EL · 10-K · 2026A · Full report

Operating Income and Margins

ESTEE LAUDER COMPANIES INC · 2026-08-19 · Importance 69 · Surprise 64 · In source text

Reported operating income improved by $1.565 billion in fiscal 2026 from the fiscal 2025 operating loss of $785 million, and reported operating margin reached 5.2% versus negative 5.5%. The improvement reflected higher net sales, higher gross margin, and a favorable operating-expense margin, as well as the absence of $1.286 billion of fiscal 2025 goodwill and other intangible impairment charges. Fiscal 2026 operating income included $823 million of restructuring and other activity charges, compared with $486 million in fiscal 2025. Management said fiscal 2026 non-consumer-facing expenses were virtually flat year over year, with lower general and administrative, marketing, product development, and shipping expenses—including PRGP employee-cost savings—largely offset by higher employee incentive costs.

Key facts

• The Talcum litigation settlement agreements resolved over 200 pending cosmetic talcum powder matters and established a framework for potential future claims from January 1, 2025 through December 31, 2029, subject to annual caps. source
• ESTEE LAUDER COMPANIES INC recorded a $159 million charge in the fiscal 2025 first quarter for probable losses under Talcum litigation settlement agreements. source
• Fiscal 2026 operating expense margin improved as increased net sales offset higher consumer-facing investments. source
• Non-consumer-facing expenses were virtually flat year-over-year; lower expenses in general and administrative, marketing, product development, and shipping, including PRGP employee-cost savings, were largely offset by higher employee incentive costs. source

Impact estimates