EL · 8-K · 20261102PR000057

Gross Margin Drivers

ESTEE LAUDER COMPANIES INC · 2026-11-02 · Importance 43 · Surprise 32

First-quarter gross profit increased 10% to $2.813 billion from $2.554 billion. Gross margin expanded 230 basis points to 75.7% from 73.4%, and adjusted gross margin increased 240 basis points to 75.7% from 73.3%. The company attributed the improvement to PRGP procurement savings, expense optimization and manufacturing efficiencies, sales leverage, and strategic pricing benefits that collectively offset inflation.

Key facts

• For the three months ended September 30, 2026, gross margin was 75.7%, up 230 basis points from 73.4%; adjusted gross margin was 75.7%, up 240 basis points from 73.3%. source
• Gross-margin improvement reflected net benefits from PRGP cost and operational efficiencies, sales leverage, and strategic pricing actions, which collectively offset inflation. source
• PRGP benefits included procurement savings, expense optimization, and manufacturing efficiencies. source