EL · 8-K · 20261102PR000057

Operating Margin Drivers

ESTEE LAUDER COMPANIES INC · 2026-11-02 · Importance 57 · Surprise 64 · No source text

Reported operating income increased to $408 million from $169 million, and operating margin expanded to 11.0% from 4.9%. Adjusted operating income rose 76% to $449 million, with adjusted operating margin up to 12.1% from 7.3%. Management cited operating leverage and gross-margin expansion, while the reported comparison also benefited from a $45 million year-over-year decrease in restructuring and other charges; consumer-facing investments increased 8%.

Key facts

• For the three months ended September 30, 2026, operating margin was 11.0%, up from 4.9%; adjusted operating margin was 12.1%, up from 7.3%. source
• Skin Care operating income increased 40%, primarily due to higher net sales and lower non-consumer-facing expenses, partly offset by increased consumer-facing investments. source
• Fragrance operating income increased 93%, primarily due to increased net sales, partly offset by increased consumer-facing investments. source
• Asia/Pacific operating income increased 73%, reflecting higher gross profit from increased net sales and lower cost of sales. source
• Mainland China operating margin increased to 5.2% from 2.3%, primarily driven by higher net sales, partly offset by increased consumer-facing investments. source
• The Americas operating income increased 31%, reflecting higher gross profit from increased net sales and lower cost of sales, partly offset by increased consumer-facing investments. source
• EUKEM operating margin increased to 4.8% from 0.7%, primarily due to increased net sales and reduced non-consumer-facing expenses. source
• Operating-margin expansion was driven by operating leverage and gross-margin expansion, which funded increased consumer-facing investments; reported operating margin also reflected a $45 million year-over-year decrease in restructuring and other charges. source

Impact estimates