Estée Lauder Companies (NYSE: EL) shares tumbled more than 20% intra-day on Thursday as investors reacted to the company’s latest quarterly results and rising tariff concerns.
The cosmetics maker reported second-quarter earnings per share of $0.89, beating analyst expectations of $0.83 and representing a 43% increase from the prior year. Revenue rose 6% year over year to $4.23 billion, slightly above the consensus estimate of $4.22 billion.
Net sales in skin care and fragrance increased 6%, while hair care returned to growth with a 5% increase. Makeup sales declined 1%, driven by weakness in the Estée Lauder brand, partially offset by strength at MAC.
By region, Mainland China delivered standout performance with 13% organic sales growth. Europe, the UK, the Middle East and Africa posted 2% organic growth, while the Americas reported flat organic sales.
Despite raising its full-year outlook, Estée Lauder warned that tariff-related pressures would reduce fiscal 2026 profitability by approximately $100 million, primarily in the second half of the year. The company cited tariffs including a 39% rate on Swiss imports and a 35% rate on Canadian imports into the U.S.
Reported and adjusted gross margin expanded 40 basis points to 76.5%, reflecting benefits from the company’s Profit Recovery and Growth Plan, which were largely offset by tariffs, inflation, and changes in product mix.
Looking ahead, Estée Lauder raised its fiscal 2026 outlook and now expects organic net sales growth of 1% to 3% and adjusted earnings per share of $2.05 to $2.25.
