Estée Lauder Raises Forecasts as Its Turnaround Gains Ground

Estée Lauder lifted its annual outlook after stronger quarterly sales and earnings, offering investors fresh evidence of recovery. The next test is sustaining growth and improving cash generation through the holiday season.

Estée Lauder is giving investors more evidence that its recovery is gaining traction.

The beauty company raised its fiscal 2027 sales and profit forecasts on Monday after quarterly revenue increased 7% to approximately $3.72 billion.

Adjusted earnings reached 72 cents per share, beating analysts’ expectations of 51 cents. Shares rose nearly 3% in premarket trading following the results.

The improvement extended to profitability. Adjusted operating margin increased to 12.1%, compared with 7.3% a year earlier, according to the company’s earnings release.

Estée Lauder now expects annual organic sales growth of 4% to 5.5%, up from its previous forecast of 3% to 5%. Its adjusted earnings outlook increased to $3.20–$3.45 per share from $3.10–$3.35.

Luxury fragrance demand helped support the quarter, while organic sales increased 9% in China and 4% in the Americas. That gives investors evidence of growth across two important markets.

Our assessment is that the combination of higher sales and stronger margins makes this a more useful turnaround signal than revenue growth alone.

It suggests the company is retaining more operating profit as business improves. Sustaining that progress will require continued demand alongside disciplined spending.

Cash generation remains another measure to watch. Quarterly free cash flow improved but was still negative at $235 million, compared with negative $436 million a year earlier. Management also retained caution around geopolitical and economic uncertainty in its outlook.

The holiday period will provide another opportunity to test whether the stronger start can continue.

Investor Take: The upgraded outlook strengthens Estée Lauder’s recovery case. Watch whether sales momentum produces sustained margin improvement and stronger cash flow. Those measures will help investors judge how much of the turnaround is becoming durable.