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Business Wire 20-Aug-2025 6:00 AM
New Leadership Team Delivers Strategic Progress and Outlook in Fiscal 2025 Second Half
Affirms Fiscal 2026 Outlook to Restore Positive Sales Growth and Improve Operating Profitability
The Estée Lauder Companies Inc. (NYSE:EL) today reported its financial results for its fiscal year ended June 30, 2025.
Stéphane de La Faverie, President and CEO, said, "Having closed fiscal 2025 as expected, we remain wholly focused on continuing to execute our strategic vision of Beauty Reimagined with excellence. Despite continued volatility in the external environment, we embarked on fiscal 2026 with signs of momentum and confidence in our outlook to deliver organic sales growth this year after three years of declines and to begin rebuilding operating profitability in pursuit of a solid double-digit adjusted operating margin over the next few years."
FISCAL 2025 SELECT FINANCIAL RESULTS (unaudited)1,2
|
Year Ended June 30 |
Percentage Change |
||||||
($ in millions, except per share data) |
2025 |
2024 |
||||||
Net Sales |
$ |
14,326 |
|
$ |
15,608 |
|
(8 |
)% |
Organic Net Sales, Non-GAAP1 |
$ |
14,351 |
|
$ |
15,609 |
|
(8 |
)% |
|
|
|
|
|||||
Other Financial Results: |
|
|
|
|||||
Gross Profit |
$ |
10,597 |
|
$ |
11,184 |
|
(5 |
)% |
Gross Margin |
|
74.0 |
% |
|
71.7 |
% |
|
|
Adjusted Gross Profit, Non-GAAP1,2 |
$ |
10,602 |
|
$ |
11,186 |
|
(5 |
)% |
Adjusted Gross Margin, Non-GAAP1,2 |
|
74.0 |
% |
|
71.7 |
% |
|
|
|
|
|
|
|||||
Operating (Loss) Income |
$ |
(785 |
) |
$ |
970 |
|
(100+ |
)% |
Operating Margin |
|
(5.5 |
)% |
|
6.2 |
% |
|
|
Adjusted Operating Income, Non-GAAP1,2 |
$ |
1,146 |
|
$ |
1,588 |
|
(28 |
)% |
Adjusted Operating Margin, Non-GAAP1,2 |
|
8.0 |
% |
|
10.2 |
% |
|
|
|
|
|
|
|||||
Diluted Net (Loss) Earnings Per Common Share |
$ |
(3.15 |
) |
$ |
1.08 |
|
(100+ |
)% |
Adjusted Diluted Net Earnings Per Common Share, Non-GAAP1,2 |
$ |
1.51 |
|
$ |
2.59 |
|
(42 |
)% |
|
|
1See pages 22 and 23 for reconciliation between GAAP and Adjusted Non-GAAP measures. |
|
2Adjusted Non-GAAP measures are calculated based on Net Sales adjusted only for Returns associated with restructuring and other activities. |
|
|
|
| 3Consumer-facing investments includes co-operative advertising, selling, advertising and promotional expenses, as well as store operating costs. | |
BEAUTY GAINS AND OPERATIONAL HIGHLIGHTS
|
|
| 4Source: Circana, LLC, US Prestige Beauty Total Department/Specialty, Dollar Share Growth of Corporation, six-months ended June 2025. | |
FISCAL 2025 RESULTS BY PRODUCT CATEGORY AND BY REGION
Results by Product Category |
||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
Year Ended June 30 |
|||||||||||||||||||
|
Net Sales |
Percentage Change1 |
Operating (Loss) Income |
Percentage Change |
||||||||||||||||
($ in millions) |
2025 |
2024 |
Reported Basis |
Impact of Foreign Currency Translation |
Organic Net Sales (Non-GAAP) |
2025 |
2024 |
Reported Basis |
||||||||||||
Skin Care |
$ |
6,962 |
$ |
7,908 |
|
(12 |
)% |
— |
% |
(12 |
)% |
$ |
574 |
|
$ |
735 |
|
(22 |
)% |
|
Makeup |
|
4,205 |
|
4,470 |
|
(6 |
) |
— |
|
(5 |
) |
|
(441 |
) |
|
93 |
|
(100 |
+) |
|
Fragrance |
|
2,491 |
|
2,487 |
|
— |
|
— |
|
— |
|
|
(378 |
) |
|
265 |
|
(100 |
+) |
|
Hair Care |
|
565 |
|
629 |
|
(10 |
) |
— |
|
(10 |
) |
|
(41 |
) |
|
(52 |
) |
21 |
|
|
Other |
|
100 |
|
115 |
|
(13 |
) |
— |
|
(13 |
) |
|
(13 |
) |
|
53 |
|
(100 |
+) |
|
Subtotal |
$ |
14,323 |
$ |
15,609 |
|
(8 |
)% |
— |
% |
(8 |
)% |
$ |
(299 |
) |
$ |
1,094 |
|
(100 |
+) |
|
Returns/charges |
||||||||||||||||||||
associated with |
||||||||||||||||||||
restructuring and |
||||||||||||||||||||
other activities |
|
3 |
|
(1 |
) |
|
|
|
|
(486 |
) |
|
(124 |
) |
|
|||||
Total |
$ |
14,326 |
$ |
15,608 |
|
(8 |
)% |
— |
% |
(8 |
)% |
$ |
(785 |
) |
$ |
970 |
|
(100 |
+)% |
|
Non-GAAP Adjustments to As Reported Operating (Loss) Income: |
||||||||||||||||||||
Returns/charges associated with restructuring and other activities |
|
486 |
|
|
124 |
|
|
|||||||||||||
Skin Care - Goodwill and other intangible asset impairments |
|
375 |
|
|
471 |
|
|
|||||||||||||
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 |
|
159 |
|
|
— |
|
|
|||||||||||||
Skin Care - Change in fair value of DECIEM acquisition-related stock options inclusive |
|
|
||||||||||||||||||
of payroll tax |
|
— |
|
|
23 |
|
|
|||||||||||||
Adjusted Operating Income - Non-GAAP |
$ |
1,146 |
|
$ |
1,588 |
|
(28 |
)% |
||||||||||||
1Percentages are calculated on an individual basis. |
||||||||||||||||||||
The product category net sales commentary below reflects organic net sales, excluding the impacts from foreign currency translation. In addition to the Operational Highlights above, below are the drivers of the Company's performance.
Skin Care
Makeup
Fragrance
Hair Care
|
|
| 5In fiscal 2025, the Company expanded its Luxury fragrance brand portfolio with the launch of BALMAIN Beauty. | |
Results by Geographic Region |
||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
Year Ended June 30 |
|||||||||||||||||||
|
Net Sales |
Percentage Change1 |
Operating (Loss) Income |
Percentage Change |
||||||||||||||||
($ in millions) |
2025 |
2024 |
Reported Basis |
Impact of Foreign Currency Translation |
Organic Net Sales (Non-GAAP) |
2025 |
2024 |
Reported Basis |
||||||||||||
The Americas |
$ |
4,411 |
$ |
4,581 |
|
(4 |
)% |
1 |
% |
(3 |
)% |
$ |
(918 |
) |
$ |
34 |
|
(100 |
+)% |
|
Europe, the Middle |
|
|||||||||||||||||||
East & Africa |
|
5,375 |
|
6,140 |
|
(12 |
) |
— |
|
(13 |
) |
|
610 |
|
|
836 |
|
(27 |
) |
|
Asia/Pacific |
|
4,537 |
|
4,888 |
|
(7 |
) |
— |
|
(7 |
) |
|
9 |
|
|
224 |
|
(96 |
) |
|
Subtotal |
$ |
14,323 |
$ |
15,609 |
|
(8 |
)% |
— |
% |
(8 |
)% |
$ |
(299 |
) |
$ |
1,094 |
|
(100 |
+)% |
|
Returns/charges |
|
|||||||||||||||||||
associated with |
|
|||||||||||||||||||
restructuring and |
|
|||||||||||||||||||
other activities |
|
3 |
|
(1 |
) |
|
|
|
|
(486 |
) |
|
(124 |
) |
|
|||||
Total |
$ |
14,326 |
$ |
15,608 |
|
(8 |
)% |
— |
% |
(8 |
)% |
$ |
(785 |
) |
$ |
970 |
|
(100 |
+)% |
|
Non-GAAP Adjustments to As Reported Operating (Loss) Income: |
||||||||||||||||||||
Returns/charges associated with restructuring and other activities |
|
486 |
|
|
124 |
|
|
|||||||||||||
The Americas - Goodwill and other intangible asset impairments |
|
911 |
|
|
— |
|
|
|||||||||||||
Asia/Pacific - Goodwill and other intangible asset impairments |
|
375 |
|
|
471 |
|
|
|||||||||||||
The Americas - Talcum litigation settlement agreements |
159 |
— |
||||||||||||||||||
The Americas - Changes in fair value of DECIEM acquisition-related stock options |
||||||||||||||||||||
inclusive of payroll tax |
|
— |
|
|
14 |
|
|
|||||||||||||
Europe, the Middle East & Africa - Changes in fair value of DECIEM acquisition- |
||||||||||||||||||||
related stock options inclusive of payroll tax |
|
— |
|
|
9 |
|
|
|||||||||||||
Adjusted Operating Income - Non-GAAP |
$ |
1,146 |
|
$ |
1,588 |
|
(28 |
)% |
||||||||||||
1Percentages are calculated on an individual basis. |
||||||||||||||||||||
The geographic region net sales commentary below reflects organic net sales, excluding the negative impact from foreign currency translation that is reflected in the preceding table. In addition to the Operational Highlights above, below are the drivers of the Company's performance.
Organic Net Sales - decreased 8%, reflecting declines across all geographic regions and driven by:
Operating Results - decreased, reflecting declines across all geographic regions, primarily driven by:
Fourth Quarter Results
Results by Product Category |
||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended June 30 |
|||||||||||||||||||
|
Net Sales |
Percentage Change1 |
Operating (Loss) Income |
Percentage Change |
||||||||||||||||
($ in millions) |
2025 |
2024 |
Reported Basis |
Impact of Foreign Currency Translation |
Organic Net Sales (Non-GAAP) |
2025 |
2024 |
Reported Basis |
||||||||||||
Skin Care |
$ |
1,705 |
$ |
2,035 |
(16 |
)% |
(1 |
)% |
(17 |
)% |
$ |
(210 |
) |
$ |
(185 |
) |
(14 |
)% |
||
Makeup |
|
982 |
|
1,105 |
(11 |
) |
(1 |
) |
(12 |
) |
|
(59 |
) |
|
37 |
|
(100 |
+) |
||
Fragrance |
|
560 |
|
539 |
4 |
|
(1 |
) |
2 |
|
|
(24 |
) |
|
(2 |
) |
(100 |
+) |
||
Hair Care |
|
141 |
|
165 |
(15 |
) |
— |
|
(15 |
) |
|
(7 |
) |
|
(2 |
) |
(100 |
+) |
||
Other |
|
20 |
|
27 |
(26 |
) |
— |
|
(26 |
) |
|
12 |
|
|
15 |
|
(20 |
) |
||
Subtotal |
$ |
3,408 |
$ |
3,871 |
(12 |
)% |
(1 |
)% |
(13 |
)% |
$ |
(288 |
) |
$ |
(137 |
) |
(100 |
+%) |
||
Returns/charges |
||||||||||||||||||||
associated with |
||||||||||||||||||||
restructuring and |
||||||||||||||||||||
other activities |
|
3 |
|
— |
|
|
|
|
(102 |
) |
|
(96 |
) |
|
||||||
Total |
$ |
3,411 |
$ |
3,871 |
(12 |
)% |
(1 |
)% |
(13 |
)% |
$ |
(390 |
) |
$ |
(233 |
) |
(67 |
)% |
||
Non-GAAP Adjustments to As Reported Operating Loss: |
||||||||||||||||||||
Returns/charges associated with restructuring and other activities |
|
102 |
|
|
96 |
|
|
|||||||||||||
Skin Care - Goodwill and other intangible asset impairments |
|
375 |
|
|
471 |
|
|
|||||||||||||
Makeup - Other intangible asset impairment |
|
50 |
|
|
— |
|
|
|||||||||||||
Skin Care - Changes in fair value of DECIEM acquisition-related stock options |
|
|
||||||||||||||||||
inclusive of payroll tax |
|
— |
|
|
15 |
|
|
|||||||||||||
Adjusted Operating Income - Non-GAAP |
$ |
137 |
|
$ |
349 |
|
(61 |
)% |
||||||||||||
1Percentages are calculated on an individual basis. |
||||||||||||||||||||
Results by Geographic Region |
||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended June 30 |
|||||||||||||||||||
|
Net Sales |
Percentage Change1 |
Operating (Loss) Income |
Percentage Change |
||||||||||||||||
($ in millions) |
2025 |
2024 |
Reported Basis |
Impact of Foreign Currency Translation |
Organic Net Sales (Non-GAAP) |
2025 |
2024 |
Reported Basis |
||||||||||||
The Americas |
$ |
949 |
$ |
1,014 |
(6 |
)% |
1 |
% |
(5 |
)% |
$ |
65 |
|
$ |
277 |
|
(77 |
)% |
||
Europe, the Middle |
|
|
|
|
||||||||||||||||
East & Africa |
|
1,293 |
|
1,652 |
(22 |
) |
(2 |
) |
(24 |
) |
|
(35 |
) |
|
11 |
|
(100 |
+) |
||
Asia/Pacific |
|
1,166 |
|
1,205 |
(3 |
) |
(1 |
) |
(4 |
) |
|
(318 |
) |
|
(425 |
) |
25 |
|
||
Subtotal |
$ |
3,408 |
$ |
3,871 |
(12 |
)% |
(1 |
)% |
(13 |
)% |
$ |
(288 |
) |
$ |
(137 |
) |
(100 |
+%) |
||
Returns/charges |
|
|
|
|
||||||||||||||||
associated with |
|
|
|
|
||||||||||||||||
restructuring and |
|
|
|
|
||||||||||||||||
other activities |
|
3 |
|
— |
|
|
|
|
(102 |
) |
|
(96 |
) |
|
||||||
Total |
$ |
3,411 |
$ |
3,871 |
(12 |
)% |
(1 |
)% |
(13 |
)% |
$ |
(390 |
) |
$ |
(233 |
) |
(67 |
)% |
||
Non-GAAP Adjustments to As Reported Operating Loss: |
||||||||||||||||||||
Returns/charges associated with restructuring and other activities |
|
102 |
|
|
96 |
|
|
|||||||||||||
The Americas - Other intangible asset impairments |
|
50 |
|
|
— |
|
|
|||||||||||||
Asia/Pacific - Goodwill and other intangible asset impairments |
|
375 |
|
|
471 |
|
|
|||||||||||||
The Americas - Changes in fair value of DECIEM acquisition-related stock options |
|
|
||||||||||||||||||
inclusive of payroll tax |
|
— |
|
|
6 |
|
|
|||||||||||||
Europe, the Middle East & Africa - Changes in fair value of DECIEM acquisition- |
|
|
||||||||||||||||||
related stock options inclusive of payroll tax |
|
— |
|
|
9 |
|
|
|||||||||||||
Adjusted Operating Income - Non-GAAP |
$ |
137 |
|
$ |
349 |
|
(61 |
)% |
||||||||||||
1Percentages are calculated on an individual basis. |
||||||||||||||||||||
|
|
| 6Refer to Page 23 for details on the earnings and related tax impacts associated with the fiscal 2024 non-GAAP adjustments. For fiscal 2024, this also includes the impact of redeemable noncontrolling interest of $4 million. | |
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 16, 2025 to stockholders of record at the close of business on September 2, 2025.
PROFIT RECOVERY AND GROWTH PLAN ("PRGP") In February 2025, the Company announced the expansion of its PRGP, including the restructuring program. While the Company realized more net benefits under the PRGP in fiscal 2025 than expected, these benefits were more than offset by sales volume deleverage, investments to restore sustainable growth and inflation. Actions under the plan are expected to be substantially completed in fiscal 2027, with a majority of the full run-rate benefits expected to be realized during fiscal 2027. The plan is designed to further transform the Company's operating model to fund a return to sales growth in fiscal 2026 and restore a solid double-digit adjusted operating margin over the next few years, and continue to mitigate impacts from external volatility.
The Company has made meaningful progress in the execution of its PRGP, as evidenced by adjusted gross margin expansion, the advancement of planned initiatives, internally and with external partners, and cumulative actions under its restructuring program. The Company delivered over 200 basis points of adjusted gross margin expansion in fiscal 2025, despite pressure from its sales volume declines, through initiatives designed to (i) enhance operational efficiencies; (ii) reduce excess inventory; and (iii) improve the realization of net strategic pricing actions by reducing discounts and promotions. This reflects over 300 basis points of expansion in each of the first three quarters, and relatively flat adjusted gross margin in the fourth quarter—despite being the quarter with the largest sales volume decline of fiscal 2025. In addition, the Company reduced its non-consumer-facing expenses by 6% in fiscal 2025, with continued progress in the fourth quarter, to help fund consumer-facing investments, through initiatives designed to (i) reduce employee-related costs, (ii) optimize vendor management and (iii) reduce third-party labor-related costs.
Restructuring Program Component of the PRGP Relating specifically to the restructuring program component of the PRGP, once fully implemented, the Company expects to take restructuring and other charges of between $1.2 billion and $1.6 billion, before taxes, consisting 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 between $0.8 billion and $1.0 billion, before taxes, to help restore operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth.
The Company estimates a net reduction in positions of 5,800 to 7,000, including approvals to date. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas. Approvals for specific initiatives under this restructuring program, in total, are expected to be completed by the end of fiscal 2026. 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.
As of June 30, 2025, the Company has recognized total cumulative charges under the restructuring component of the PRGP of $610 million, consisting primarily of employee-related costs. As of August 13, 2025, the Company has approved initiatives totaling cumulative charges of $747 million and a net reduction of over 3,200 positions. Inclusive of approvals through August 2025 and relative to the high end of the total expected ranges, the Company has approved initiatives that account for over 60% of the expected gross benefits and nearly 50% of both the expected charges and net reduction in positions.
OUTLOOK FOR FISCAL 2026 FULL YEAR As the Company has done historically, it continues to develop its strategy, assess performance and allocate resources by product category and will continue to report results by product category. To enhance accountability and streamline operations within the organization, as well as to align with its recently announced leadership changes, the Company has reorganized its geographic regions. Beginning with the fiscal 2026 first quarter, the Company will be reporting its fiscal 2026 and comparable fiscal 2025 results by geographic region under the new regional structure. The Company's four new geographic regions are:
See page 26 for fiscal 2025 and 2024 full-year and fourth quarter net sales results presented under the new regional structure.
The Company continues to closely monitor evolving trade policies and enacted tariffs, and its task force has been actively evaluating developments and mitigation strategies to reduce the potential impacts of tariffs. The Company has implemented a range of actions, including leveraging available trade programs and further optimizing its regional manufacturing footprint to bring production closer to the consumer—including through its facility in Japan. These efforts, combined with increased supply chain agility, are helping to offset more than half of the expected impacts and better position the Company to adapt quickly as trade policies continue to evolve.
Based on current information and net of planned mitigation actions, the Company expects tariff-related headwinds to impact fiscal 2026 profitability by approximately $100 million. The Company continues to evaluate additional strategies, including further PRGP initiatives and potential pricing actions.
In terms of recently enacted tariffs, the Company's assumption reflects the following incremental rates on its most material flow of goods:
Beginning with fiscal 2026, the Company is providing only an annual outlook. This approach gives the Company more agility and flexibility to navigate ongoing volatility while better aligning with its long-term value creation and strategic priorities.
Reconciliation between GAAP and Non-GAAP - Net Sales Growth (Unaudited) |
||
|
Twelve Months Ending |
|
|
June 30, 2026(F) |
|
As Reported - GAAP |
2% - 5 |
% |
Impact of foreign currency translation |
2 |
|
Returns associated with restructuring and other activities(1) |
— |
|
Organic, Non-GAAP |
0% - 3 |
% |
(F)Represents forecast, using spot rates as of June 30, 2025. |
||
(1)The net sales growth impact of returns associated with restructuring and other activities includes approvals to date. Additional returns associated with restructuring and other activities are anticipated as initiatives are approved in fiscal 2026. |
||
Reconciliation between GAAP and Non-GAAP - Diluted Net Earnings (Loss) Per Common Share ("EPS") |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
Twelve Months Ending |
||||||
|
June 30 |
|
|||||
|
2026(F) |
2025 |
Growth |
||||
Forecasted/As Reported EPS - GAAP |
$1.63 - $1.87 |
$ |
(3.15 |
) |
100+% |
||
|
|
|
|
||||
Non-GAAP |
|
|
|
||||
Restructuring and other charges(1) |
.23 - .27 |
|
1.06 |
|
|
||
Goodwill and other intangible asset impairments |
— |
|
|
2.78 |
|
|
|
U.S. deferred tax asset valuation allowance adjustment |
— |
|
|
.48 |
|
|
|
Talcum litigation settlement agreements(2) |
— |
|
|
.34 |
|
|
|
Forecasted/Adjusted EPS - Non-GAAP |
$1.90 - $2.10 |
$ |
1.51 |
|
26% - 39% |
||
Impact of foreign currency translation |
(.03 |
) |
|
|
|||
Forecasted/Adjusted Constant Currency EPS - Non-GAAP |
$1.87 - $2.07 |
$ |
1.51 |
|
24% - 37% |
||
(F)Represents forecast, using spot rates as of June 30, 2025. |
|||||||
(1)The diluted net earnings per common share impact of restructuring and other charges includes approvals to date. Additional restructuring and other charges are anticipated as initiatives are approved in fiscal 2026. |
|||||||
(2)No assumptions included in the fiscal 2026 forecast. |
|||||||
The Company has reflected the following assumptions in its fiscal 2026 full-year outlook:
The Company continues to monitor the effects of the global macro environment, including the risk of recession; currency volatility; inflationary pressures; supply chain challenges; social and political issues; competitive pressures; legal and regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues. The Company is also mindful of inflationary pressures (including those caused by tariffs) on its cost base and is monitoring the impact on consumer preferences, the impact of changes being made in the organization, including those related to Beauty Reimagined and the PRGP, as well as the potential impact of changes expected to be made as part of the PRGP on suppliers, retailers and others, and challenges relating to successfully outsourcing select services.
CONFERENCE CALL AND WEBCAST DETAILS The Estée Lauder Companies will host a conference call at 8:30 a.m. (ET) today, August 20, 2025 to discuss its results for fiscal 2025. The dial-in number for the call is 877-883-0383 in the U.S. or 412-902-6506 internationally (conference ID number: 9963609).
The call will also be webcast live at http://www.elcompanies.com/investors/events-and-presentations and will be available for replay until September 3, 2025.
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, 2024. |
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+, and the DECIEM family of brands, including The Ordinary and NIOD.
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) |
2025 |
2024 |
|
2025 |
2024 |
||||||||||||
Net sales(A) |
$ |
3,411 |
|
$ |
3,871 |
|
(12 |
)% |
|
$ |
14,326 |
|
$ |
15,608 |
|
(8 |
)% |
Cost of sales(A) |
|
955 |
|
|
1,093 |
|
(13 |
) |
|
|
3,729 |
|
|
4,424 |
|
(16 |
) |
Gross profit |
|
2,456 |
|
|
2,778 |
|
(12 |
) |
|
|
10,597 |
|
|
11,184 |
|
(5 |
) |
Gross margin |
|
72.0 |
% |
|
71.8 |
% |
|
|
|
74.0 |
% |
|
71.7 |
% |
|
||
|
|
|
|
|
|
|
|
||||||||||
Operating expenses |
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative(B) |
|
2,315 |
|
|
2,444 |
|
(5 |
) |
|
|
9,456 |
|
|
9,621 |
|
(2 |
) |
Restructuring and other charges(A) |
|
106 |
|
|
96 |
|
10 |
|
|
|
481 |
|
|
122 |
|
100 |
+ |
Goodwill impairment(C) |
|
— |
|
|
291 |
|
(100 |
) |
|
|
13 |
|
|
291 |
|
(96 |
) |
Impairment of other intangible assets(C) |
|
425 |
|
|
180 |
|
100 |
+ |
|
|
1,273 |
|
|
180 |
|
100 |
+ |
Talcum litigation settlement agreements(D) |
|
— |
|
|
— |
|
— |
|
|
|
159 |
|
|
— |
|
100 |
|
Total operating expenses |
|
2,846 |
|
|
3,011 |
|
(5 |
) |
|
|
11,382 |
|
|
10,214 |
|
11 |
|
Operating expense margin |
|
83.4 |
% |
|
77.8 |
% |
|
|
|
79.4 |
% |
|
65.4 |
% |
|
||
|
|
|
|
|
|
|
|
||||||||||
Operating (loss) income |
|
(390 |
) |
|
(233 |
) |
(67 |
) |
|
|
(785 |
) |
|
970 |
|
(100 |
+) |
Operating (loss) income margin |
|
(11.4 |
)% |
|
(6.0 |
)% |
|
|
|
(5.5 |
)% |
|
6.2 |
% |
|
||
|
|
|
|
|
|
|
|
||||||||||
Interest expense |
|
88 |
|
|
91 |
|
(3 |
) |
|
|
357 |
|
|
378 |
|
(6 |
) |
Interest income and investment income, net |
|
29 |
|
|
41 |
|
(29 |
) |
|
|
114 |
|
|
167 |
|
(32 |
) |
Other components of net periodic benefit cost |
|
2 |
|
|
(4 |
) |
100 |
+ |
|
|
12 |
|
|
(13 |
) |
100 |
+ |
(Loss) earnings before income taxes |
|
(451 |
) |
|
(279 |
) |
(62 |
) |
|
|
(1,040 |
) |
|
772 |
|
(100 |
+) |
Provision for income taxes(E) |
|
95 |
|
|
7 |
|
100 |
+ |
|
|
93 |
|
|
363 |
|
(74 |
) |
Net (loss) earnings |
|
(546 |
) |
|
(286 |
) |
(91 |
) |
|
|
(1,133 |
) |
|
409 |
|
(100 |
+) |
Net loss (earnings) attributable to redeemable |
|
|
|
|
|
|
|||||||||||
noncontrolling interest |
|
— |
|
|
2 |
|
(100 |
) |
|
|
— |
|
|
(19 |
) |
100 |
|
Net (loss) earnings attributable to The Estée Lauder |
|
|
|
|
|
|
|||||||||||
Companies Inc. |
$ |
(546 |
) |
$ |
(284 |
) |
(92 |
)% |
|
$ |
(1,133 |
) |
$ |
390 |
|
(100 |
+)% |
|
|
|
|
|
|
|
|
||||||||||
Net (loss) earnings attributable to The Estée Lauder |
|
|
|||||||||||||||
Companies Inc. per common share |
|
|
|
|
|
|
|
||||||||||
Basic |
$ |
(1.51 |
) |
$ |
(.79 |
) |
(92 |
)% |
|
$ |
(3.15 |
) |
$ |
1.09 |
|
(100 |
+)% |
Diluted |
$ |
(1.51 |
) |
$ |
(.79 |
) |
(92 |
)% |
|
$ |
(3.15 |
) |
$ |
1.08 |
|
(100 |
+)% |
|
|
|
|
|
|
|
|
||||||||||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
||||||||||
Basic |
|
360.7 |
|
|
359.4 |
|
|
|
|
360.1 |
|
|
359.0 |
|
|
||
Diluted |
|
360.7 |
|
|
359.4 |
|
|
|
|
360.1 |
|
|
360.8 |
|
|
||
(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"). |
|
As a component of the PRGP, communicated on November 1, 2023, on February 5, 2024, the Company announced a two-year restructuring program. The restructuring program's main focus included the reorganization and rightsizing of certain areas of the Company's business as well as simplification and acceleration of processes. The Company planned to substantially complete specific initiatives under the restructuring program through fiscal 2026. The Company expected that the restructuring program would result in restructuring and other charges totaling between $500 million and $700 million, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives. |
|
After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, the Company committed to the expansion of the PRGP, including an expansion of the restructuring program. |
|
The expanded component of the restructuring program began during the Company's fiscal 2025 third quarter with all initiatives to be approved by the end of fiscal 2026. Specific initiatives under the expanded component of the restructuring program are expected to be substantially completed by the end of fiscal 2027. The now expanded restructuring program's focus includes (i) reorganization and rightsizing of certain areas and (ii) simplification and acceleration of processes, along with the newly added focus on (i) outsourcing of select services and (ii) evolution of go-to-market footprint and selling models. |
|
The Company expects that the restructuring program will result in restructuring and other charges totaling between $1.2 billion and $1.6 billion, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives. |
|
Under the PCBA Program, the Company approved specific initiatives through fiscal 2022 and has substantially completed those initiatives through fiscal 2023. Additional information about the PCBA Program is 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, 2024. |
|
(B) For the three and twelve months ended June 30, 2024, the Company recorded $15 million ($11 million, less the portion attributable to redeemable noncontrolling interest and net of tax, or $.03 per common share) and $23 million ($18 million, less the portion attributable to redeemable noncontrolling interest and net of tax, or $.05 per common share), respectively, of expense related to the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax. |
|
(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 both 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. |
Based on the Company's annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024, the Company determined that the carrying value of the Dr.Jart+ reporting unit and trademark exceeded their estimated fair values. Given the lower-than-expected growth within key geographic regions, the reporting unit has made a strategic shift in its operating plan to exit the travel retail channel. This revised strategy also includes increased direct investment in other areas of the business, including in mainland China, to support the brand's future growth. As a result of these changes in strategy, the Company made revisions to the internal forecasts relating to the Dr.Jart+ reporting unit which were finalized and approved in the fiscal 2024 fourth quarter, and reflected in the goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024. These changes in circumstances were also indicators that the carrying amounts of its respective long-lived assets may not be recoverable. After performing the relevant impairment assessments, the Company recorded a goodwill impairment charge of $291 million and a trademark intangible asset impairment charge of $180 million related to Dr.Jart+ (combined $430 million, net of tax), with a combined impact of $1.19 per common share, for the three and twelve months ended June 30, 2024. |
(D) From the end of August 2024 through October 2024, the Company reached agreements with certain plaintiff law firms (collectively, the "talcum litigation settlement agreements") for: (i) the resolution of pending cosmetic talcum powder matters handled by those firms as well as (ii) a process for resolving potential future cosmetic talcum powder claims expected to be brought on behalf of plaintiffs by those firms from January 1, 2025 through December 31, 2029, with annual capped amounts per year for each participating law firm. To account for the talcum litigation settlement agreements, the Company recorded a charge of $159 million in the fiscal 2025 first quarter for the amount agreed to settle the current claims and an estimated amount for potential future claims. |
(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. 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 before and after these items. 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. 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) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
Net Sales |
$ |
3,411 |
|
$ |
3,871 |
(12 |
)% |
$ |
14,326 |
|
$ |
15,608 |
(8 |
)% |
||
Non-GAAP Adjustments |
|
|
|
|
|
|
||||||||||
Returns associated with restructuring and other activities |
|
(3 |
) |
|
— |
|
|
(3 |
) |
|
1 |
|
||||
Adjusted Net Sales, Non-GAAP |
|
3,408 |
|
|
3,871 |
|
|
14,323 |
|
|
15,609 |
|
||||
Impact of foreign currency translation |
|
(27 |
) |
|
— |
|
28 |
|
|
— |
||||||
Organic Net Sales, Non-GAAP1 |
$ |
3,381 |
|
$ |
3,871 |
(13 |
)% |
$ |
14,351 |
|
$ |
15,609 |
(8 |
)% |
||
1Organic net sales represents net sales excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures; as well as the impact from foreign currency translation. The Company believes that the Non-GAAP measure of organic net sales growth provides year-over-year sales comparisons on a consistent basis. |
||||||||||||||||
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) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
Gross Profit |
$ |
2,456 |
|
$ |
2,778 |
|
(12 |
)% |
$ |
10,597 |
|
$ |
11,184 |
|
(5 |
)% |
Non-GAAP Adjustments |
|
|
|
|
|
|
||||||||||
Restructuring and other activities |
|
(4 |
) |
|
— |
|
|
|
5 |
|
|
2 |
|
|
||
Adjusted Gross Profit, Non-GAAP |
$ |
2,452 |
|
$ |
2,778 |
|
(12 |
)% |
$ |
10,602 |
|
$ |
11,186 |
|
(5 |
)% |
|
|
|
|
|
|
|
||||||||||
Gross Margin |
|
72.0 |
% |
|
71.8 |
% |
|
|
74.0 |
% |
|
71.7 |
% |
|
||
Non-GAAP Adjustments |
|
|
|
|
|
|
||||||||||
Restructuring and other activities |
|
(0.1 |
) |
|
— |
|
|
|
— |
|
|
— |
|
|
||
Adjusted Gross Margin, Non-GAAP |
|
71.9 |
% |
|
71.8 |
% |
|
|
74.0 |
% |
|
71.7 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
Operating (Loss) Income |
$ |
(390 |
) |
$ |
(233 |
) |
(67 |
)% |
$ |
(785 |
) |
$ |
970 |
|
(100 |
+)% |
Non-GAAP Adjustments |
|
|
|
|
|
|
||||||||||
Restructuring and other charges |
|
102 |
|
|
96 |
|
|
|
486 |
|
|
124 |
|
|
||
Goodwill and other intangible asset impairments |
|
425 |
|
|
471 |
|
|
|
1,286 |
|
|
471 |
|
|
||
Talcum litigation settlement agreements |
|
— |
|
|
— |
|
|
|
159 |
|
|
— |
|
|
||
Change in fair value of DECIEM acquisition-related stock options |
|
— |
|
|
15 |
|
|
|
— |
|
|
23 |
|
|
||
Adjusted Operating Income, Non-GAAP |
$ |
137 |
|
$ |
349 |
|
(61 |
)% |
$ |
1,146 |
|
$ |
1,588 |
|
(28 |
)% |
|
|
|
|
|
|
|
||||||||||
Operating Margin |
|
(11.4 |
)% |
|
(6.0 |
)% |
|
|
(5.5 |
)% |
|
6.2 |
% |
|
||
Non-GAAP Adjustments |
|
|
|
|
|
|
||||||||||
Restructuring and other charges |
|
3.0 |
|
|
2.5 |
|
|
|
3.4 |
|
|
0.8 |
|
|
||
Goodwill and other intangible asset impairments |
|
12.5 |
|
|
12.2 |
|
|
|
9.0 |
|
|
3.0 |
|
|
||
Talcum litigation settlement agreements |
|
— |
|
|
— |
|
|
|
1.1 |
|
|
— |
|
|
||
Change in fair value of DECIEM acquisition-related stock options |
|
— |
|
|
0.4 |
|
|
|
— |
|
|
0.1 |
|
|
||
Adjusted Operating Margin, Non-GAAP |
|
4.0 |
% |
|
9.0 |
% |
|
|
8.0 |
% |
|
10.2 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
Provision for Income Taxes |
$ |
95 |
|
$ |
7 |
|
100 |
+% |
$ |
93 |
|
$ |
363 |
|
(74 |
)% |
Effective Tax Rate ("ETR") |
|
(21.1 |
)% |
|
(2.5 |
)% |
|
|
(8.9 |
)% |
|
47.0 |
% |
|
||
Tax Impact on Non-GAAP adjustments |
|
|
|
|
|
|
||||||||||
Restructuring and other charges |
|
21 |
|
|
21 |
|
|
|
105 |
|
|
27 |
|
|
||
Goodwill and other intangible asset impairments |
|
98 |
|
|
41 |
|
|
|
285 |
|
|
41 |
|
|
||
U.S. deferred tax asset valuation allowance adjustment |
|
(172 |
) |
|
— |
|
|
|
(172 |
) |
|
— |
|
|
||
Talcum litigation settlement agreements |
|
— |
|
|
— |
|
|
|
35 |
|
|
— |
|
|
||
Adjusted Provision for Income Taxes, Non-GAAP |
$ |
42 |
|
$ |
69 |
|
|
$ |
346 |
|
$ |
431 |
|
|
||
Adjusted ETR, Non-GAAP |
|
55.3 |
% |
|
22.8 |
% |
|
|
38.8 |
% |
|
31.0 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
Diluted Net (Loss) Earnings Per Common Share |
$ |
(1.51 |
) |
$ |
(.79 |
) |
(92 |
)% |
$ |
(3.15 |
) |
$ |
1.08 |
|
(100 |
+)% |
Non-GAAP Adjustments |
|
|
|
|
|
|
||||||||||
Restructuring and other charges |
|
.23 |
|
|
.21 |
|
|
|
1.06 |
|
|
.27 |
|
|
||
Goodwill and other intangible asset impairments |
|
.89 |
|
|
1.19 |
|
|
|
2.78 |
|
|
1.19 |
|
|
||
U.S. deferred tax asset valuation allowance adjustment |
|
.48 |
|
|
— |
|
|
|
.48 |
|
|
— |
|
|
||
Talcum litigation settlement agreements |
|
— |
|
|
— |
|
|
|
.34 |
|
|
— |
|
|
||
Change in fair value of DECIEM acquisition-related stock options |
||||||||||||||||
(less the portion attributable to redeemable noncontrolling |
||||||||||||||||
interest) |
|
— |
|
|
.03 |
|
|
|
— |
|
|
.05 |
|
|
||
Adjusted Diluted Net Earnings Per Common Share, Non-GAAP2 |
$ |
.09 |
|
$ |
.64 |
|
(85 |
)% |
$ |
1.51 |
|
$ |
2.59 |
|
(42 |
)% |
1Percentages are calculated on an individual basis. |
||||||||||||||||
2For 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 1.2 million shares 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. |
||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
(Unaudited, except where noted) |
||||||
|
|
|||||
|
June 30, 2025 |
June 30, 2024 |
||||
($ in millions) |
(Audited) |
|||||
ASSETS |
|
|
||||
|
|
|
||||
Cash and cash equivalents |
$ |
2,921 |
$ |
3,395 |
||
Accounts receivable, net |
|
1,530 |
|
1,727 |
||
Inventory and promotional merchandise |
|
2,074 |
|
2,175 |
||
Prepaid expenses and other current assets |
|
544 |
|
625 |
||
Total current assets |
|
7,069 |
|
7,922 |
||
Property, plant and equipment, net |
|
3,172 |
|
3,136 |
||
Operating lease right-of-use assets |
|
1,952 |
|
1,833 |
||
Other assets |
|
7,699 |
|
8,786 |
||
Total assets |
$ |
19,892 |
$ |
21,677 |
||
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
||||
|
|
|
||||
Current debt |
$ |
3 |
$ |
504 |
||
Accounts payable |
|
1,497 |
|
1,440 |
||
Operating lease liabilities |
|
406 |
|
354 |
||
Other accrued liabilities |
|
3,529 |
|
3,404 |
||
Total current liabilities |
|
5,435 |
|
5,702 |
||
Long-term debt |
|
7,314 |
|
7,267 |
||
Long-term operating lease liabilities |
|
1,744 |
|
1,701 |
||
Other noncurrent liabilities |
|
1,534 |
|
1,693 |
||
Total noncurrent liabilities |
|
10,592 |
|
10,661 |
||
Total equity |
|
3,865 |
|
5,314 |
||
Total liabilities and equity |
$ |
19,892 |
$ |
21,677 |
||
|
|
|
||||
SELECT CASH FLOW DATA |
||||||
(Unaudited, except where noted) |
||||||
|
|
|
||||
|
Twelve Months Ended June 30 |
|||||
($ in millions) |
2025 |
2024 (Audited) |
||||
Net (loss) earnings |
$ |
(1,133 |
) |
$ |
409 |
|
Adjustments to reconcile net (loss) earnings to net cash flows from operating activities: |
|
|
||||
Depreciation and amortization |
|
829 |
|
|
825 |
|
Deferred income taxes |
|
(396 |
) |
|
(265 |
) |
Impairment of goodwill and other intangible assets |
|
1,286 |
|
|
471 |
|
Other items |
|
337 |
|
|
289 |
|
Changes in operating assets and liabilities: |
|
|
||||
Decrease (increase) in accounts receivable, net |
|
230 |
|
|
(285 |
) |
Decrease in inventory and promotional merchandise |
|
184 |
|
|
766 |
|
(Increase) decrease in other assets, net |
|
(11 |
) |
|
15 |
|
(Decrease) increase in accounts payable and other liabilities |
|
(54 |
) |
|
135 |
|
Net cash flows provided by operating activities |
$ |
1,272 |
|
$ |
2,360 |
|
|
|
|
||||
Other Investing and Financing Sources (Uses): |
|
|
||||
Capital expenditures |
$ |
(602 |
) |
$ |
(919 |
) |
Repayments of current debt, net |
|
— |
|
|
(215 |
) |
Repayments of commercial paper (maturities after three months) |
|
— |
|
|
(785 |
) |
Proceeds from issuance of long-term debt, net |
|
— |
|
|
648 |
|
Repayments of long-term debt |
|
(505 |
) |
|
(10 |
) |
Dividends paid to stockholders |
|
(618 |
) |
|
(947 |
) |
Payments to acquire treasury stock |
|
(35 |
) |
|
(35 |
) |
Payments for acquisition of redeemable noncontrolling interest |
|
— |
|
|
(745 |
) |
|
|
|
||||
Supplemental cash flow information: |
|
|
||||
Cash paid for interest |
$ |
353 |
|
$ |
359 |
|
Cash paid for income taxes |
|
630 |
|
|
550 |
|
As referenced on page 14, beginning with the fiscal 2026 first quarter, the Company will be reporting its fiscal 2026 and comparable fiscal 2025 results by geographic region under the new regional structure. Presented below are the fiscal 2025 and 2024 full-year and fourth quarter net sales results by geographic region under this new regional structure:
Results by Geographic Region |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
|
|
|
|||||||
|
Year Ended June 30 |
|||||||||||
|
Net Sales |
Percentage Change1 |
||||||||||
($ in millions) |
2025 |
2024 |
Reported Basis |
Impact of Foreign Currency Translation |
Organic Net Sales (Non-GAAP) |
|||||||
The Americas |
$ |
4,410 |
$ |
4,579 |
|
(4 |
)% |
1 |
% |
(3 |
)% |
|
EUKEM |
|
3,566 |
|
3,539 |
|
1 |
|
(1 |
) |
(1 |
) |
|
Asia/Pacific |
|
3,606 |
|
4,587 |
|
(21 |
) |
1 |
|
(21 |
) |
|
Mainland China |
|
2,741 |
|
2,904 |
|
(6 |
) |
— |
|
(6 |
) |
|
Subtotal |
$ |
14,323 |
$ |
15,609 |
|
(8 |
)% |
— |
% |
(8 |
)% |
|
Returns/charges associated with |
|
|
||||||||||
restructuring and other activities |
|
3 |
|
(1 |
) |
|
|
|
||||
Total |
$ |
14,326 |
$ |
15,608 |
|
(8 |
)% |
— |
% |
(8 |
)% |
|
1Percentages are calculated on an individual basis. |
||||||||||||
|
Three Months Ended June 30 |
|||||||||||
|
Net Sales |
Percentage Change1 |
||||||||||
($ in millions) |
2025 |
2024 |
Reported Basis |
Impact of Foreign Currency Translation |
Organic Net Sales (Non-GAAP) |
|||||||
The Americas |
$ |
941 |
$ |
994 |
(5 |
)% |
1 |
% |
(4 |
)% |
||
EUKEM |
|
828 |
|
814 |
2 |
|
(5 |
) |
(3 |
) |
||
Asia/Pacific |
|
906 |
|
1,318 |
(31 |
) |
— |
|
(31 |
) |
||
Mainland China |
|
733 |
|
745 |
(2 |
) |
— |
|
(1 |
) |
||
Subtotal |
$ |
3,408 |
$ |
3,871 |
(12 |
)% |
(1 |
)% |
(13 |
)% |
||
Returns/charges associated with |
|
|
||||||||||
restructuring and other activities |
|
3 |
|
— |
|
|
|
|||||
Total |
$ |
3,411 |
$ |
3,871 |
(12 |
)% |
(1 |
)% |
(13 |
)% |
||
1Percentages are calculated on an individual basis. |
||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20250820075434/en/
Investors: Rainey Mancini rmancini@estee.com
Media: Brendan Riley briley@estee.com