Estée Lauder is navigating a critical period as it attempts to reverse a significant downturn in its business performance. The cosmetics giant’s ambitious “Beauty Reimagined” strategy has yet to convince a skeptical market, with recent disclosures regarding executive compensation raising questions about the alignment of leadership incentives with shareholder returns.
Financial Performance Highlights Challenges
The company’s fiscal 2025 results underscored the depth of its challenges. Estée Lauder reported an 8% decline in organic sales and a sharp reversal into a loss of $3.15 per share. The most severe impact was felt in the previously lucrative travel retail segment, which contracted by a substantial 28%. This difficult backdrop coincides with the appointment of new CEO Stéphane de La Faverie, who commences his role with a base salary of $1.5 million plus potential bonuses, while investors await concrete signs of recovery.
A notable bright spot emerged from the company’s digital initiatives. Online sales reached a record high, accounting for 31% of total revenue. Strategic partnerships with platforms like Amazon and TikTok Shop are central to the company’s plan to stimulate growth. The critical question remains whether these digital gains can offset broader structural issues.
Market Sentiment and Technical Position
Analyst consensus reflects widespread caution. The average rating on Estée Lauder shares stands at “Hold,” accompanied by a modest price target of $88.55. Among the 21 financial institutions covering the stock, recommendations are tepid: twelve advise holding, eight suggest buying, and only one issues a strong buy recommendation. This hesitancy points to uncertainty about the efficacy of the new strategic direction.
Should investors sell immediately? Or is it worth buying Estee Lauder?
From a technical perspective, the stock has struggled to regain momentum since plummeting to $45.70 in April. The current share price continues to trade below its 50-day moving average, indicating persistent selling pressure and a lack of bullish conviction among traders.
Outlook Weighed Down by Headwinds
Management’s guidance for the current fiscal year 2026 projects flat to slightly positive sales growth. The earnings forecast, set between $1.90 and $2.10 per share, must also absorb approximately $100 million in costs related to labor agreements. Two of the most significant hurdles facing the company are the uncertain recovery of its key China market and the ongoing management of labor relations.
Estée Lauder finds itself at a pivotal juncture. While its digital offensive is yielding initial positive results, the underlying structural problems are profound. The coming quarters will be the true test of whether the “Beauty Reimagined” plan can deliver the promised revitalization. For now, the investment case remains a waiting game with an uncertain outcome.
Ad
Estee Lauder Stock: Buy or Sell?! New Estee Lauder Analysis from September 27 delivers the answer:
The latest Estee Lauder figures speak for themselves: Urgent action needed for Estee Lauder investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from September 27.
Estee Lauder: Buy or sell? Read more here...