Updated as of 5:30 p.m. on Thursday.
The Estée Lauder Cos. has finally delivered a new full-year outlook to the market.
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After scrapping its previous forecast in October, Estée Lauder said it expects sales to drop by as much as 9 percent in 2025 on the back of continued weakness in Asia and travel retail, but sees a return to growth next year if “there is meaningful resolution of the recently enacted tariffs.”
The bigger-than-expected annual drop comes on the back of a forecasted stronger double-digit net sales decline in the company’s global travel retail business in the fourth quarter compared to the third quarter when travel retail declined 28 percent organically. It continues to shrink as a percentage of the business toward the low teens.
Lauder also expects a high-single-digit organic net sales decline in Asia-Pacific for fiscal 2025, primarily driven by ongoing subdued consumer sentiment from Chinese consumers and the impact of the company’s strategic exit of Dr.Jart+ from the travel retail channel in Korea.
Stéphane de La Faverie, president and chief executive officer, said: “With the strategic reset of our travel retail business well underway to better reflect recent industry trends and market conditions, and provided there is meaningful resolution of the recently enacted tariffs to mitigate potential related negative impacts, we are confident in our ability to return to sales growth in fiscal 2026.”
On the subject of tariffs, Akhil Shrivastava, executive vice president and chief financial officer at Lauder, added that it does not expect a material impact of fiscal 2025 profitability. But he stressed that “unless meaningful resolution of trade negotiations is achieved, we do anticipate the high rate of tariffs to have a material impact in fiscal 2026.” As a result, Lauder is exploring additional cost savings and strategic pricing to help further mitigate some of these impacts and plans to provide more details in its August earnings call.
At the beginning of April, President Donald Trump unveiled sweeping punitive tariffs on around 60 countries, sending the markets into a tailspin. He later stepped back, authorizing a 90-day pause — “and a substantially lowered reciprocal tariff during this period” of 10 percent. Still, he upped import duties on China-made goods to 145 percent. Currently, 75 percent of what Lauder sells in the U.S. is either sourced from its manufacturing plants in the U.S. and Canada or covered under existing trade agreements. Roughly 25 percent of what it sells in China is sourced from its manufacturing plants in the U.S.