Estée Lauder is gradually emerging from three years of decline

Estée Lauder is going through less of a collapse than a delicate phase of reconstruction. After three years marked by declining sales, the American group is regaining positive momentum in 2026. This recovery, however, remains fragile, exposed to trade tensions, the cost of tariffs, consumer caution, and profound transformations in the prestige beauty.

One figure in particular caught the eye: $100 million. Contrary to a widely circulated interpretation, this amount represents neither a projected net loss nor a anticipated decline in revenue. It corresponds to the estimated adverse impact of the tariffs on profitability for fiscal year 2026, after taking into account the mitigation measures already planned by the company.

At the same time, several brands in the portfolio, including La Mer, Le Labo, Tom Ford Beauty, Kilian Paris and The Ordinary, are showing resilience which reveals the new hierarchy of the global cosmetics market.

To understand the situation in 2026, we need to go back to the fiscal year ending June 30, 2025.

Estée Lauder had then recorded an 8% decline in its reported and organic sales. Skincare fell by 12%, makeup by 5%, and haircare by 10%. Perfume sales remained generally stable, supported by certain high-end brands, particularly Le Labo and Kilian Paris.

Several difficulties had accumulated:

persistent weakness in Asian travel retail ;
limited confidence among Chinese consumers;
stock reductions at some distributors;
slowdown of several historical brands;
underperformance of certain physical points of sale;
accounting write-downs relating in particular to Tom Ford and Too Faced;
Higher restructuring costs and marketing investments.

This decline did not reflect a general rejection of Estée Lauder products. Rather, it revealed an organization that had become too dependent on certain markets, certain distribution channels, and a growth model that needed to be rethought.

To further explore this strategic realignment, our analysis of the ultimately abandoned merger between Estée Lauder and Puig sheds light on the consolidation challenges currently facing the premium beauty industry.

Sales are expected to start rising again in 2026

The trajectory changes during fiscal year 2026. For its third quarter, ending March 31, 2026, Estée Lauder reported revenue of $3.712 billion, compared to $3.550 billion a year earlier. Sales thus increased by 5% as reported and 2% organically. Adjusted operating income also rose by 38%, to $557 million.

Indicator	Third quarter 2026	Annual change
Total revenue	$3.712 billion	+5 %
Organic growth	—	+2 %
Skin care	$1.856 billion	+3% published
Makeup	$1.072 billion	+4% published
Perfumes	$628 million	+13% published
Adjusted operating result	$557 million	+38 %

These results do not mean that all the problems are solved. They do, however, indicate that the group is beginning to convert its investments, launches, and structural savings into measurable growth.

As of August 5, 2026, these quarterly figures remain the last complete financial results published by the company. The presentation of the annual results for fiscal year 2026 is scheduled for August 19, 2026.

Luxury perfumery is becoming the most visible driver

The most dynamic category undoubtedly remains prestige perfumery.

In the third quarter of 2026, fragrance sales increased by 13% as reported and 10% organically. This growth was driven by the group's luxury brands in all regions, with a particularly strong contribution from Le Labo, Kilian Paris, Balmain Beauty , and Tom Ford Beauty.

This performance deserves to be placed within a broader trend. The fragrance possesses several strategic advantages:

It provides a relatively accessible entry point into the world of luxury.
It relies on franchises capable of remaining desirable for several years.
It generates restocking purchases, gifts, and collections.
It lends itself particularly well to storytelling, influence, and in-store experience.
It retains significant potential for upgrading through mergers, private editions and exclusive formats.

Le Labo benefited from its established collections, new launches, and targeted expansion of its distribution network. Tom Ford capitalized on the dynamism of Private Blend and its signature fragrances such as Oud Wood and Ombré Leather. Kilian Paris continues to leverage highly recognizable references like Angels' Share and Love, Don't Be Shy.

The rise of these brands confirms a trend already observed in our analysis of the most powerful luxury beauty brands : desirability no longer rests solely on brand recognition. It depends on the coherence between the product, the narrative, the distribution, and the overall experience.

Tom Ford Beauty regains momentum

Tom Ford Beauty perfectly illustrates the complexity of the Estée Lauder portfolio.

The brand had suffered a significant impairment charge during fiscal year 2025 and experienced some commercial weakness in North America. However, its fragrances returned to positive growth in 2026, driven by its established franchises and the halo effect created by new launches.

This duality is characteristic of the current market: a brand may encounter difficulties in certain categories or channels while retaining considerable power in perfumery.

Tom Ford still possesses several rare assets:

a name globally associated with glamour and sensuality;
an immediately recognizable visual identity;
a portfolio of perfumes that has become cultural;
an ability to occupy both the prestige segment and private perfumery;
strong editorial potential surrounding its campaigns.

The campaign dedicated to Tom Ford Black Orchid Reserve and Tilda Swinton shows how the house continues to transform an olfactory launch into an artistic and media object.

La Mer proves the resilience of ultra-premium skincare

In healthcare, the picture is more contrasting.

Organic sales in the category remained virtually stable in the third quarter of 2026. This stability, however, masks opposing trends: La Mer and The Ordinary progressed, while Clinique and Origins declined.

La Mer is recording high single-digit growth, supported by its iconic products, The Treatment Lotion franchise and several innovations, including a new night cream for the eye contour and an SPF 50 protective fluid.

This performance demonstrates the strength of luxury skincare when it combines four dimensions:

a formula perceived as effective;
an identifiable caregiving gesture;
a powerful brand heritage;
a sensory experience that is difficult to replicate in lower-priced segments.

In high-end skincare, price alone is no longer enough to define luxury. Clients expect tangible proof: results, texture, a ritual, and expert advice. La Mer still manages to combine these elements, even as discretionary spending slows.

The Ordinary imposes another model of prestige

At first glance, The Ordinary's growth seems far removed from La Mer's world. Yet, both brands share the same requirement: to make their value proposition immediately understandable.

The Ordinary doesn't sell a classic vision of luxury. The brand values the clarity of its ingredients, perceived effectiveness, simple packaging, and more accessible prices. Its sales grew by double digits in the third quarter of 2026, supported by its expanded distribution network and new products.

Estée Lauder's portfolio is thus based on two complementary drivers:

heritage desirability , embodied by La Mer or Tom Ford;
functional credibility , embodied by The Ordinary.

This complementarity allows the group to address several price levels and several generations of consumers without depending on a single model.

Jo Malone London remains a strategic asset

Jo Malone London is not designated as the main growth driver for the third quarter of 2026. The brand nevertheless remains important in the group's distribution strategy.

In the first nine months of the fiscal year, Estée Lauder opened a net 27 additional stores for its fragrance brands, a development primarily driven by Le Labo and Jo Malone London.

The British company benefits from a particularly extensive product range: personal fragrances, candles, home scents, gifts, seasonal editions, and olfactory combinations. Its potential therefore extends beyond the sale of a single bottle.

Jo Malone also caters to the desire for a more intimate luxury. Customers can personalize their fragrance, combine several scents, or transform perfume into a home ritual. This experiential dimension partially protects the brand from competition based solely on price.

What do the $100 million related to customs duties actually represent?

The figure of $100 million must be interpreted precisely.

On August 20, 2025, Estée Lauder estimated that the tariffs then adopted could reduce its profitability for fiscal year 2026 by approximately $100 million, after implementing its initial offsetting measures. The company was considering adjustments to its supply chain, additional cost savings, and potential tariff reductions.

On May 1, 2026, the group maintained this estimate. However, it indicated that it had already implemented various measures to offset more than half of the initial expected impact:

use of available commercial programs;
optimization of regional production;
bringing manufacturing capacities closer to consumer markets;
development of the Japanese factory;
improved supply chain agility.

The prices are also factored into inventory costs before being included in sales costs. Estée Lauder mentioned a lag of approximately six months between the payment of these costs and their recognition in the accounts.

In other words, tariff pressure does not necessarily appear immediately in the results. It can gradually spread through margins, production decisions and selling prices.

An estimate that became more uncertain as the year progressed

The $100 million figure was based on information available as of April 24, 2026.It therefore does not automatically take into account all subsequent business decisions.

On July 27, 2026, the French Customs Directorate General updated its presentation of US and European measures. It clarified that the additional 10% US duty based on Section 122 expired on July 24, 2026, while other provisions based on Sections 232 and 301 may continue to apply depending on the product.

It would therefore be unwise to consider the $100 million figure as a final amount. The actual cost will depend in particular on:

of the origin of the products and components;
of their customs classification;
manufacturing and packaging facilities;
of the stock depletion schedule;
possible exemptions;
the group's ability to adjust its flows;
of the cost share passed on in prices.

For an international cosmetics group, the issue is not limited to the finished product. A bottle may involve European glass, an Asian pump, metal components, a formula manufactured in another country, and packaging produced in a third territory.

Can Estée Lauder raise its prices without losing its customers?

Price increases are one possible response to tariff tensions, but they carry a risk. pricing power depends on its desirability. A price increase will be more readily accepted on an iconic fragrance, a highly sought-after cream, or a rare edition than on a readily comparable product.

Therefore, not all brands in the Estée Lauder portfolio have the same room for maneuver.

The strongest houses can defend their prices thanks to:

their hero products;
their perceived quality;
their exclusivity;
customer loyalty;
their control of distribution;
their ability to create a distinctive experience.

On the other hand, more fragile brands risk losing volume, intensifying promotions, or seeing customers switch to more accessible players.

This tension explains whyproduct innovation, consulting, retail and branded content are becoming as important as pricing policy.

Consumers will remain cautious in 2026

The French context illustrates this caution.

In July 2026, the household confidence indicator published by INSEE reached 86, up two points, but remained significantly below its long-term average of 100. The perceived opportunity to make major purchases also remained poor.

Luxury beauty products are more resilient than other discretionary categories thanks to their relatively accessible entry price. A fragrance, a lipstick, or a serum allows you to experience a touch of the premium world without committing the budget required to purchase a handbag or a piece of jewelry.

This resilience, however, does not mean that customers accept all price increases. They compare products more closely, study assets, consult reviews, and expect an immediately noticeable benefit.

Perceived value thus becomes the central indicator. A product can be expensive if it appears unique, effective, durable in use and consistent with the brand identity.

Beauty Reimagined: The Reconstruction Strategy

Estée Lauder's recovery is based on its Beauty Reimagined, led by Stéphane de La Faverie.

This strategy is structured around five priorities:

accelerate consumer coverage;
to create truly transformative innovations;
increase investments visible to customers;
to support more sustainable growth;
simplify and transform internal operations.

The recovery and growth plan, or PRGP, aims simultaneously to improve gross margin, reduce excess inventory, simplify the organization and reallocate resources towards launches, campaigns and points of contact with consumers.

The group is therefore less focused on uniformly reducing its spending than on reallocating its investments. Less administrative complexity. More resources dedicated to the product, digital, consulting, the store, and the overall experience.

This ambition is also reflected in Estée Lauder's Parisian Atelier, conceived as a space dedicated to olfactory innovation and new creative processes.

What are the prospects for Estée Lauder after 2026?

As of May 1, 2026, Estée Lauder projected annual organic growth at the high end of its previous 1% to 3% range, or approximately 3%, and an adjusted operating margin between 10.7% and 11%.

The group also shared an initial outlook for its 2027 fiscal year:

organic sales growth of between 3% and 5%;
adjusted operating margin between 12.5% and 13%;
continuation of gains related to the simplification of the organization;
Acceleration expected in priority categories and markets.

These objectives remain preliminary. They depend on changes in customs tariffs, the geopolitical context, the behavior of Chinese consumers, travel retail, and the ability of brands to maintain their desirability.

The four indicators to watch

The success of Estée Lauder's turnaround can be assessed through four signals.

1. Organic growth

The reported growth is partly due to exchange rate effects. Sustained organic growth will demonstrate that real demand is recovering.

2. The operating margin

The group must prove that it can grow without losing the benefits of its structural economies.

3. Performance in China and in travel retail

These markets have had a significant impact on previous fiscal years. Their normalization remains essential.

4. The distribution of growth among brands

A recovery too focused on a few fragrances would remain fragile. A true turnaround will require a broader improvement in skincare, makeup, and brands currently struggling.

Estée Lauder is no longer just playing with size, but precision

The main lesson of 2026 lies in this contrast: Estée Lauder remains exposed to potentially heavy price pressure, but its portfolio still contains several particularly desirable growth drivers.

La Mer champions ultra-premium skincare. The Ordinary responds to the demand for efficacy and transparency. Le Labo, Kilian Paris, and Tom Ford are accelerating their growth in haute parfumerie. Jo Malone is expanding its experiential offerings. Estée Lauder itself is regaining momentum thanks to the relaunch of Double Wear.

The group's future will depend less on the number of brands it owns than on its ability to assign each a clear role.

In contemporary beauty, prestige no longer automatically protects against declining sales volumes. It only protects those brands that can remain relevant, consistent, and desirable.

Estée Lauder appears to have begun this process. The annual results on August 19, 2026, will reveal whether the rebound observed since the start of the fiscal year marks a genuine change in the cycle or merely an initial stage of stabilization.

Frequently asked questions about Estée Lauder in 2026

Is Estée Lauder forecasting a loss of $100 million in 2026?

No. The company estimates that the tariffs could reduce its profitability by approximately $100 million. This amount does not represent a projected net loss.

Are Estée Lauder's sales continuing to decline?

Sales declined by 8% during fiscal year 2025. They then returned to growth: in the third quarter of 2026, revenue increased by 5% as reported and by 2% organically.

Which brands in the group are progressing the most?

In the third quarter of 2026, growth is notably driven by La Mer, The Ordinary, Le Labo, Kilian Paris, Balmain Beauty, Tom Ford Beauty and Estée Lauder's Double Wear makeup range.

Why do customs duties affect cosmetics?

Cosmetic products utilize international supply chains. Formulas, bottles, pumps, packaging, and finished products can cross multiple borders before reaching the market, multiplying exposure to duties and logistical costs.

Will Estée Lauder product prices increase?

Price adjustments are possible, but no uniform increase can be deduced from the $100 million estimate. Decisions will depend on brands, markets, categories, and cost-cutting measures.

Primary sources of the company

Three official French sources

About the author

Sarah Cohen

Beauty & Innovation Editor

Sarah Cohen is a writer specializing in luxury beauty and cosmetic innovations. Passionate about exceptional skincare and new technologies in the service of beauty, she deciphers them for Luxe…

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Estée Lauder in 2026: $100 million under pressure, but luxury brands are bouncing back