Estee Lauder reports 10% sales decline in Q3 FY25 despite exceeding profitability forecast with 75% gross margin
Despite the sales decline, the company’s profitability exceeded expectations, with gross margin rising to 75.0%.
USA – The Estée Lauder Companies Inc. has announced its financial report for Q3 FY25, reporting a 10% net sales decrease to USD 3.6 billion.
However, despite declining net sales, the company exceeded profitability expectations, with gross margin expanding to 75.0%, driven by cost efficiencies under its Profit Recovery and Growth Plan (PRGP).
Stéphane de La Faverie, President and Chief Executive Officer, stated, “In the third quarter of fiscal 2025, we delivered our organic sales outlook and exceeded profitability expectations.”
“We are moving decisively and building momentum as we bring our ‘Beauty Reimagined’ strategic vision to life across its five key priorities.”
The skin care sales saw 11% drop driven by the downturn in Asia’s travel retail sector, impacting key brands like Estée Lauder and La Mer.
The makeup net sales declined 7%, impacted by lower shipments of new product launches for M·A·C and retailer inventory reductions due to weakened demand.
Fragrance net sales dipped 1%, impacted by weaker demand for Clinique Happy and Estée Lauder fragrances in the Asia/Pacific region.
However, strong double-digit growth from Le Labo helped offset the decline, while lower costs contributed to an increase in fragrance operating income, despite shifts in consumer-facing investments.
Estée Lauder’s hair care net sales dropped 10%, largely due to weak performance in Aveda’s salon and freestanding store channels, which continued to face demand challenges.
Th net sales in the Americans countries has a 5% decrease, largely due to soft retail demand, lower consumer confidence, and operational challenges at department stores, despite slight growth in North American retail sales.
In Europe, the Middle East and Africa, the net sales saw a 1% decline driven by the sharp drop in global travel retail, impacted by lower Chinese consumer spending and retailer shifts toward more profitable duty-free strategies in Korea and China.
In Asia/Pacific, the net sales diped 1%, weighed down by double-digit declines in Hong Kong SAR and Korea, where political and social unrest reduced retail traffic and led to lower sales.
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