(Reuters) -Estee Lauder forecast annual profit below Wall Street estimates on Wednesday, as the cosmetics giant grapples with persistent weakness in the U.S. and China markets and tariff uncertainty.
Estee Lauder Projects Lower Profit Amid $100 Million Tariff Impact
Estee Lauder's Financial Outlook and Challenges
(Reuters) -Estee Lauder forecast annual profit below Wall Street estimates on Wednesday and warned of a $100 million tariff-hit in fiscal 2026, sending the cosmetic giant's shares down about 4% in early trading.
The Trump administration's unpredictable trade policies have put a strain on businesses that are grappling with higher costs and low demand.
To revive sales, Estee Lauder has been accelerating new launches in categories including skincare, introducing new luxury price tiers, increasing investments and implementing cost-savings measures, under new CEO Stephane de La Faverie, who took up the top job earlier this year.
Impact of Tariffs on Profit
In May, Estee Lauder said it was planning to reduce its sourcing in China from U.S. plants to below 10% by shifting production to Japan and Europe to counter over half of the expected hit from trade policies.
The company sources roughly 25% of its products sold in China and EMEA regions from U.S. plants.
Restructuring Plans and Financial Performance
Organic net sales for the fourth quarter fell 13%, compared with an 8% rise a year ago, primarily hurt by weakness in the skincare and makeup segments. The company has also seen pressure from persistent weakness in the U.S. and China markets.
Quarterly Loss Analysis
Estee reported a wider quarterly loss of $546 million, up from $284 million a year ago, partly due to impairment charges tied to brand performance at Too Faced and skincare brand Dr.Jart+.
On an adjusted basis, it earned 9 cents per share, in line with estimates.
It sees full-year adjusted earnings per share to be in the range of $1.90 to $2.10, compared with analysts' estimates of $2.21, according to data compiled by LSEG.
Estee Lauder, which laid out restructuring plans in February, said on Wednesday it expects to take restructuring charges between $1.2 billion and $1.6 billion, before taxes in 2026.
(Reporting by Anuja Bharat Mistry and Anshi Sancheti in Bengaluru; Editing by Shinjini Ganguli)
