The Estée Lauder Companies Reports Fiscal 2026 Results
NEW YORK--( BUSINESS WIRE)-- The Estée Lauder Companies Inc. (NYSE: EL) today reported its financial results for its fiscal year ended June 30, 2026.
“I am incredibly proud of our team for delivering fiscal 2026 results ahead of the expectations we had to start the year. We reignited growth with organic sales rising 3%, driven by the breadth of growth across brands, and achieved significant operating margin expansion,” said Stéphane de La Faverie, President and CEO. “We ended the year on a high note, as organic sales growth accelerated to 5% for our fourth consecutive quarter of growth and stronger profitability. We are delivering on all aspects of Beauty Reimagined. Our One ELC operating model is increasingly enabling the entire organization to move at speed and with discipline.”
de La Faverie emphasized, “For fiscal 2027, we are affirming our confidence to accelerate organic sales growth. In addition, we are raising our outlook for an even stronger adjusted operating margin, as we double down on our strengths to further diversify growth across product categories and geographies, including accelerating growth in North America.”
FISCAL 2026 SELECT FINANCIAL RESULTS (unaudited) 1,2
Year Ended
June 30
Percentage
Change
($ in millions, except per share data)
2026
2025
Net Sales
$
15,049
$
14,326
5
%
Organic Net Sales, Non-GAAP 1
$
14,811
$
14,323
3
%
Other Financial Results:
Gross Profit
$
11,362
$
10,597
7
%
Gross Margin
75.5
%
74.0
%
Adjusted Gross Profit, Non-GAAP 1,2
$
11,372
$
10,602
7
%
Adjusted Gross Margin, Non-GAAP 1,2
75.5
%
74.0
%
Operating Income (Loss)
$
780
$
(785
)
100
+%
Operating Margin
5.2
%
(5.5
)%
Adjusted Operating Income, Non-GAAP 1,2
$
1,687
$
1,146
47
%
Adjusted Operating Margin, Non-GAAP 1,2
11.2
%
8.0
%
Diluted Net Earnings (Loss) Per Common Share
$
.50
$
(3.15
)
100
+%
Adjusted Diluted Net Earnings Per Common Share, Non-GAAP 1,2
$
2.51
$
1.51
66
%
SELECT FISCAL 2026 FOURTH QUARTER AND FULL-YEAR HIGHLIGHTS 6
Beauty Gains and Achievements
Operations and Execution
Product and Commercial Innovation
Social Impact & Sustainability
PROFIT RECOVERY AND GROWTH PLAN (“PRGP”)
The PRGP, coupled with Beauty Reimagined, has transformed the Company’s operating model to (i) create greater capacity to invest behind sales growth by streamlining its fixed-cost base, (ii) support the recovery toward a solid double-digit adjusted operating margin and (iii) enhance agility to mitigate external volatility. The Company’s ongoing transformation has fundamentally reshaped the way it operates, creating a faster, more efficient organization with a culture of continuous improvement that drives ongoing operational optimization, process simplification and greater operating leverage as it scales. As of June 30, 2026, the Company concluded approvals relating to the restructuring component of the PRGP.
Key achievements through June 30, 2026:
See “Restructuring Program Component of the PRGP” below for more information.
Actions under the Company’s PRGP are still expected to be substantially completed in fiscal 2027, with a vast majority of the full run-rate benefits still expected to be realized during fiscal 2027.
Restructuring Program Component of the PRGP
Relating specifically to the restructuring program component of the PRGP, through June 30, 2026, the Company has recognized total cumulative charges under the restructuring component of the PRGP of $1.4 billion, consisting primarily of employee-related costs. In fiscal 2026, for the fourth quarter and full-year, the Company recognized charges of $0.3 billion and $0.8 billion, respectively. As noted above, approvals for specific initiatives under this restructuring program were concluded as of June 30, 2026.
Once all approved initiatives are fully implemented, the restructuring program component of the PRGP is expected to result in restructuring and other charges slightly above the high-end of the previously announced range of $1.5 billion and $1.7 billion, before taxes. This consists of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives. The restructuring program is expected to yield annual gross benefits of approximately $1.2 billion, at the high-end of the previously announced range of between $1.0 billion and $1.2 billion, before taxes, to help restore operating margin, offset inflation and fuel increased reinvestments in consumer-facing areas to drive sustainable sales growth.
The Company estimates a final net reduction in positions of approximately 10,000, at the high-end of the previously announced range of 9,000 to 10,000. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas. The restructuring program’s focus includes the (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models, all to help rebuild operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth.
FISCAL 2026 RESULTS BY PRODUCT CATEGORY AND BY REGION
Results by Product Category
(Unaudited)
Year Ended June 30
Net Sales
Percentage Change 1
Operating
Income (Loss)
Percentage
Change
($ in millions)
2026
2025
Reported
Basis
Impact of
Foreign
Currency
Translation
Organic
Net Sales
(Non-GAAP)
2026
2025
Reported
Basis
Skin Care
$
7,338
$
6,962
5
%
(2
)%
4
%
$
1,416
$
574
100
+%
Makeup
4,276
4,205
2
(2
)
—
(70
)
(441
)
84
Fragrance
2,779
2,491
12
(2
)
10
204
(378
)
100
+
Hair Care
565
565
—
(1
)
(1
)
(4
)
(41
)
90
Other
103
100
3
—
3
57
(13
)
100
+
Subtotal
$
15,061
$
14,323
5
%
(2
)%
3
%
$
1,603
$
(299
)
100
+%
Returns/charges
associated with
restructuring and
other activities
(12
)
3
(823
)
(486
)
Total
$
15,049
$
14,326
5
%
(2
)%
3
%
$
780
$
(785
)
100
+%
Non-GAAP Adjustments to As Reported Operating Income (Loss):
Returns/charges associated with restructuring and other activities
823
486
Skin Care - Securities class action litigation settlement
27
—
Makeup - Securities class action litigation settlement
35
—
Fragrance - Securities class action litigation settlement
13
—
Hair Care - Securities class action litigation settlement
9
—
Skin Care - Other intangible asset impairments
—
375
Makeup - Goodwill and other intangible asset impairments
—
308
Fragrance - Other intangible asset impairment
—
549
Other - Other intangible asset impairment
—
54
Makeup - Talcum litigation settlement agreements 2
—
159
Adjusted Operating Income - Non-GAAP
$
1,687
$
1,146
47
%
1Percentages are calculated on an individual basis.
2From the end of August 2024 through October 2024, the Company entered into agreements with certain plaintiff law firms to resolve over 200 pending cosmetic talcum powder matters, which was a portion of the pending matters that existed at that time, and establish a framework for resolving potential future claims brought by these plaintiff firms from January 1, 2025 through December 31, 2029 (mitigating a portion of its future exposure), subject to annual caps (the “Talcum litigation settlement agreements”). In connection with the Talcum litigation settlement agreements, the Company recorded a charge of $159 million in the fiscal 2025 first quarter, representing its best estimate of probable losses for current and potential future claims under these agreements.
The product category commentary below on net sales reflects organic net sales, excluding the favorable impacts from foreign currency translation, and on operating results reflects adjusted operating results, excluding the adjustments in the preceding table. In addition to the Operational Highlights above, below are the drivers of the Company’s performance.
Skin Care
Makeup
Fragrance
Hair Care
Results by Geographic Region
(Unaudited)
Year Ended June 30
Net Sales
Percentage Change 1
Operating
Income (Loss)
Percentage
Change
($ in millions)
2026
2025
Reported
Basis
Impact of
Foreign
Currency
Translation
Organic
Net Sales
(Non-GAAP)
2026
2025
Reported
Basis
The Americas
$
4,463
$
4,410
1
%
—
%
1
%
$
211
$
(818
)
100
+%
EUKEM
3,794
3,566
6
(5
)
1
196
145
35
Asia/Pacific
3,746
3,606
4
1
4
823
180
100
+
Mainland China
3,058
2,741
12
(3
)
9
373
194
92
Subtotal
$
15,061
$
14,323
5
%
(2
)%
3
%
$
1,603
$
(299
)
100
+%
Returns/charges
associated with
restructuring and
other activities
(12
)
3
(823
)
(486
)
Total
$
15,049
$
14,326
5
%
(2
)%
3
%
$
780
$
(785
)
100
+%
Non-GAAP Adjustments to As Reported Operating Income (Loss):
Returns/charges associated with restructuring and other activities
823
486
The Americas - Securities class action litigation settlement
84
—
The Americas - Goodwill and other intangible asset impairments
—
911
Asia/Pacific - Other intangible asset impairments
—
375
The Americas - Talcum litigation settlement agreements 2
—
159
Adjusted Operating Income - Non-GAAP
$
1,687
$
1,146
47
%
1Percentages are calculated on an individual basis.
2From the end of August 2024 through October 2024, the Company entered into agreements with certain plaintiff law firms to resolve over 200 pending cosmetic talcum powder matters, which was a portion of the pending matters that existed at that time, and establish a framework for resolving potential future claims brought by these plaintiff firms from January 1, 2025 through December 31, 2029 (mitigating a portion of its future exposure), subject to annual caps (the “Talcum litigation settlement agreements”). In connection with the Talcum litigation settlement agreements, the Company recorded a charge of $159 million in the fiscal 2025 first quarter, representing its best estimate of probable losses for current and potential future claims under these agreements.
The geographic region commentary below on net sales reflects organic net sales, excluding the (favorable)/unfavorable impact from foreign currency translation, and on operating results reflects adjusted operating results, excluding the adjustments in the preceding table. In addition to the Operational Highlights above, below are the drivers of the Company’s performance.
Organic Net Sales - increased 3%, with growth in every geographic region, led by:
Adjusted Operating Results - increased, due to:
Fourth Quarter Results
Results by Product Category
(Unaudited)
Three Months Ended June 30
Net Sales
Percentage Change 1
Operating
(Loss) Income
Percentage
Change
($ in millions)
2026
2025
Reported
Basis
Impact of
Foreign
Currency
Translation
Organic
Net Sales
(Non-GAAP)
2026
2025
Reported
Basis
Skin Care
$
1,853
$
1,705
9
%
(2
)%
7
%
$
331
$
(210
)
100
+%
Makeup
1,010
982
3
(1
)
2
(70
)
(59
)
(19
)
Fragrance
618
560
10
—
10
(8
)
(24
)
67
Hair Care
140
141
(1
)
—
(1
)
(5
)
(7
)
29
Other
19
20
(5
)
—
(5
)
19
12
58
Subtotal
$
3,640
$
3,408
7
%
(1
)%
5
%
$
267
$
(288
)
100
+%
Returns/charges
associated with
restructuring and
other activities
(13
)
3
(306
)
(102
)
Total
$
3,627
$
3,411
6
%
(1
)%
5
%
$
(39
)
$
(390
)
90
%
Non-GAAP Adjustments to As Reported Operating (Loss) Income:
Returns/charges associated with restructuring and other activities
306
102
Skin Care - Other intangible asset impairments
—
375
Makeup - Other intangible asset impairment
—
50
Adjusted Operating Income - Non-GAAP
$
267
$
137
95
%
1Percentages are calculated on an individual basis.
Results by Geographic Region
(Unaudited)
Three Months Ended June 30
Net Sales
Percentage Change 1
Operating
(Loss) Income
Percentage
Change
($ in millions)
2026
2025
Reported
Basis
Impact of
Foreign
Currency
Translation
Organic
Net Sales
(Non-GAAP)
2026
2025
Reported
Basis
The Americas
$
995
$
941
6
%
(1
)%
5
%
$
(1
)
$
(29
)
97
%
EUKEM
851
828
3
(2
)
1
2
(38
)
100
+
Asia/Pacific
970
906
7
2
9
212
(280
)
100
+
Mainland China
824
733
12
(6
)
7
54
59
(8
)
Subtotal
$
3,640
$
3,408
7
%
(1
)%
5
%
$
267
$
(288
)
100
+%
Returns/charges
associated with
restructuring and
other activities
(13
)
3
(306
)
(102
)
Total
$
3,627
$
3,411
6
%
(1
)%
5
%
$
(39
)
$
(390
)
90
%
Non-GAAP Adjustments to As Reported Operating (Loss) Income:
Returns/charges associated with restructuring and other activities
306
102
The Americas - Other intangible asset impairments
—
50
Asia/Pacific - Other intangible asset impairments
—
375
Adjusted Operating Income - Non-GAAP
$
267
$
137
95
%
1Percentages are calculated on an individual basis.
QUARTERLY DIVIDEND
Today, the Company announced a quarterly dividend of $.35 per share on its Class A and Class B Common Stock, payable in cash on September 15, 2026 to stockholders of record at the close of business on August 31, 2026.
OUTLOOK FOR FISCAL 2027 FULL YEAR
Reconciliation between GAAP and Non-GAAP - Net Sales Growth
(Unaudited)
Twelve Months Ending
June 30, 2027 (F)
As Reported - GAAP
3% - 5
%
Impact of foreign currency translation
—
Returns associated with restructuring and other activities
—
Organic, Non-GAAP
3% - 5
%
(F)Represents forecast, using spot rates as of June 25, 2026.
Reconciliation between GAAP and Non-GAAP - Diluted Net Earnings Per Common Share (“EPS”)
(Unaudited)
Twelve Months Ending
June 30
2027 (F)
2026
Growth
Forecasted/As Reported EPS - GAAP
$2.52 - $2.85
$
.50
100
+%
Non-GAAP
Restructuring and other charges
.50 - .58
1.83
Securities class action litigation settlements
—
.18
Forecasted/Adjusted EPS - Non-GAAP
$3.10 - $3.35
$
2.51
24% - 34
%
Impact of foreign currency translation
(.04
)
Forecasted/Adjusted Constant Currency EPS - Non-GAAP
$3.06 - $3.31
$
2.51
22% - 32
%
(F)Represents forecast, using spot rates as of June 25, 2026.
The Company has reflected the following assumptions in its fiscal 2027 full-year outlook:
CONFERENCE CALL AND WEBCAST DETAILS
The Estée Lauder Companies will host a conference call at 8:30 a.m. (ET) today, August 19, 2026 to discuss its results for fiscal 2026.
The call will be webcast live at http://www.elcompanies.com/investors/events-and-presentations and will be available for replay until Friday, October 30, 2026.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this press release, in particular those in “Outlook,” as well as remarks by the CEO and other members of management, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address the Company’s expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, the Company’s long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like “expect,” “will,” “will likely result,” “would,” “believe,” “estimate,” “planned,” “plans,” “intends,” “may,” “should,” “could,” “anticipate,” “estimate,” “project,” “projected,” “forecast,” and “forecasted” or similar expressions. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, actual results may differ materially from the Company’s expectations. Factors that could cause actual results to differ from expectations include, without limitation:
(1)
increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses;
(2)
the Company’s ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in the Company’s business;
(3)
consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell the Company’s products, an increase in the ownership concentration within the retail industry, ownership of retailers by the Company’s competitors or ownership of competitors by the Company’s customers that are retailers and the Company’s inability to collect receivables;
(4)
destocking and tighter working capital management by retailers;
(5)
the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs;
(6)
shifts in the preferences of consumers as to how they perceive value and where and how they shop;
(7)
social, political and economic risks to the Company’s foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States;
(8)
changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, the Company’s business, including those relating to its products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action the Company may take as a result;
(9)
foreign currency fluctuations affecting the Company’s results of operations and the value of its foreign assets, the relative prices at which the Company and its foreign competitors sell products in the same markets and the Company’s operating and manufacturing costs outside of the United States;
(10)
changes in global or local conditions, including those due to volatility in the global credit and equity markets, government economic policies, natural or man-made disasters, real or perceived epidemics, supply chain challenges, inflation, or increased energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase the Company’s products while traveling, the financial strength of the Company’s customers, suppliers or other contract counterparties, the Company’s operations, the cost and availability of capital which the Company may need for new equipment, facilities or acquisitions, the returns that the Company is able to generate on its pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying the Company’s critical accounting estimates;
(11)
shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture the Company’s products or at the Company’s distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings;
(12)
real estate rates and availability, which may affect the Company’s ability to increase or maintain the number of retail locations at which the Company sells its products and the costs associated with the Company’s other facilities;
(13)
changes in product mix to products which are less profitable;
(14)
the Company’s ability to acquire, develop or implement new information technology, including operational technology and websites, on a timely basis and within the Company’s cost estimates; to maintain continuous operations of its new and existing information technology; and to secure the data and other information that may be stored in such technologies or other systems or media;
(15)
the Company’s ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom;
(16)
consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation;
(17)
the timing and impact of acquisitions, investments and divestitures; and
(18)
additional factors as described in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
The Company assumes no responsibility to update forward-looking statements made herein or otherwise.
The Estée Lauder Companies Inc. is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products, and is a steward of luxury and prestige brands globally. The Company’s products are sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, Jo Malone London, Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, the DECIEM family of brands, including The Ordinary, NIOD, Avestan and Loopha, and Balmain Beauty.
ELC-F
ELC-E
CONSOLIDATED STATEMENT OF (LOSS) EARNINGS
(Unaudited)
Three Months Ended
June 30
Percentage
Change
Year Ended
June 30
Percentage
Change
($ in millions, except per share data)
2026
2025
2026
2025
Net sales (A)
$
3,627
$
3,411
6
%
$
15,049
$
14,326
5
%
Cost of sales (A)
890
955
(7
)
3,687
3,729
(1
)
Gross profit
2,737
2,456
11
11,362
10,597
7
Gross margin
75.5
%
72.0
%
75.5
%
74.0
%
Operating expenses
Selling, general and administrative
2,483
2,315
7
9,685
9,456
2
Restructuring and other charges (A)
293
106
100
813
481
69
Securities class action litigation settlement (B)
—
—
—
84
—
100
Goodwill impairment (C)
—
—
—
—
13
(100
)
Impairment of other intangible assets (C)
—
425
(100
)
—
1,273
(100
)
Talcum litigation settlement agreements (D)
—
—
—
—
159
(100
)
Total operating expenses
2,776
2,846
(2
)
10,582
11,382
(7
)
Operating expense margin
76.5
%
83.4
%
70.3
%
79.4
%
Operating (loss) income
(39
)
(390
)
90
780
(785
)
100
+
Operating (loss) income margin
(1.1
)%
(11.4
)%
5.2
%
(5.5
)%
Interest expense
81
88
(8
)
334
357
(6
)
Interest income and investment income, net
24
29
(17
)
90
114
(21
)
Other components of net periodic benefit cost
8
2
100
+
19
12
58
(Loss) earnings before income taxes
(104
)
(451
)
77
517
(1,040
)
100
+
Provision for income taxes (E)
12
95
(87
)
335
93
100
+
Net (loss) earnings
(116
)
(546
)
79
182
(1,133
)
100
+
Net (loss) earnings per common share
Basic
$
(.32
)
$
(1.51
)
79
%
$
.50
$
(3.15
)
100
+%
Diluted
$
(.32
)
$
(1.51
)
79
%
$
.50
$
(3.15
)
100
+%
Weighted-average common shares outstanding
Basic
363.1
360.7
362.3
360.1
Diluted
363.1
360.7
364.8
360.1
(A) Included in net sales, cost of sales and restructuring and other charges are the impacts of returns and charges associated with the restructuring program component of the PRGP and the Post-COVID Business Acceleration Program (the “PCBA Program”). Additional information about the restructuring program component of the PRGP and the PCBA Program are included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
(B) On December 7, 2023 and January 22, 2024, purported securities class action complaints were filed in the United States District Court for the Southern District of New York against the Company and its then Chief Executive Officer and Chief Financial Officer. The actions were consolidated on February 20, 2024. On March 22, 2024, plaintiffs filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged materially false and misleading statements between February 3, 2022 and October 31, 2023. On March 31, 2025, the Court denied defendants’ motion to dismiss. On April 2, 2026, the parties reached an agreement in principle to settle the securities class action litigation. In light of these discussions, during the fiscal 2026 third quarter, the Company recorded a loss contingency of $84 million, net of the estimated probable insurance recoveries, in the consolidated statements of earnings (loss) relating to a potential settlement of the securities class action. As of June 30, 2026, the total settlement amount has been funded, including amounts paid by the insurance carriers. This matter is subject to final approval from the Court.
(C) During the fiscal 2025 second quarter, the TOM FORD brand experienced lower-than-expected growth within key geographic regions and channels, including in mainland China, Asia travel retail and Hong Kong SAR. Also during the fiscal 2025 second quarter, the Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels. As a result, the Company made revisions to the internal forecasts relating to its TOM FORD brand and Too Faced reporting unit. Additionally, there were increases in the weighted average cost of capital for the TOM FORD brand and Too Faced reporting unit as compared to the prior-year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024. The Company concluded that the changes in circumstances in the TOM FORD brand and Too Faced reporting unit, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of the TOM FORD trademark and the Too Faced trademark and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Too Faced’s long-lived assets, including customer lists, may not be recoverable. After performing the relevant impairment assessments, the Company recorded $773 million and $75 million of trademark intangible asset impairment charges for TOM FORD and Too Faced, respectively, as well as a $13 million goodwill impairment charge related to Too Faced.
Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2025, the Company determined that the carrying value of the Dr.Jart+ and Too Faced trademarks exceeded their estimated fair values. As it relates to Dr.Jart+, a decision was made in the prior year in the reporting unit’s operating plan to exit the travel retail channel. A revised strategy was implemented that included increased direct investment in other areas of the business, including in mainland China, to support the brand’s future growth. However, given the lower-than-expected growth within key geographic regions in fiscal 2025, specifically within mainland China and Korea, it was determined that revisions to the internal forecasts were necessary which were finalized and approved in the fiscal 2025 fourth quarter in connection with the brand’s annual planning process, and reflected in the goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2025. The Too Faced reporting unit continued to experience lower-than-expected results in key geographic regions and channels and as such, it was determined that revisions to the internal forecasts were necessary. These changes in circumstances were also indicators that the carrying amounts of their respective long-lived assets, including customer lists, may not be recoverable. After performing the relevant impairment assessments, the Company recorded $83 million and $50 million of trademark intangible asset impairment charges for Dr.Jart+ and Too Faced, respectively, and a $292 million impairment charge related to the customer list intangible asset for Dr.Jart+.
For the three months ended June 30, 2025, other intangible asset impairment charges were $425 million ($327 million, net of tax), with a combined impact of $.89 per common share. For the twelve months ended June 30, 2025, goodwill impairment charges were $13 million and other intangible asset impairment charges were $1,273 million (combined $1,001 million, net of tax), with a combined impact of $2.78 per common share.
(D) From the end of August 2024 through October 2024, the Company entered into agreements with certain plaintiff law firms to resolve over 200 pending cosmetic talcum powder matters, which was a portion of the pending matters that existed at that time, and establish a framework for resolving potential future claims brought by these plaintiff firms from January 1, 2025 through December 31, 2029 (mitigating a portion of its future exposure), subject to annual caps (the “Talcum litigation settlement agreements”). In connection with the Talcum litigation settlement agreements, the Company recorded a charge of $159 million in the fiscal 2025 first quarter, representing its best estimate of probable losses for current and potential future claims under these agreements.
(E) During fiscal 2025, the Company established a U.S. valuation allowance of $172 million against general foreign tax credit and research and development tax credit carryforwards as it was determined more-likely-than-not that these deferred tax assets would not be realized. This determination was driven by the Company’s weighing of relevant evidence including lower U.S. taxable income in fiscal 2025 as compared to recent years, reflecting reduced income from its travel retail business, and the resulting uncertainty about the ability to realize the carryforwards prior to expiration.
This earnings release includes some non-GAAP financial measures relating to charges associated with restructuring and other activities and adjustments, as well as organic net sales and free cash flow. Included herein are reconciliations between the non-GAAP financial measures and the most directly comparable GAAP measures for certain consolidated statements of (loss) earnings accounts and consolidated statements of cash flow line items before and after the relevant adjustments. The Company uses certain non-GAAP financial measures, among other financial measures, to evaluate its operating performance, which represent the manner in which the Company conducts and views its business. Management believes that excluding certain items that are not comparable from period-to-period, or do not reflect the Company’s underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze operating performance from period-to-period. In the future, the Company expects to incur charges or adjustments similar in nature to those presented herein; however, the impact to the Company’s results in a given period may be highly variable and difficult to predict. For free cash flow, this measure represents how much cash the Company has available from operations after the deduction of capital expenditures, which are a recurring and necessary use of cash. The Company’s non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP.
The Company operates on a global basis, with the majority of its net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates can affect the Company’s results of operations. Therefore, the Company presents certain net sales, operating results, provision for income taxes and diluted net (loss) earnings per common share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of its underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency information by translating current-period results using prior-year period monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.
Reconciliation between GAAP and Non-GAAP Net Sales
(Unaudited)
Three Months Ended
June 30
Percentage
Change
Twelve Months Ended
June 30
Percentage
Change
($ in millions)
2026
2025
2026
2025
Net Sales
$
3,627
$
3,411
6
%
$
15,049
$
14,326
5
%
Non-GAAP Adjustments
Returns associated with restructuring and other activities
13
(3
)
12
(3
)
Adjusted Net Sales, Non-GAAP
3,640
3,408
15,061
14,323
Impact of foreign currency translation
(50
)
—
(250
)
—
Organic Net Sales, Non-GAAP
$
3,590
$
3,408
5
%
$
14,811
$
14,323
3
%
Reconciliation of Certain Consolidated Statements of (Loss) Earnings Accounts
Before and After Returns, Charges and Other Adjustments
(Unaudited) 1
Three Months Ended
June 30
Percentage
Change
Twelve Months Ended
June 30
Percentage
Change
($ in millions, except per share data)
2026
2025
2026
2025
Gross Profit
$
2,737
$
2,456
11
%
$
11,362
$
10,597
7
%
Non-GAAP Adjustments
Restructuring and other activities
13
(4
)
10
5
Adjusted Gross Profit, Non-GAAP
$
2,750
$
2,452
12
%
$
11,372
$
10,602
7
%
Impact of foreign currency translation
(31
)
—
(175
)
—
Adjusted Gross Profit, Non-GAAP constant currency
$
2,719
$
2,452
11
%
$
11,197
$
10,602
6
%
Gross Margin
75.5
%
72.0
%
75.5
%
74.0
%
Non-GAAP Adjustments
Restructuring and other activities
—
(0.1
)
—
—
Adjusted Gross Margin, Non-GAAP
75.5
%
71.9
%
75.5
%
74.0
%
Operating (Loss) Income
$
(39
)
$
(390
)
90
%
$
780
$
(785
)
100
+%
Non-GAAP Adjustments
Restructuring and other charges
306
102
823
486
Securities class action litigation settlement
—
—
84
—
Goodwill and other intangible asset impairments
—
425
—
1,286
Talcum litigation settlement agreements 3
—
—
—
159
Adjusted Operating Income, Non-GAAP
267
137
95
%
1,687
1,146
47
%
Impact of foreign currency translation
2
—
(20
)
—
Adjusted Operating Income, Non-GAAP constant currency
$
269
$
137
96
%
$
1,667
$
1,146
45
%
Operating Margin
(1.1
)%
(11.4
)%
5.2
%
(5.5
)%
Non-GAAP Adjustments
Restructuring and other charges
8.4
3.0
5.4
3.4
Securities class action litigation settlement
—
—
0.6
—
Goodwill and other intangible asset impairments
—
12.5
—
9.0
Talcum litigation settlement agreements 3
—
—
—
1.1
Adjusted Operating Margin, Non-GAAP
7.3
%
4.0
%
11.2
%
8.0
%
Provision for Income Taxes
$
12
$
95
(87
)%
$
335
$
93
100
+%
Effective Tax Rate ("ETR")
(11.5
)%
(21.1
)%
64.8
%
(8.9
)%
Tax Impact on Non-GAAP adjustments
Restructuring and other charges
48
21
156
105
Securities class action litigation settlement
—
—
18
—
Goodwill and other intangible asset impairments
—
98
285
U.S. deferred tax asset valuation allowance adjustment
—
(172
)
—
(172
)
Talcum litigation settlement agreements 3
—
—
—
35
Adjusted Provision for Income Taxes, Non-GAAP
$
60
$
42
$
509
$
346
Adjusted ETR, Non-GAAP
29.7
%
55.3
%
35.7
%
38.8
%
Diluted Net (Loss) Earnings Per Common Share
$
(.32
)
$
(1.51
)
79
%
$
.50
$
(3.15
)
100
+%
Non-GAAP Adjustments
Restructuring and other charges
.71
.23
1.83
1.06
Securities class action litigation settlement
—
—
.18
—
Goodwill and other intangible asset impairments
—
.89
—
2.78
U.S. deferred tax asset valuation allowance adjustment
—
.48
—
.48
Talcum litigation settlement agreements 3
—
—
—
.34
Adjusted Diluted Net Earnings Per Common Share, Non-GAAP 2
$
.39
$
.09
100
+%
$
2.51
$
1.51
66
%
Impact of foreign currency translation
—
—
(.04
)
—
Adjusted Diluted Net Earnings Per Common Share, Non-GAAP constant currency 2
$
.39
$
.09
100
+%
$
2.47
$
1.51
64
%
1Percentages are calculated on an individual basis.
2For the three months ended June 30, 2026, and the three and twelve months ended June 30, 2025, the effects of potentially dilutive stock options, performance share units, and restricted stock units of approximately 2.2 million shares, 1.2 million shares, and 1.2 million shares, respectively, were excluded from the computation of As Reported and adjustments to Non-GAAP diluted loss per common share as they were anti-dilutive due to the net loss incurred during the periods. These shares were added to the weighted-average common shares outstanding to calculate Non-GAAP diluted earnings per common share.
3From the end of August 2024 through October 2024, the Company entered into agreements with certain plaintiff law firms to resolve over 200 pending cosmetic talcum powder matters, which was a portion of the pending matters that existed at that time, and establish a framework for resolving potential future claims brought by these plaintiff firms from January 1, 2025 through December 31, 2029 (mitigating a portion of its future exposure), subject to annual caps (the “Talcum litigation settlement agreements”). In connection with the Talcum litigation settlement agreements, the Company recorded a charge of $159 million in the fiscal 2025 first quarter, representing its best estimate of probable losses for current and potential future claims under these agreements.
Reconciliation of Certain Consolidated Statements of Cash Flows Accounts
Cash Flows from Operating Activities to Free Cash Flow
(Unaudited)
Twelve Months Ended
June 30
($ in millions)
2026
2025
Net cash flows provided by operating activities
$
1,773
$
1,272
Less: capital expenditures
(457
)
(602
)
Free cash flow
$
1,316
$
670
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, except where noted)
June 30,
2026
June 30,
2025
($ in millions)
(Audited)
ASSETS
Cash and cash equivalents
$
3,498
$
2,921
Accounts receivable, net
1,518
1,530
Inventory and promotional merchandise
1,999
2,074
Prepaid expenses and other current assets
597
544
Total current assets
7,612
7,069
Property, plant and equipment, net
2,805
3,172
Operating lease right-of-use assets
1,740
1,952
Other assets
7,605
7,699
Total assets
$
19,762
$
19,892
LIABILITIES AND EQUITY
Current debt
$
503
$
3
Accounts payable
1,578
1,497
Operating lease liabilities
399
406
Other accrued liabilities
3,751
3,529
Total current liabilities
6,231
5,435
Long-term debt
6,803
7,314
Long-term operating lease liabilities
1,541
1,744
Other noncurrent liabilities
1,381
1,534
Total noncurrent liabilities
9,725
10,592
Total equity
3,806
3,865
Total liabilities and equity
$
19,762
$
19,892
SELECT CASH FLOW DATA
(Unaudited, except where noted)
Twelve Months Ended
June 30
($ in millions)
2026
2025
(Audited)
Net earnings (loss)
$
182
$
(1,133
)
Adjustments to reconcile net earnings (loss) to net cash flows from operating activities:
Depreciation and amortization
796
829
Deferred income taxes
(164
)
(396
)
Impairment of goodwill and other intangible assets
—
1,286
Other items
369
337
Changes in operating assets and liabilities:
Decrease in accounts receivable, net
8
230
Decrease in inventory and promotional merchandise
51
184
Increase in other assets, net
(8
)
(11
)
Increase (decrease) in accounts payable and other liabilities, net
539
(54
)
Net cash flows provided by operating activities
$
1,773
$
1,272
Other Investing and Financing Sources (Uses):
Capital expenditures
$
(457
)
$
(602
)
Repayments of long-term debt
(3
)
(505
)
Dividends paid to stockholders
(508
)
(618
)
Payment of deferred consideration
(300
)
—
Settlement of cross-currency swaps
116
20
Supplemental cash flow information:
Cash paid for interest
$
331
$
353
Cash paid for income taxes
535
630