL), parent company of Bobbi Brown and Clinique, hoped to cast its results as long-awaited progress. Sales picked up in Europe, China and other Asian markets. And after 10 years of losing market share, Estée Lauder is gaining ground in the Americas by expanding beyond department stores and selling via Amazon (AMZN), Tik Tok and Sephora, CEO Stéphane de la Faverie said on a conference call Thursday.
“One of the main challenges that we see is: the enacted tariffs are starting to hurt consumer confidence in Latin America,” de la Faverie said, according to a transcript provided by Alpha Sense. “But overall, I want to say, I feel very strong.”
The company reported $4.2 trillion in sales for the quarter ended Dec. 31—a 6% increase from last year, and slightly above the consensus analyst estimate from Visible Alpha. That translated to about $0.89 in adjusted earnings per share, compared to the $0.82 analysts anticipated, per Visible Alpha.
Estée Lauder also raised its earnings outlook for the full fiscal year. The company expects to end 2026 with an adjusted operating profit margin of 9.8% to 10.2%, despite a dip in the third quarter due to tariffs and other headwinds. That’s up from the 9.4% to 9.9% margin given in prior guidance.
Today’s investor reaction, however, was deeply negative, with the shares finishing 19% lower even after a bounce from intraday lows. The stock finished Wednesday’s session above Wall Street’s consensus price target, per Visible Alpha Data; it’s now some 15% below it.
