Estée Lauder (NYSE: EL) outlines ‘Beauty Reimagined’ shake-up
Rhea-AI Filing Summary
ESTEE LAUDER COMPANIES INC (EL) describes a global prestige beauty business spanning skin care, makeup, fragrance and hair care, stewarding over 20 luxury and prestige brands sold in approximately 150 countries and territories. The company operates primarily as a wholesaler across department stores, travel retail, specialty-multi retailers and online platforms, and also runs a direct-to-consumer network with about 1,600 freestanding stores as of June 30, 2026.
In February 2025, management launched the “Beauty Reimagined” strategic vision and a “One ELC” operating model aimed at simplifying the organization, unifying culture and leveraging shared data and platforms to drive growth and efficiencies. The business is managed by product category and a reorganized four-region structure (The Americas, EUKEM, Asia/Pacific and standalone Mainland China), with a strong focus on emerging and priority emerging markets.
R&D remains a core capability, with $278 million spent in fiscal 2026 and roughly 1,000 employees dedicated to innovation and product safety. Human capital is central, with about 55,000 employees worldwide and 81% female representation. The Lauder family continues to control the company, holding approximately 82% of the voting power of the common stock, and EL identifies extensive risk factors, including intense competition, macroeconomic conditions, ESG expectations, AI and cybersecurity.
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Key Figures
Market value of voting common equity held by non-affiliates: $26 billion
Class A shares outstanding: 247,291,223 shares
Class B shares outstanding: 114,507,344 shares
+5 more
8 metrics
Market value of voting common equity held by non-affiliates
$26 billion
Approximate aggregate market value at December 31, 2025
Class A shares outstanding
247,291,223 shares
Shares of Class A Common Stock outstanding at August 12, 2026
Class B shares outstanding
114,507,344 shares
Shares of Class B Common Stock outstanding at August 12, 2026
Freestanding stores
1,600
Approximate number of freestanding stores operated as of June 30, 2026
Research and development costs 2026
$278 million
Research and development expenses in fiscal 2026
Employees worldwide 2026
55,000
Approximate global headcount as of June 30, 2026
Female share of workforce
81%
Proportion of global employees who were female as of June 30, 2026
Lauder family voting power
82%
Approximate percentage of outstanding voting power held as of August 12, 2026
Key Terms
Beauty Reimagined, One ELC operating model, Profit Recovery and Growth Plan, controlled company, +2 more
6 terms
Beauty Reimagined financial
"In February 2025, we embarked on “Beauty Reimagined,” a strategic vision"
One ELC operating model financial
"we created our "One ELC" operating model, a scalable, integrated system"
Profit Recovery and Growth Plan financial
"in connection with our Profit Recovery and Growth Plan (“PRGP”), we have"
controlled company regulatory
"We are a “controlled company” within the meaning of the New York Stock Exchange rules"
A controlled company is a publicly traded firm where one shareholder or a small group holds enough voting power to determine board members and major strategic choices. For investors this matters because control can speed decision-making and protect long-term plans, but it also raises the risk that majority owners will favor their own interests over minority shareholders, reducing outside oversight—like a family-owned restaurant that sold shares but the family still calls the shots.
Emerging Markets financial
"Our “Emerging Markets” are Argentina, Brazil, Chile, Colombia, Mexico, Panama and Peru"
Countries and regions whose economies are growing and modernizing faster than low-income nations but are not yet as stable or wealthy as advanced economies; they often have expanding middle classes, rising consumer demand and developing financial markets. For investors, emerging markets can offer higher growth potential—like backing a fast-growing startup instead of a mature company—but also bring greater risks from political changes, currency swings, weaker regulations and less market liquidity, which can make returns more volatile.
cybersecurity incident response plan technical
"We have also adopted a cybersecurity incident response plan that is designed"
Earnings Snapshot
FAQ
What is the core business of ESTEE LAUDER COMPANIES INC (EL)?
ESTEE LAUDER COMPANIES INC focuses on prestige beauty, manufacturing and marketing skin care, makeup, fragrance and hair care products. Its portfolio includes more than 20 luxury and prestige brands distributed through wholesale and direct-to-consumer channels in about 150 countries.
How large is Estée Lauder’s global footprint in terms of stores and employees (EL)?
As of June 30, 2026, Estée Lauder operated about 1,600 freestanding stores and employed approximately 55,000 people worldwide. Around 35,000 are beauty demonstrators, and roughly 26% of employees are in the U.S., with 74% based internationally.
How much does Estée Lauder (EL) spend on research and development?
In fiscal 2026, Estée Lauder recorded $278 million in research and development costs. The company had about 1,000 R&D employees focused on new products, technology, safety and regulatory compliance across multiple facilities and partnerships with research institutions.
How concentrated is voting control at Estée Lauder (EL)?
Members of the Lauder family beneficially own Class A and Class B shares representing about 82% of the voting power as of August 12, 2026. This gives the family significant influence over director elections, major transactions and other matters requiring stockholder approval.
What is the Estée Lauder (EL) geographic and regional structure?
Effective July 1, 2025, Estée Lauder manages four regions: The Americas, EUKEM (Europe, the UK and Ireland and Emerging Markets), Asia/Pacific and standalone Mainland China. Results and resource allocation are tracked by product category and this new regional structure.
What are Estée Lauder’s (EL) key strategic initiatives like Beauty Reimagined and One ELC?
“Beauty Reimagined” focuses on consumer coverage, innovation, marketing investment and efficiencies. The “One ELC” model streamlines the organization into One Team, One Culture and One Operating Ecosystem, aiming for faster execution, clearer ownership and scalable shared platforms.
How does Estée Lauder (EL) address cybersecurity risk?
Estée Lauder runs a formal cybersecurity program led by a Chief Information Security Officer and overseen by the Audit Committee. It uses risk assessments, third-party reviews, employee training, incident response planning and cyber insurance to manage material risks from cybersecurity threats.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the fiscal year ended | |||||
OR | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to | |||||
Commission file number 1-14064
The Estée Lauder Companies Inc .
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code 212 -572-4200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ | ||||||||
Non-accelerated filer ☐ | Smaller reporting company | Emerging growth company | ||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s voting common equity held by non-affiliates of the registrant was approximately $26 billion at December 31, 2025 (the last business day of the registrant’s most recently completed second quarter).*
At August 12, 2026, 247,291,223 shares of the registrant’s Class A Common Stock, $.01 par value, and 114,507,344 shares of the registrant’s Class B Common Stock, $.01 par value, were outstanding.
Documents Incorporated by Reference
Document | Where Incorporated | |||||||
Proxy Statement for Annual Meeting of Stockholders to be held November 17, 2026 | Part III | |||||||
* Calculated by excluding all shares held by executive officers and directors of registrant and certain trusts without conceding that all such persons are “affiliates” of registrant for purposes of the Federal securities laws.
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
| Page | ||||||||
Part I: | ||||||||
Item 1. | Business | 2 | ||||||
Item 1A. | Risk Factors | 16 | ||||||
Item 1B. | Unresolved Staff Comments | 23 | ||||||
Item 1C. | Cybersecurity | 23 | ||||||
Item 2. | Properties | 24 | ||||||
Item 3. | Legal Proceedings | 24 | ||||||
Item 4. | Mine Safety Disclosures | 25 | ||||||
Part II: | ||||||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 26 | ||||||
Item 6. | [Reserved] | 27 | ||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 | ||||||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 57 | ||||||
Item 8. | Financial Statements and Supplementary Data | 57 | ||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 57 | ||||||
Item 9A. | Controls and Procedures | 57 | ||||||
Item 9B. | Other Information | 57 | ||||||
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 57 | ||||||
Part III: | ||||||||
Item 10. | Directors, Executive Officers and Corporate Governance | 58 | ||||||
Item 11. | Executive Compensation | 58 | ||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 58 | ||||||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 58 | ||||||
Item 14. | Principal Accounting Fees and Services | 59 | ||||||
Part IV: | ||||||||
Item 15. | Exhibits, Financial Statement Schedules | 60 | ||||||
Item 16. | Form 10-K Summary | 65 | ||||||
Signatures | 66 | |||||||
Table of Contents
Cautionary Note Regarding Forward-Looking Information and Risk Factors
This Annual Report on Form 10-K includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, we cannot assure that actual results will not differ materially from our expectations. Factors that could cause actual results to differ from expectations are described herein; in particular, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Forward-Looking Information.” In addition, there is a discussion of risks associated with an investment in our securities, see “Item 1A. Risk Factors.”
Unless the context requires otherwise, references to “we,” “us,” “our” and the “Company” refer to The Estée Lauder Companies Inc. and its subsidiaries.
PART I
Item 1. Business.
The Estée Lauder Companies Inc., founded in 1946 by Estée and Joseph Lauder, is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. We are a steward of over 20 luxury and prestige brands globally. Since the initial launch of the Estée Lauder brand in the United States, we have significantly expanded our consumer reach to approximately 150 countries and territories. We operate as a wholesaler, with our products sold in brick-and-mortar locations and on various e-commerce platforms, including those operated by department stores, duty-free retailers, specialty-multi retailers, online pure players, upscale perfumeries and pharmacies, and top-tier salons and spas. Additionally, we operate a direct-to-consumer business across freestanding stores, our brands' websites and third-party online platforms.
In February 2025, we embarked on “Beauty Reimagined,” a strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work.
As part of reimagining the way we work, we created our "One ELC" operating model, a scalable, integrated system designed to operate faster, execute with greater discipline, and drive growth. One ELC is built on three elements: One Team, One Culture, and One Operating Ecosystem. One Team is the simplification of the organization with fewer layers and silos, clearer ownership and faster decision making. One Culture is the reinforcement of how teams work every day, grounded in accountability, bold, entrepreneurial thinking, and agility. One Operating Ecosystem is the combination of shared platforms, data and strategic partners to enable consistent, scalable and effective execution across brands, regions and functions.
We have been controlled by the Lauder family since the founding of our Company. Members of the Lauder family, some of whom are directors, executive officers and/or employees, beneficially own, directly or indirectly, as of August 12, 2026, shares of our Company's Class A Common Stock and Class B Common Stock having approximately 82% of the outstanding voting power of the Common Stock.
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Products
Skin Care - Our broad range of skin care products address various skin care needs. These products include moisturizers, serums, cleansers, toners, eye care, body care, exfoliators, acne and oil correctors, facial masks and sun care products.
Makeup - We offer an extensive array of makeup products across shades and colors. Our full array of makeup products includes foundations, powders, concealers and setting sprays, lipsticks, lip liners and lip glosses, and mascaras, eyeshadows and eyeliners. We also sell related items such as compacts, brushes and other makeup tools.
Fragrance - We offer a variety of fragrance products. The fragrances are sold in various forms, including parfum, eau de parfum, eau de toilette, eau de cologne, and body spray, as well as lotions, creams, powders, candles and soaps that are based on a particular fragrance.
Hair Care - Our hair care products include shampoos, conditioners, styling products, treatment, finishing sprays and hair color products.
Other - The other category includes royalty revenue from our licensing of the TOM FORD trademark to third parties as well as sales from ancillary products and services that do not fit within the definitions of skin care, makeup, fragrance, and hair care.
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Our Brands
Given the personal nature of our products and the wide array of consumer preferences and tastes, as well as competition for the attention of consumers, our strategy has been to market and promote our products through distinctive brands seeking to address broad preferences and tastes. Each brand has a single global image that is promoted with consistent logos, packaging and advertising designed to enhance its image and differentiate it from other brands in the market. Beauty brands are differentiated by numerous factors, including quality, performance, a particular lifestyle, where they are distributed (e.g., prestige or mass) and price point. Below is a chart showing brands we sell and how we view them based on lifestyle and price point:
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 | Estée Lauder brand products, which have been sold since 1946, have a reputation for innovation, sophistication and superior quality. Estée Lauder is one of the world’s most renowned beauty brands, producing high-performance skin care and makeup and iconic fragrances. | |||||||
 | We pioneered the marketing of prestige men’s fragrance and grooming products with the introduction of Aramis products in 1964. | |||||||
 | Introduced in 1968, Clinique skin care and makeup products are all allergy tested and 100% fragrance free and have been designed to address individual skin types and needs. Clinique also offers select fragrances. The skin care and makeup products are based on the research and related expertise of leading dermatologists. | |||||||
 | Lab Series, introduced in 1987, is a series of high performance, specialized skin care solutions uniquely created to improve the look and feel of men’s skin. | |||||||
 | Introduced in 1990, Origins is primarily known for clinically proven, naturally powerful skin care and body care for healthy looking skin and holistic well-being. Origins has a license agreement to develop and sell beauty products using the name of Dr. Andrew Weil. | |||||||
 | M·A·C, the leading prestige makeup brand globally, was created in Toronto, Canada. After having acquired a majority interest in 1994, we completed our acquisition of M·A·C in 1998. The brand’s popularity has grown through a tradition of word-of-mouth endorsement from professional makeup artists, models, photographers and journalists around the world. | |||||||
 | Acquired in 1995, Bobbi Brown Cosmetics is a global prestige beauty brand known for its high quality and undertone-correct makeup and skin care products that celebrate individual beauty and confidence. Reflecting its artistry roots, the brand is focused on creating a teaching and learning community of consumers around the world. | |||||||
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 | Acquired in 1995, La Mer is a leading global luxury skin care brand that is available in limited distribution worldwide. The brand is known for its iconic Crème de la Mer moisturizer, serums and lotions, as well as other skin care and foundation products that are created around the original “Miracle Broth.” | |||||||
 | Acquired in 1997, Aveda sells high-performance, naturally-derived hair care products, as well as skin care. The brand is known for its innovative plant-based products and its commitment to environmental sustainability and corporate responsibility. | |||||||
 | Acquired in 1999, Jo Malone London is synonymous with a distinctly British character that delights in the unexpected, with timeless, carefully-crafted scents designed for discovery. The fragrance house celebrates gift giving: whether it’s a token of appreciation or the grandest of gestures, a gift presented in the iconic cream and black box is instantly recognizable and rarely forgotten. | |||||||
 | Acquired a majority interest in 2000 (and the remaining interest in 2006), Bumble and bumble is a New York-based hair care brand that creates high-quality hair care and styling products. | |||||||
 | Acquired in 2003, Darphin is a Paris-based, prestige skin care brand known for its high-performance morphological skin science. | |||||||
 | In 2005, we entered into a license agreement and developed, manufactured and distributed luxury beauty products under the TOM FORD brand name. In fiscal 2023, we acquired the TOM FORD brand and related intellectual property. The TOM FORD brand is a luxury brand encompassing fashion, beauty, eyewear and other accessories. As the current owner and steward of the brand, we are continuing with the development, manufacture and distribution of beauty products and have licensed the fashion and eyewear to third parties. Consistent with the fashion brand, our products exude seductive modern-day glamour and include luxury fragrance, color cosmetics, men’s grooming products and skin care products for discerning consumers globally. | |||||||
 | Acquired in 2010, Smashbox Cosmetics is a Los Angeles-based, photo studio-inspired makeup brand with high performance products created for our consumers' everyday life in the spotlight. | |||||||
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 | Launched in 2012, AERIN is a global luxury lifestyle brand inspired by the signature style of its founder, Aerin Lauder. | |||||||
 | Acquired in 2014, Le Labo was born in Grasse, the capital of perfumery in the South of France, and raised in New York City. The laboratory is Le Labo's namesake and practice: sanctuaries devoted to its craft of Slow Perfumery, where creations are hand-blended on site and to order. Its collection spans genderless perfumes and candles, alongside formulas for body, hair, and face, as well as a grooming line. | |||||||
 | Acquired in 2015, Les Editions de Parfums Frédéric Malle is a collection of exclusive, sophisticated, ultraluxury fragrances crafted by some of the world’s most talented perfumers and published by the brand. | |||||||
 | Acquired in 2015, GLAMGLOW started as a behind-the-scenes Hollywood secret to instant glow. The brand is known for bold, sensorial products that deliver instant results, and its unconventional philosophy that high performance skin care should also be fun and sexy. | |||||||
 | Acquired in 2016, KILIAN PARIS is a prestige fragrance brand that embodies audacious luxury and timeless festive sophistication. | |||||||
 | Acquired in 2016, Too Faced is a serious makeup brand that knows how to have fun. The brand is unabashedly pink, pretty and feminine with a playful wink that is beloved for its high-quality formulas, cheeky product names and distinctive packaging. | |||||||
 | Acquired in 2019, Dr.Jart+ is a Seoul-based, global skin care brand known for its innovative formulations and unique combination of dermatological science and art. | |||||||
 | After increasing our investment to 76% in 2021, we purchased the remaining interest in the Deciem Beauty Group Inc. ("DECIEM") in 2024. Known as “The Abnormal Beauty Company,” DECIEM is a Toronto-based, vertically integrated multi-brand beauty company rooted in a consumer-focused and functional approach. Its portfolio includes The Ordinary, an ingredient-focused brand, NIOD, a science-driven skin care brand, as well as Avestan, a brand focused on the exploration of unfamiliar fragrances and Loopha, a scented self-care brand with a scientific soul. | |||||||
    | ||||||||
 | Balmain Beauty was established in 2022 under a license agreement with Balmain S.A., extending the storied legacy of the Parisian fashion house founded in 1945 by Pierre Balmain into a new era of luxury beauty. Balmain embodies contemporary elegance, culture, and sensuality, inspiring fragrances that celebrate bold self-expression. Balmain Beauty introduced its first fragrances in fiscal 2025. | |||||||
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Our “Luxury Brands” are prestige brands sold at luxury price points and include La Mer, Jo Malone London, TOM FORD, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle, KILIAN PARIS and Balmain Beauty. This luxury portfolio also includes Estée Lauder's Re-Nutriv product franchise. Our “Large Brands”, defined as brands that have net sales of $1,000 million or more, are Estée Lauder, La Mer, M·A·C, Clinique, Jo Malone London and TOM FORD. Our “Scaling Brands”, defined as brands with net sales of $400 million or more, but less than $1,000 million, are The Ordinary, Le Labo, Bobbi Brown Cosmetics and Aveda. Our “Developing Brands”, defined as brands with net sales of less than $400 million, are Too Faced, KILIAN PARIS, Dr.Jart+, Origins, Bumble and bumble, Editions de Parfums Frédéric Malle, Smashbox, Darphin Paris, Lab Series, Balmain Beauty, Aramis, AERIN Beauty, NIOD, Avestan, Loopha and GLAMGLOW.
From time to time, we also make minority investments in companies, mainly in the beauty industry, including through our New Incubation Ventures, the strategic early-stage investment and incubation arm of our Company. For some of our historical minority investments, we have acquired the remaining interests (e.g., Have & Be Co. Ltd. (i.e. Dr.Jart+) and DECIEM). We have several minority investments as of June 30, 2026, including a company based in India that manufactures, markets and sells Ayurvedic skin care and other products under the Forest Essentials brand name, primarily in India, for which we have signed an agreement, subject to regulatory approvals, to acquire the remaining interest, as well as an investment in a luxury skin care brand, with proprietary formulas designed to support skin repair and resilience at the cellular level.
Social Impact and Sustainability
We continue to integrate social impact and sustainability into our strategy and business operations. Our social impact and sustainability initiatives help drive innovation, growth and operational efficiency across the business and within our brand portfolio, including through ingredient and packaging innovation and efforts to reduce cost and waste. Our initiatives also aim to enhance employee engagement and strengthen consumer trust and loyalty.
Our areas of focus include green chemistry and ingredient transparency; packaging; climate and energy; responsible sourcing; employee engagement, health and safety; philanthropic partnerships supporting women and girls; and social impact investments. We have established goals or commitments within these focus areas. For example, our climate and energy goals are intended to advance efficiency and conservation across our facilities, internal supply chain and broader value chain.
The Nominating and ESG Committee of our Board of Directors has oversight responsibility for our Company’s social impact and sustainability activities and practices, including citizenship and sustainability matters. Our social impact and sustainability efforts are led by our Chief Sustainability Officer and Chief Value Chain Officer, under the oversight of our President and Chief Executive Officer. Other members of senior management, together with employees across the organization, help to drive our strategic initiatives concerning social impact and sustainability.
Additional information related to our social impact and sustainability matters can be found at www.elcompanies.com.
Distribution
We operate as a wholesaler, with our products sold in brick-and-mortar locations and on various e-commerce platforms, including those operated by department stores, duty-free retailers, specialty-multi retailers, online pure players, upscale perfumeries and pharmacies, and top-tier salons and spas. Additionally, we operate a direct-to-consumer business across freestanding stores, our brands' websites and third-party online platforms. Our general practice is to accept returns of our products from customers if properly requested and approved.
Our online sites, including our brand.com sites as well as those operated by authorized retailers and through third-party online platforms are across our geographic regions, with a majority of these online sales generated in mainland China, the United States and the United Kingdom. As of June 30, 2026, we operated approximately 1,600 freestanding stores, which reflects the closure of freestanding stores in unproductive areas of our business and the opening of new freestanding stores during the fiscal year, as we continue to evolve our strategic focus on accelerating best-in-class consumer coverage. Most freestanding stores are operated by us under a single brand name, such as M·A·C, Jo Malone London and Le Labo. Approximately 300 of the freestanding stores are multi-branded company stores, primarily in outlet malls.
We maintain dedicated sales teams that manage our retail accounts. We have wholly-owned operations in over 50 countries through which we market, sell and distribute our products. In certain countries, we sell our products through carefully selected distributors who we believe share our commitment to protecting the image and position of our brands. For information regarding our net sales by geographic region, see Item 8. Financial Statements and Supplementary Data – Note 14 – Revenue Recognition.
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We continue to develop our strategy, assess performance and allocate resources by product category and will continue to report results by product category. To enhance accountability and streamline operations within the organization, as well as to align with our leadership changes during the second half of fiscal 2025, we have reorganized our geographic regions as of the fiscal 2026 first quarter. Accordingly, results by geographic region for fiscal 2026 and comparative fiscal 2025 and 2024 are reported under the new regional structure. Our four geographic regions effective July 1, 2025 are:
•The Americas, which includes North America and Latin America;
•Europe, the United Kingdom and Ireland and Emerging Markets ("EUKEM"), which includes the geographic markets of our previously reported Europe, the Middle East & Africa ("EMEA") region, excludes our global travel retail business previously reported in our EMEA region, and includes our Southeast Asian Emerging Markets, previously reported in our Asia/Pacific region, of Indonesia, Malaysia, the Philippines, Thailand and Vietnam;
•Asia/Pacific, which includes certain geographic markets of our previously reported Asia/Pacific region, such as Japan, Korea, Hong Kong SAR, and Australia, among others, as well as our global travel retail business, previously reported in our EMEA region; and
•Mainland China, previously reported in our Asia/Pacific region, is reported as a separate region.
Our “Emerging Markets” are Argentina, Brazil, Chile, Colombia, Mexico, Panama and Peru in The Americas, and are India, Indonesia, Israel, Malaysia, the Middle East, the Philippines, Russia, South Africa, Thailand, Turkey and Vietnam in EUKEM.
Our “Priority Emerging Markets” are Brazil and Mexico in The Americas and India, Indonesia, Malaysia, the Middle East, the Philippines, South Africa, Thailand, Turkey and Vietnam in EUKEM. Beginning in fiscal 2027, South Africa will no longer be included within our "Priority Emerging Markets".
Customers
Our strategy is to build strong relationships globally with select retailers, and our senior management works with executives of our major retail accounts on a regular basis in support of these relationships. We believe we are viewed as an important supplier to these customers. In addition, we connect with our consumers directly through freestanding stores, e-commerce sites and social media to build a robust omnichannel experience that allows consumers to shop in these and other channels.
Marketing
Our strategy to market and promote our products begins with our well-diversified portfolio of distinctive brands across four major product categories. Our portfolio can be deployed in multiple distribution channels, key travel corridors and geographies and we continue to expand consumer coverage by participating in high-growth markets, channels, price tiers and media where the strength, awareness and desirability of our brands provide a competitive advantage. Our marketing approach reflects a consumer engagement model designed to support the long-term equity and desirability of our brands while driving consumer discovery, engagement and conversion across markets and channels. By placing the consumer at the center of every engagement and leveraging our category, geographic and channel diversity, we are able to expand our consumer coverage and reach consumers across developed and emerging markets with products, services and experiences designed for local relevance, inclusiveness and appeal with tailored experiences to local consumer preferences, cultural context and shopping behaviors. This strategy is built around “Bringing the Best to Everyone We Touch.”
Our founder, Mrs. Estée Lauder, formulated this unique marketing philosophy to provide “High-Touch” service and high-quality products as the foundation for a solid and loyal consumer base. We have further expanded our “High-Touch” execution to build more personalized consumer experiences through digital and physical demonstration and tailored trial-to-loyalty pathways with an integrated consumer engagement and marketing model across evolving physical and digital environments to support discovery, consideration, conversion and loyalty across our own and our retail partners' platforms.
Our marketing strategies vary by brand, local market and distribution channel. We have a diverse portfolio of brands, and we employ different engagement models suited to each brand’s core consumer, equity, distribution, product focus, and local relevance.
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Hero products are at the core of our brand marketing strategies. They are the pillars of our brands and historically have provided strong results through high repeat sales and consumer loyalty. In addition to continuing to retain existing consumers, we are also strategically focused on attracting new consumers. Our hero products provide an opportunity for new consumers to experience our high quality products, driving consumer traffic across all channels of distribution. We aim to further strengthen our hero products, and create new ones, through continuous review of our product portfolio and creation of breakthrough, on-trend and commercial innovation that delivers fast-to-market products across prestige price tiers focused on in-demand subcategories, benefits, and occasions.
Our marketing planning approach focuses on maximizing the visibility, effectiveness and efficiency of our marketing and advertising investments across the consumer journey to accelerate new consumer acquisition. We leverage our deep category understanding and consumer intelligence and local insights to optimize allocation of resources across different media outlets and retail touch points to resonate with our most discerning consumers most effectively. This approach includes strategically deploying our brands and tailoring product assortments and communications to fit local tastes and preferences in markets and cities, and also using these insights to develop new ways to innovate, engage consumers, build brand equity and sell products. We deploy integrated marketing and media programs designed to both generate and optimize consumer demand and capture purchase intent across physical and digital environments. Our approach seeks to accelerate the impact of brand-building activities through broad reach media such as print, television and out-of-home advertising, to increase top-of mind awareness, engagement and long-term brand equity and desirability. Meanwhile, we seek to drive efficiencies with data, technology and precision of our performance and digital marketing activities, as well as leverage creator and influencer partnerships and optimize search environments and retail media networks, to better support discovery, conversion and loyalty across digital and social platforms. Together, these activities enable a full-funnel marketing approach that connects brand storytelling, consumer engagement, search and discovery, commerce and loyalty across our own platforms and those of our retail partners to meet evolving consumer shopping behaviors. Our One ELC Operating Model and unified global media model create a new enterprise operating system for growth. Powered by a single global partner and an enterprise-led approach to media planning and buying, this model unlocks greater scale, precision, and impact, thus strengthening our ability to generate and capture demand while improving media effectiveness, efficiency, and agility across markets.
As prestige beauty discovery increasingly occurs across social platforms, creator ecosystems, digital marketplaces and retailer platforms, search engines and emerging LLMs (large language models), we continue to invest in capabilities that improve the visibility, relevance and performance of our brands in these environments. This includes strengthening content, product information, digital merchandising, search optimization and media activation across both our own channels and those of our authorized retail partners. We are leveraging artificial intelligence (“AI”) to enhance personalization at scale, increase speed to market and reduce costs across the marketing value chain. As examples, we leverage AI and related technologies to help identify trends and insights, inform campaign development, test and optimize creative content, generate selected marketing content, improve targeting and search visibility, and optimize media planning and measurement. We collaborate with a range of expert partners across technology, media, creative services, commerce and data analytics. These partnerships help expand our capabilities, accelerate innovation, enable agility, and drive efficiency, while leveraging human expertise and technology to enhance the consumer experience. We also anticipate and monitor emerging platforms, balancing speed to market with brand protection to ensure readiness while safeguarding brand equity.
Promotional activities, in-store displays, digital merchandising and sampling programs are designed to attract new consumers, build demand and loyalty and introduce existing consumers to other product offerings from the respective brands. Our marketing efforts also benefit from cooperative advertising programs with some retailers, some of which are supported by coordinated promotions, such as sampling programs, including purchase with purchase and gift with purchase. Sampling is a key promotional activity as it allows consumers to experience product quality and perceived benefits directly, and as such sample products are very effective inducements to purchases by new and existing consumers. Our marketing and sales executives spend considerable time in the field meeting with consumers, retailers, beauty advisors and makeup artists at the points of sale to enable us to offer a seamless and consistent brand experience across distribution channels.
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Information Technology
Information technology, including operational technology and our websites, is a key enabler of all aspects of our business, from research and development, manufacturing and distribution, to marketing, sales and order processing, consumer experiences as well as finance and human resources. We continue to make strategic investments to align with our long-term strategy of maintaining and enhancing our information technology and cybersecurity infrastructure, keeping pace with cyber threat actors and our evolving business needs. We are focused on optimizing adoption of such investments to maximize return on investment and realized value. The modernization and simplification of our information technology ecosystem remains a key focus, as we increasingly leverage the benefits of the cloud and as the organization transforms, including through the leveraging of external organizations.
We recognize information technology presents opportunities for competitive advantage, and we continue to invest in new capabilities and the use of emerging technologies, including investments in AI, across various aspects of our business. As an example, this includes the strategic utilization of data to provide better visibility into consumer trends, to increase responsiveness in our product development.
Research and Development
We believe we are an industry leader in the development of new products, and strive to deliver breakthrough, on-trend and commercial innovation to consumers around the world. Our research and innovation team, which includes scientists, engineers, analysts, and other employees involved in product and packaging innovation, works closely with our marketing and product development teams, as well as external partners in certain cases, to develop new products and product-line extensions, improve, redesign or reformulate existing products, generate new technologies, design new testing methods, identify new materials and create new packaging concepts. In addition, these research and innovation personnel provide ongoing technical assistance and know-how to quality assurance and manufacturing personnel on a worldwide basis, to ensure consistent global standards for our products and to deliver environmentally responsible products that meet or exceed consumer expectations. The research and innovation team has research-based working relationships with several U.S. and international dermatology and medical institutions, research universities and educational facilities, which supplement internal capabilities. Members of the research and innovation team are also responsible for product safety, registration and regulatory compliance matters.
Our research and development costs totaled $278 million, $316 million and $360 million in fiscal 2026, 2025 and 2024, respectively, and are expensed as incurred. As of June 30, 2026 and 2025, we had approximately 1,000 and 1,100 employees, respectively, engaged in research and development activities. We maintain research and development programs at certain of our principal facilities and facilities dedicated to performing research and development, see Item 2. Properties.
Manufacturing, Warehousing and Raw Materials
We manufacture our products primarily in our own facilities in Belgium, Canada, Japan, Switzerland, the United Kingdom and the United States, and we also leverage global third-party manufacturing networks. We continue to evaluate our manufacturing facilities and processes and identify sourcing opportunities to improve innovation, increase efficiencies, minimize our impact on the environment, ensure supply sufficiency, reduce costs and adjust our operations to respond to external challenges (e.g., geopolitical conditions including tariffs). Our plants are modern, and our manufacturing processes are substantially automated. While we believe our manufacturing network of internal and external sites is sufficient to meet current and reasonably anticipated increased requirements, we continue to implement improvements in capacity, technology, and productivity and align our manufacturing with regional sales demand to be more agile. From time to time, demand changes may challenge our capacity for certain subcategories on a short-term basis, but we believe these changes will not impact our ability to meet our long-term strategic objectives.
We have established a flexible global distribution network that is designed to meet the changing demands of our customers while maintaining service levels. We are continuously evaluating and adjusting this physical distribution network, particularly as we work to anticipate and respond to shifts in channel and consumer preferences, external challenges (e.g., geopolitical conditions including tariffs), as well as identifying opportunities to increase efficiencies and reduce costs. We have established regional and local distribution centers, including those maintained by third parties, strategically positioned throughout the world in order to facilitate efficient delivery of our products to our customers and consumers.
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As discussed above, we continue to focus on social impact and sustainability across our operations. Focus areas include employee health and safety and minimizing our impact on the environment. This is achieved, in part, through our Environmental and Safety Management System, our system of health and safety policies and procedures, which is continually being enhanced and evolved. Additionally, we invest in our equipment, facilities and people to drive injury prevention and to enhance the work environment through continuous improvement of safe practices and capabilities. We also engage in initiatives to support and deliver our sustainability goals and reduce our impact on the environment. Environmental efforts include waste reduction, reducing industrial waste to landfills, reduced water withdrawal, investments in renewable energy sources and packaging that incorporates recyclable and recycled content.
The principal raw materials used in the manufacture of our products are essential oils, alcohols and specialty chemicals. We also purchase packaging components that are manufactured to our design specifications. Procurement of materials for all manufacturing facilities is generally made on a global basis through our Global Supplier Management function. We also partner with an extensive network of third-party manufacturers that help us access innovation and capacity. We review our supplier base periodically with the specific objectives of improving quality, increasing innovation and speed-to-market, ensuring supply sufficiency and reducing costs. In addition, we focus on supply sourcing within the region of manufacture to allow for improved supply chain efficiencies, lead-time reduction and reduced emissions.
Some current product supply chains include single-source materials from key partners; however, we believe we have a robust business continuity strategy, sophisticated capacity planning tools and strategic inventory buffer and multi-sourcing solutions. In the past, we have been able to obtain an adequate supply of essential raw materials and packaging components for virtually all materials used in the production of our products. From time to time, we may experience supply disruptions on a short-term basis, but we currently believe we have adequate resources of supply and our portfolio of suppliers has the resources and facilities to overcome most unforeseen interruptions of supply.
We are continually benchmarking the performance of our supply chain, and we augment our supply base and adjust our distribution networks and manufacturing plants and networks based upon the changing needs of the business and external challenges as previously mentioned. Additionally, in connection with our Profit Recovery and Growth Plan (“PRGP”), we have, and are continuing to focus on our levels of excess inventory and obsolescence and cost efficiencies within our global supply chain network. As we integrate acquired brands, we continually seek new ways to leverage our production and sourcing capabilities to improve our overall supply chain performance.
Competition
There is significant competition within each market where our skin care, makeup, fragrance and hair care products are sold. Brand recognition, product quality and effectiveness, distribution channels, accessibility, and price point are some of the factors that impact consumers’ choices among competing products and brands. There continues to be interest and awareness from our customers and consumers in responsibly-sourced ingredients and environmentally sustainable products, and we believe we are well-positioned to benefit from these preferences due to our social impact and sustainability efforts. Marketing, merchandising, in-store and online experiences and demonstrations, and new product innovations also have an impact on consumers’ purchasing decisions.
We compete against a number of global and local companies. Some of our competitors are large, well-known, multinational manufacturers and marketers of skin care, makeup, fragrance and hair care products, most of which market and sell their products under multiple brand names. Our competitors include L’Oreal S.A.; Unilever PLC; Procter & Gamble Co.; LVMH Moët Hennessey Louis Vuitton SE; Chanel Limited; Beiersdorf AG; Shiseido Company, Limited; Coty Inc.; and Puig Brands, S.A. We also face competition from a number of independent brands (“Indie Brands”), some of which are backed by private-equity investors, as well as some retailers that have their own beauty brands. Certain of our competitors also have ownership interests in retailers that are customers of ours.
Trademarks, Patents and Copyrights
We own the trademark rights used in connection with the manufacturing, marketing, distribution and sale of our products in the United States, China and in the other principal markets where such products are sold, including Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, TOM FORD, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, The Ordinary, NIOD, Avestan and Loopha. We are the exclusive worldwide licensee for fragrances, cosmetics, skin care and/or related products for AERIN, Balmain, and Dr. Andrew Weil. For further discussion on license arrangements, including their duration, see Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies – Royalty Fees - License Arrangements. We protect our trademarks in the United States, China and other principal markets worldwide. We consider the protection of our trademarks to be important to our business.
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A number of our products incorporate patented, patent-pending or proprietary technology. In addition, several products and packaging for such products are covered by design patents or copyrights. While we consider these patents and copyrights, and the protection thereof, to be important, no single patent or copyright, or group of patents or copyrights, is considered material to the conduct of our business.
Human Capital
We strive to operate responsibly and to build a sustainable business based on uncompromising ethics and integrity, consistent with our Company values. We view human capital management and the strength of our employees as integral to the long-term success and resilience of our business.
Our Board of Directors and its committees provide oversight to management on a range of human capital matters, including inclusion, health and safety, and compensation and benefits.
As of June 30, 2026 and 2025, we had approximately 55,000 and 57,000 employees worldwide, respectively, including approximately 35,000 demonstrators at points of sale who are employed by us as of June 30, 2026 and 2025. At June 30, 2026, approximately 69% of our global employees were full-time, approximately 17% were temporary and approximately 14% were part-time employees, with approximately 26% of our global employees located in the United States and approximately 74% located outside of the United States. As of June 30, 2026, approximately 81% of our employees were female and 19% were male, and approximately 63% of our employees at the level of Vice President and above were female and 37% were male. We have no employees in the United States that are covered by a collective bargaining agreement. A limited number of employees outside of the United States are covered by works council agreements or other syndicate arrangements.
Our human capital management includes the following strategic areas:
Building a Strong Culture of Belonging
We remain committed to our values and support an inclusive environment for all of our employees by encouraging a culture of fairness, equal access to opportunities and ongoing learning and growth. Our objective in creating a culture of belonging is to enhance our ability to attract and retain the best talent globally and promote an environment where employees are motivated to succeed. By maintaining an environment of inclusion and belonging, we are better equipped to create innovative products and services as we continually strive to meet the evolving needs of our global consumers.
We are proud of our history of driving awareness and acceptance around the world and for standing up for the rights of all individuals, in the workplace and beyond.
Talent Recruitment, Retention, Learning and Development
Hiring, retaining and developing the best talent globally is key to our success. Our talent strategy is focused on building organization capability, employee engagement, internal talent movement and career development, succession planning and building leadership at various levels across the organization, while recognizing and rewarding high-performance. Our investments include programs and tools to equip our employees with the right skillsets and knowledge, including through training and development programs that are focused on strengthening leadership and professional skills at various stages of an employee's career, as well as opportunities to gain on-the-job development and experiences through short-term and long-term projects and networking across brands, functions and regions. Additionally, our Grow Your Skills programming and Emerging Leaders Programs are core tenants that drive continuous development across our learning culture.
To enhance our culture and measure our human capital efforts, we regularly engage with our employees and provide several mechanisms for our employees to provide their feedback. Based on our review of employee survey results, action plans are implemented by leadership to enhance the employee experience and drive alignment with our overall human capital strategy. We believe these programs and opportunities create a pipeline of skilled talent and leadership, necessary to drive and deliver on our long-term strategy in an ever changing business environment.
Our “Internal First” hiring approach prioritizes qualified internal candidates for eligible full-time roles before external recruitment, reflecting our commitment to developing, retaining and strategically deploying talent across the enterprise. This strategy enhances career progression, strengthens leadership pipelines and preserves institutional knowledge, while enabling targeted upskilling to meet evolving business priorities across brands, regions and functions. We believe this approach supports employee engagement, succession readiness and long-term organizational resilience.
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Health and Safety
We are committed to providing a healthy and safe workplace for our employees. We establish and update safety policies and procedures, train employees on our safety guidelines and local requirements, and seek to create a culture focused on well-being and safety through ongoing communication, awareness and engagement.
Employee Rewards
We offer competitive compensation and benefit packages to attract, motivate and retain world-class talent, and we are committed to fair pay across the organization.
To support the health and well-being of our employees, our competitive benefit packages may include, depending upon position and location, pension and post-retirement benefit plans, health and wellness benefits, flexible working arrangements, parental (maternal and paternal) leave and support programs, adoption assistance and education-related benefits.
Volunteerism and Community Engagement
We support volunteer efforts by our employees as our long-term success can benefit from the vitality of the communities where we have a presence. This is done through our ELC Good Works program, our global charitable and volunteerism program which allows eligible employees to create and participate in volunteer activities, with their cash donations matched by the Company and volunteer hours rewarded through additional cash donations by the Company.
Government Regulation
We and our products are subject to regulation by numerous federal, state, local and international regulatory authorities and the regulatory authorities in the countries in which our products are produced or sold. Such laws and regulations relate to a wide range of matters including ingredients, manufacturing, labeling, packaging, marketing, advertising, transport and the sale, disposal and safety of our products, as well as environmental matters. We rely on legal and operational compliance programs, as well as in-house and outside counsel, to guide our businesses in complying with applicable laws and regulations.
Seasonality
Our results of operations in total, by product category and geographic region, are subject to seasonal fluctuations, with net sales in the first half of the fiscal year typically being slightly higher than in the second half of the fiscal year. The higher net sales that we typically recognize in the first half of the fiscal year are attributable to the increased levels of purchasing by consumers for special events and by retailers for holiday selling seasons. Fluctuations in net sales and operating results in total and by product category and geographic region in any fiscal quarter may be attributable to the level and scope of new product introductions or the particular retail calendars followed by our customers that are retailers, which may impact their order placement and receipt of goods. Additionally, gross margins and operating expenses are impacted on a quarter-by-quarter basis by holiday and key shopping moments, as well as variations in our launch calendar and the timing of promotions, including purchase with purchase and gift with purchase promotions.
Availability of Reports
We make available financial information, news releases and other information on our website: www.elcompanies.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports, as well as any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge via the EDGAR database at www.sec.gov or our website, as soon as reasonably practicable after we file such reports and amendments with, or furnish them to, the U.S. Securities and Exchange Commission.
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Corporate Governance Guidelines and Code of Conduct
The Board of Directors has developed corporate governance practices to help it fulfill its responsibilities to stockholders in providing general direction and oversight of management. These practices are set forth in our Corporate Governance Guidelines. We also have a Code of Conduct (“Code”) applicable to all employees, officers and directors of the Company, including the Chief Executive Officer, the Chief Financial Officer and other senior financial officers. These documents and any waiver of a provision of the Code granted to any senior officer or director or any material amendment to the Code may be found in the “Investors” section of our website: www.elcompanies.com under the heading “Corporate Governance.” The charters for the Audit Committee, Compensation Committee and Nominating and ESG Committee may be found in the same location on our website.
Information about our Executive Officers*
| Name and Title | Age | Business Experience in the Past Five Years** | ||||||||||||
Michael Bowes Executive Vice President, Chief People Officer | 55 | Executive Vice President, Chief People Officer (since April 2025); Senior Vice President, Global Talent (July 2019 to March 2025) | ||||||||||||
Roberto Canevari Executive Vice President, Chief Value Chain Officer | 60 | Executive Vice President, Chief Value Chain Officer (since April 2025); Executive Vice President, Global Supply Chain (April 2021 to March 2025) | ||||||||||||
Stéphane de La Faverie President and Chief Executive Officer and a Director | 52 | President, Chief Executive Officer and a Director (since January 2025); Executive Group President (September 2022 to December 2024); Group President, The Estée Lauder Companies and Global President Estée Lauder and AERIN Beauty (July 2020 to August 2022) | ||||||||||||
Jane Hertzmark Hudis Executive Vice President, Chief Brand Officer | 66 | Executive Vice President, Chief Brand Officer (since April 2025); Executive Group President (July 2020 to March 2025) | ||||||||||||
Rashida La Lande Executive Vice President and General Counsel | 52 | Executive Vice President and General Counsel (since August 2024) Prior to joining the Company in 2024, she served as Executive Vice President and Chief Legal and Corporate Affairs Officer (December 2023 to August 2024), Executive Vice President, Global General Counsel, and Chief Sustainability and Corporate Affairs Officer (December 2021 to December 2023), Corporate Secretary (2018 to May 2022), and Senior Vice President, Global General Counsel and Head of ESG and Government Affairs (2018 to December 2021) at The Kraft Heinz Company, a manufacturer and marketer of food and beverage products | ||||||||||||
René Lammers Executive Vice President, Chief Research and Innovation Officer | 61 | Executive Vice President, Chief Research & Innovation Officer (since October 2025) Prior to joining the Company in 2025, he served as Executive Vice President & Chief Science Officer (March 2019 to September 2025) at PepsiCo, Inc., a global beverage and convenient food company | ||||||||||||
Ronald S. Lauder Chairman of Clinique Laboratories, LLC | 82 | Chairman of Clinique Laboratories, LLC | ||||||||||||
Akhil Shrivastava Executive Vice President and Chief Financial Officer | 53 | Executive Vice President and Chief Financial Officer (since November 2024); Senior Vice President, Corporate Controller (July 2024 to October 2024); Senior Vice President and Treasurer (December 2020 to June 2024) | ||||||||||||
Meridith Webster Executive Vice President and Chief Communications and Public Affairs Officer | 50 | Executive Vice President and Chief Communications and Public Affairs Officer (since April 2025); Executive Vice President, Global Communications and Public Affairs (May 2021 to March 2025) | ||||||||||||
*As of August 12, 2026
**All of the executive officers named above have been employees of the Company for more than five years, with the exception of Rashida La Lande and René Lammers.
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Item 1A. Risk Factors.
There are risks associated with an investment in our securities. Please consider the following risks and all of the other information in this annual report on Form 10-K and in our subsequent filings with the U.S. Securities and Exchange Commission (“SEC”). Our business may also be adversely affected by risks and uncertainties not presently known to us or that we currently believe to be not material. If any of the events contemplated by the following discussion of risks should occur or other risks arise or develop, our business, which includes (a) our prospects, (b) our financial condition, (c) our results of operations, (d) our reputation, and (e) the trading prices of our securities, may be adversely affected.
Risks related to our Business and our Industry
The beauty business is highly competitive, and if we are unable to compete effectively our business will suffer.
We face vigorous competition from companies throughout the world, including multinational consumer product companies. Some competitors have greater resources than we do, others are newer companies (such as Indie Brands, some of which are backed by private-equity investors), and some are competing in distribution channels where we are less represented. The beauty business can change rapidly due to consumer preferences and industry trends. In some cases, we may not be able to respond to changing business and economic conditions as quickly as our competitors. Competition in the beauty business is based on a variety of factors including pricing of products, innovation, perceived value, service to the consumer, promotional activities, advertising, special events, new product introductions, and e-commerce initiatives, including the ability to effectively leverage existing and emerging digital technologies, such as AI and data analytics, to gain more commercial insights and develop relevant marketing concepts and advertising to reach consumers. It is difficult for us to predict the timing and scale of our competitors’ actions in these areas.
Our ability to compete also depends on the continued strength of our brands, our ability to attract and retain key talent and other personnel, the efficiency of our manufacturing and distribution network, and our ability to maintain and protect our intellectual property and those other rights used in our business.
Our Company has a well-recognized and strong reputation and our ability to maintain our reputation is critical to our business. Our reputation could be negatively impacted by social media and many other factors, including, given the legal, regulatory and ethical landscape around the use of AI, our ability to adapt and use the emerging technology in an effective and ethical manner.
If our reputation is adversely affected, our ability to attract and retain customers, consumers and employees could be impacted. In addition, certain of our key retailers around the world market and sell competing brands or are owned or otherwise affiliated with companies that market and sell competing brands. Our inability to continue to compete effectively in key countries around the world (e.g., China or the United States) could have a material adverse effect on our business.
Our inability to anticipate and respond to market trends and changes in consumer preferences could adversely affect our business.
Our success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to changes in consumer preferences for skin care, makeup, fragrance and hair care products, attitudes toward our industry and brands, as well as to where and how consumers shop. We must continually work to develop, manufacture and market new products, maintain and adapt our selling, advertising, promotional and other consumer engagement activities to existing and emerging distribution channels, maintain and enhance the recognition of our brands, achieve a favorable mix of products, successfully manage our inventories, and modernize and refine our approach as to how and where we market and sell our products. We recognize consumer preferences cannot be predicted with certainty and can change rapidly, driven by the use of digital and social media by consumers and the speed by which information and opinions are shared. If we are unable to anticipate and respond to challenges that we may face in the marketplace, trends in the market for our products and changing consumer demands and sentiment, our business will suffer. In addition, from time to time, sales growth or profitability may be concentrated in a relatively small number of our brands, channels and/or countries. If such a situation persists or one or more brands, channels or countries fails to perform as expected, there could be a material adverse effect on our business.
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In certain key markets, such as the United States, we have seen a longer-term decline in retail traffic in our department store customers. Consolidation, liquidation or other changes in the retail trade, from these or other factors, may result in us becoming increasingly dependent on key retailers and could result in an increased risk related to the concentration of our customers. A severe, adverse impact on the business operations of our customers, including changes to the markets or channels in which our products are sold, could have a corresponding material adverse effect on us. If one or more of our largest customers change their strategies (including pricing or promotional activities), enter bankruptcy (or similar proceedings) or if our relationship with any large customer is changed or terminated for any reason, there could be a material adverse effect on our business.
Our future success depends, in part, on our ability to achieve our long-term strategy.
Achieving our long-term strategy will require investment in new capabilities, brands, categories, distribution channels, supply chain facilities, technologies, including AI and data analytics, and emerging and more mature geographic markets. These investments may result in short-term costs without any current sales and, therefore, may be dilutive to our earnings. In addition, we may dispose of or discontinue select brands or streamline operations and incur costs, inclusive of restructuring and other charges, in doing so. Although we believe our strategy will lead to long-term growth in sales and profitability, we may not realize the anticipated benefits. The failure to realize benefits, which may be due to our inability to execute plans, global or local economic conditions, competition, changes in the beauty industry and the other risks described herein, could have a material adverse effect on our business.
Acquisitions, divestitures and other strategic actions may expose us to additional risks.
We continuously review acquisition and strategic opportunities that would expand our current product offerings, our distribution channels, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities. There can be no assurance we will be able to identify these strategic actions, be the successful bidder, and consummate such transactions on favorable terms, or otherwise realize the full intended benefit of such transactions. In addition, we periodically review our brand portfolio, and our strategy includes potential divestitures of certain brands as we rationalize product offerings.
Acquisitions including strategic investments or other activities entail numerous risks, which may include: (i) difficulties in integrating acquired operations or products, including the loss of key employees from, or customers, consumers or suppliers of, acquired businesses; (ii) diversion of management’s attention from our existing businesses; (iii) adverse effects on existing business relationships with suppliers, customers and consumers of ours or the companies in which we invest; (iv) adverse impacts of margin and product cost structures different from those of our current mix of business; (v) reputational risks associated with the activities of the businesses that we acquire or in which we invest; and (vi) risks of entering distribution channels, categories or markets in which we have limited or no prior experience.
In addition, the assumptions we use to evaluate acquisition opportunities have in the past, and may in the future, prove to be inaccurate, and intended benefits may not be realized. If required, any financing for these transactions would result in an increase in our indebtedness, dilute the interests of our stockholders or both. The purchase price for some acquisitions may include additional amounts to be paid in cash in the future, a portion of which may be contingent on the achievement of certain future operating results of the acquired business. If the performance of any such acquired business exceeds such operating results, then we may incur additional charges and be required to pay additional amounts.
Completed acquisitions typically result in additional goodwill and/or an increase in other intangible assets on our balance sheet. We are required at least annually, or as facts and circumstances exist, to test goodwill and other intangible assets with indefinite lives to determine if impairment has occurred, as well as assess the recoverability of other intangible assets, and have recorded goodwill and other intangible asset impairment charges as required. We cannot accurately predict the amount and timing of any impairment of assets. Should the value of goodwill or other intangible assets become impaired, there could be a material adverse effect on our business.
Our failure to achieve the long-term plan for acquired businesses, as well as any other adverse consequences associated with our acquisition, divestiture and strategic activities, could have a material adverse effect on our business.
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Our business could be negatively impacted by social impact and sustainability matters.
There continues to be focus from certain investors, customers, consumers, regulators, employees, and other stakeholders regarding social impact, sustainability, and other environmental, social and governance ("ESG") matters. From time to time, we announce certain initiatives, including goals and commitments, regarding our focus areas, including environmental and climate matters; packaging; sourcing; product formulation; social investments; and inclusion. We could fail, or be perceived to fail, in our achievement of such initiatives, or in accurately reporting our progress on such initiatives. Such failures could be due to changes in our business (e.g., shifts in business among distribution channels or acquisitions). Moreover, the standards by which these efforts are measured are developing and evolving, often rely on methodologies, standards and data that are subject to varying interpretations, and certain areas are subject to assumptions that could change over time. In addition, we could be criticized for the scope of our initiatives or goals by stakeholders who support these initiatives or those that oppose them. In addition, we could be perceived as not acting responsibly in connection with these matters. Any such matters, or related ESG matters, could have a material adverse effect on our business.
We use AI, and challenges with properly managing its use could have an adverse impact on our business.
We are using AI solutions, including machine learning and generative AI tools, to assist in the development of our products, engage with consumers, and in the use of internal tools that support our business. These applications are becoming increasingly important in our operations over time. This emerging technology presents risks inherent in its use, including risks related to harmful content, inaccuracies, hallucinations, bias or discrimination, and intellectual property infringement. In addition, the use of AI may increase cybersecurity and data privacy risks, such as intended, unintended, or inadvertent access to, transmission, or leakage of proprietary or sensitive information. These risks may become more pronounced as organizational reliance on AI increases. No assurance can be made that the usage of AI will assist us in being more efficient in all cases. Our competitors or other third parties may incorporate AI into their business, services, and products more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our business. The technologies underlying AI and their use cases are rapidly developing, and it is not possible to predict all the legal, reputational, operational or technological risks related to the use of AI. While new AI initiatives, laws, and regulations are emerging and evolving, uncertainty will remain, and our obligation to comply with the evolving regulatory landscape could entail significant costs, negatively affect our business, or limit our ability to incorporate certain AI capabilities into our business.
A general economic downturn, or disruption in business conditions may adversely affect our business including consumer purchases of discretionary items and/or the financial strength of our customers that are retailers.
The general level of consumer spending is affected by many factors, including general economic conditions, inflation, interest rates, energy costs, and consumer confidence and sentiment generally, all of which are beyond our control. Many of our products may be considered discretionary items for consumers, and consumer purchases of discretionary items tend to decline during recessionary periods, when disposable income is lower, and may impact sales of our products. A decline in consumer purchases of discretionary items also tends to impact our customers that are retailers. We generally extend credit to a retailer based on an evaluation of its financial condition, usually without requiring collateral. However, the financial difficulties of a retailer could cause us to curtail or eliminate business with that customer. We may also assume more credit risk relating to the receivables from that retailer. In the event of a retailer liquidation, we may incur additional costs if we choose to purchase the retailer’s inventory of our products to protect brand equity. Our inability to collect receivables from our largest customers or from a group of customers could have a material adverse effect on our business.
In addition, disruptions in local or global business conditions, for example, from events such as a pandemic or other health issues, geopolitical or local conflicts, civil unrest, terrorist attacks, adverse weather conditions, climate changes or seismic events, can have a short-term and, sometimes, long-term impact on consumer spending.
Events that impact consumers’ willingness or ability to travel or purchase our products while traveling may impact our business, including travel retail, a significant contributor to our overall results, and our strategy to market and sell products to international travelers at their destinations.
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A downturn in the economies of, or continuing recessions in, the countries where we sell our products or a disruption of business conditions in those countries could adversely affect consumer confidence and sentiment, the financial strength of our retailers and our sales and profitability. We are also cautious of foreign currency movements, including their impact on tourism. Additionally, we continue to monitor the effects of the global macroeconomic environment; social, political and human rights issues; regulatory matters, including the imposition of tariffs or sanctions; geopolitical tensions; and global security issues. For example, tariffs imposed on goods we import into the United States and/or tariffs on goods we import into other countries could have a material adverse effect on our business, as could geopolitical tensions involving countries that are key markets for us, or where we manufacture our products or source ingredients.
Volatility in the financial markets and a related economic downturn in key markets or markets generally throughout the world could have a material adverse effect on our business. While we typically generate significant cash flows from our ongoing operations and have access to global credit markets through our various financing activities, credit markets may experience significant disruptions. Deterioration in global financial markets or an adverse change in our credit ratings could make future financing difficult or more expensive. If any financial institutions that are parties to our revolving credit facilities or other financing arrangements, such as foreign exchange or interest rate hedging instruments, were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with us. This could leave us with reduced borrowing capacity or unhedged against certain foreign currency or interest rate exposures which could have a material adverse effect on our business.
Our success depends, in part, on the quality, efficacy and safety of our products.
Our success depends, in part, on the quality, efficacy and safety of our products. If our products are found to be defective or unsafe, our product claims are found to be deceptive, or our products otherwise fail to meet our consumers’ expectations, our relationships with customers or consumers could suffer, the appeal of our brands could be diminished, and we could lose sales and become subject to liability or claims, any of which could result in a material adverse effect on our business. In addition, counterfeit versions of some of our products may be sold by third parties, which may pose safety risks, may fail to meet consumers’ expectations, and may have a negative impact on our business. While we may take action to identify and remove counterfeit versions of our products from the market, these actions may not be successful.
Our success depends, in part, on our key personnel.
Our success depends, in part, on our ability to retain our key personnel, including our executive officers and senior management team. We have had, and may continue to have, changes to senior management and the composition of our Board of Directors, and we are still in the process of implementing a change in our organizational design, including through Beauty Reimagined and our Profit Recovery and Growth Plan (“PRGP”). Transition periods accompanying changes in leadership and changes due to business reorganization may result in uncertainty, impact business performance and strategies and retention of personnel. As we restructure our workforce from time to time, the risk of potential employment-related claims and disputes may also increase, resulting in potential reputational harm, costs, losses, and other liabilities. The unexpected loss of, or misconduct by, one or more of our key employees could adversely affect our business. Our success also depends, in part, on our continuing ability to identify, hire, train and retain personnel across all levels of our business. We may not be able to attract, assimilate or retain necessary personnel in the future, and our failure to do so could have a material adverse effect on our business. These risks may be exacerbated by the stresses associated with the implementation of our strategic plan and other initiatives, as well as by market conditions.
Competition for employees can be intense, and although many of our key personnel have signed non-compete agreements, it is possible that these agreements would be unenforceable, in whole or in part, in some jurisdictions, permitting employees in those jurisdictions to work for our competitors.
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We are subject to risks related to the global scope of our operations.
We operate on a global basis, and maintain offices across our geographic regions and have key operational facilities located inside and outside the United States that manufacture, warehouse or distribute goods for sale throughout the world. Our global operations are subject to many risks and uncertainties, including: (i) fluctuations in foreign currency exchange rates and the relative costs of operating in different places, which can affect our business, the value of our foreign assets, the relative prices at which we and competitors sell products in the same markets, the cost of certain inventory and non-inventory items required in our operations, and the relative prices at which we sell our products in different markets; (ii) foreign or U.S. laws, regulations and policies, including restrictions on trade, immigration and travel, operations, and investments; currency exchange controls; restrictions on imports and exports, including license requirements; tariffs; sanctions; and taxes; (iii) lack of well-established or reliable legal and administrative systems in certain countries in which we operate; (iv) adverse weather conditions and natural disasters; (v) concentration of sales growth or profitability in one or more countries; and (vi) social, economic and geopolitical conditions, such as a pandemic, terrorist attack, war or other military action. These risks could have a material adverse effect on our business.
A disruption in our operations, including supply chain, could adversely affect our business.
As a company engaged in manufacturing and distribution on a global scale, we are subject to the risks inherent in such activities. Such risks include industrial accidents, environmental events, strikes and other labor disputes, capacity constraints, disruptions in ingredient, material or packaging supply or availability of natural resources (e.g., water), global shortages, disruptions in supply chain or information technology, loss or impairment of key manufacturing or distribution sites or suppliers, product quality control, safety, increase in commodity prices and energy costs, licensing requirements and other regulatory issues, as well as natural disasters, outages due to fire, floods, power loss, telecommunications failures, break-ins and other events or external factors over which neither we nor our suppliers have control. If such an event were to occur, it could have a material adverse effect on our business.
We use a wide variety of direct and indirect suppliers of goods and services from around the world. Some of our products rely on a single or a limited number of suppliers. Changes in the financial or business condition of our suppliers could subject us to losses or adversely affect our ability to bring products to market. Further, the failure of our suppliers to deliver goods and services in sufficient quantities, in compliance with applicable standards, and in a timely manner could adversely affect our customer service levels and overall business. In addition, any increases in the costs of goods and services for our business may adversely affect our profit margins if we are unable to pass along any higher costs in the form of price increases or otherwise achieve cost efficiencies in our operations.
As we outsource functions and consolidate service providers, we become more dependent on the entities performing those functions and services.
As part of our long-term strategy, we are continually looking for opportunities to improve our essential business services, which includes finding ways to be more cost-effective and efficient. In some cases, this requires the outsourcing of functions or parts of functions that we believe can be performed more effectively by external service providers, as well as the consolidation of service providers to drive efficiencies. The failure of one or more such providers to deliver the expected services, provide them on a timely basis or to provide them at the prices or service levels that we expect, the failure of one or more of such providers to meet our performance standards and expectations, including with respect to data security, compliance with laws, disruptions arising from the transition of functions to an outsourcing provider or other service providers, or the costs incurred in returning these outsourced functions to being performed under our management and direct control, could have a material adverse effect on our business. In addition, when we transition to, from or between external service providers, we may experience challenges that could have a material adverse effect on our business.
Risks related to Legal and Regulatory Matters
Changes in laws, regulations and policies could adversely affect our business.
Our business is subject to numerous laws, regulations and policies around the world. Changes in these laws, regulations and policies, including the interpretation or enforcement thereof, that affect our business could adversely affect our business. These changes include accounting standards, as well as laws and regulations relating to tax matters, trade (including sanctions), data privacy (e.g., General Data Protection Regulation (GDPR)), cybersecurity, anti-corruption, advertising, marketing, manufacturing, distribution, customs matters, product registration, ingredients, chemicals, packaging, selective distribution, and environmental or climate change matters.
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Disputes and other legal or regulatory proceedings could adversely affect our business.
We are, and may in the future become, party to litigation, other disputes or regulatory proceedings across a wide range of matters, including ones relating to product liability matters (including asbestos-related claims), advertising, regulatory, labor and employment, pensions and benefits, intellectual property, real estate, environmental, trade relations (including tariffs and duties), securities, tax and privacy. In general, claims made by us or against us in litigation, disputes or other proceedings can be expensive and time consuming and could result in settlements, injunctions or damages that could significantly affect our business. We are mindful of the evolving litigation landscape related to asbestos-related claims, and continue to monitor trends in this area. It is not possible to predict the final resolution of the litigation, disputes or proceedings to which we currently are or may in the future become party to, and the impact of certain of these matters could have a material adverse effect on our business.
Government reviews, inquiries, investigations and actions could harm our business.
As we operate in various locations around the world, our operations are subject to governmental scrutiny and may be adversely impacted by the results of such scrutiny. The regulatory environment with regard to our business is evolving, and officials often exercise broad discretion in deciding how to interpret and apply applicable regulations. From time to time, we may receive formal and informal inquiries from various government regulatory authorities, as well as self-regulatory organizations, about our business and compliance with local laws, regulations or standards. Any determination that our operations or activities, or the activities of our employees, are not in compliance with existing laws, regulations or standards could negatively impact us in a number of ways, including the imposition of substantial fines, interruptions of business, loss of supplier, vendor or other third-party relationships, termination of necessary licenses and permits, or similar results, all of which could potentially harm our business. Regardless of the outcomes, these reviews, inquiries, investigations and actions could create negative publicity which could harm our business.
Risks related to Technology and Cybersecurity Matters
The compromise or interruption of, or damage to, our information technology (including our operational technology and websites) by cybersecurity incidents, data security breaches, other security problems, design defects or system failures could have a material negative impact on our business.
We rely on information technology that supports our business processes, including research and development, manufacturing and distribution, marketing, sales, order processing, consumer experiences, human resource management, finance and internal and external communications throughout the world. We have e-commerce and other Internet websites in the United States and many other countries. If our information technology does not function properly, or is not adequately supported or updated, it could adversely affect the Company’s business and operations.
We experience cybersecurity incidents of varying degrees on our information technology and, as a result, unauthorized parties have obtained in the past, and may obtain in the future, access to our systems and data (including unauthorized acquisition of such data). Such incidents have also caused, and may in the future cause, disruption to parts of our business operations and result in various expenses for investigation, remediation and other related matters.
Cybersecurity incidents at our Company have in the past resulted from, and may in the future result from, social engineering or impersonation of authorized users, and may also result from efforts to discover and exploit design flaws, bugs, security vulnerabilities or security weaknesses, intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage. In some instances, efforts to correct vulnerabilities or prevent incidents have in the past and may in the future reduce the functionality or performance of our information technology, which could negatively impact our business. Cybersecurity incidents can be caused by ransomware, distributed denial-of-service attacks, worms, and other malicious software programs or other attacks, including the covert introduction of malware to our information technology, and the use of techniques or processes that change frequently, may be disguised or difficult to detect, or are designed to remain dormant until a triggering event, and may continue undetected for an extended period of time. In addition, some of our suppliers, vendors, service providers, cloud solution providers and customers have in the past experienced, and may in the future experience, such incidents, which could in turn disrupt our business or compromise the security of our Company data. Our Company's continued expansion and reliance on third parties may further increase that risk. The evolution and adoption of emerging technologies, such as AI, may intensify cybersecurity risks as techniques used in cyberattacks and cybersecurity incidents continue to evolve and develop. Insurance policies that may provide coverage with regard to such events may not cover any or all of the resulting financial losses.
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As part of our normal business activities, we collect, maintain, transmit, store and otherwise process certain information that is confidential, proprietary or otherwise sensitive, including personal information of consumers, customers, suppliers, service providers and employees. We share some of this information with certain third parties who assist us with business matters. Moreover, the success of our operations depends upon the secure transmission of confidential, proprietary or otherwise sensitive data, including personal information, over networks. Any unauthorized access or data acquisition, despite security measures in place to protect such data, or other failure on the part of us or third parties to maintain the security of such data could result in business disruption, damage to our reputation, financial obligations to third parties, legal obligations, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also could result in deterioration in confidence in our Company and other competitive disadvantages, and thus could have a material adverse effect on our business.
In addition, a cybersecurity incident could require that we expend significant additional resources on remediation, restoration and enhancement of our information technology.
Risks related to our Securities and our Ownership Structure
The trading prices of our securities periodically may rise or fall based on the accuracy of predictions of our financial performance.
Our business planning process is designed to maximize our long-term strength, growth and profitability, not to achieve an earnings target in any particular fiscal quarter. We believe this longer-term focus is in the best interests of the Company and our stockholders. At the same time, however, we recognize it may be helpful to provide investors with guidance as to our expectations regarding certain aspects of our business. This could include forecasts of net sales, earnings per share and other financial metrics or projections. We assume no responsibility to provide or update guidance, and any longer-term guidance we may provide is based on goals we believe, at the time guidance is given, are reasonably attainable for growth and performance over a number of years. We historically have paid dividends on our common stock and repurchased shares of our Class A Common Stock; however, at times we have suspended the declaration of dividends and/or the repurchase of our Class A Common Stock. Going forward, at any time, we could stop, suspend or change the amounts of dividends or stop or suspend our stock repurchase program, and any such action could cause the market price of our stock to decline.
In all of our public statements when we make, or update, a forward-looking statement about our business, whether it be about net sales or earnings expectations or expectations regarding restructuring or other initiatives, or otherwise, we accompany such statements directly, or by reference to a public document, with a list of factors that could cause our actual results to differ materially from those we expect. Such a list is included, among other places, in our earnings press release and in our periodic filings with the SEC (e.g., in our reports on Form 10-K and Form 10-Q). These and other factors may make it difficult for us and for outside observers, such as research analysts, to predict what our earnings or other financial metrics, or business outcomes, will be in any given fiscal quarter or year.
Outside analysts and investors have the right to make their own predictions of our business for any future period. Outside analysts, however, have access to no more material information about our results or plans than any other public investor, and we do not endorse their predictions as to our future performance. Nor do we assume any responsibility to correct the predictions of outside analysts or others when they differ from our own internal expectations. If our actual results differ from those that outside analysts or others have been predicting, the market price of our securities could be affected. Investors who rely on the predictions of outside analysts or others when making investment decisions with respect to our securities do so at their own risk. We take no responsibility for any losses suffered as a result of such changes in the prices of our securities.
We are controlled by the Lauder family. As a result, the Lauder family has the ability to prevent or cause a change in control or approve, prevent or influence certain actions by us.
As of August 12, 2026, members of the Lauder family beneficially own, directly or indirectly, shares of the Company’s Class A Common Stock (with one vote per share) and Class B Common Stock (with 10 votes per share) having approximately 82% of the outstanding voting power of the Common Stock. In addition, four members of the Lauder family are on our Board of Directors. One other member of the Lauder family is an executive officer.
As a result of their stock ownership and positions at the Company, as well as our dual-class structure, the Lauder family has the ability to exercise significant control and influence over our business, including all matters requiring stockholder approval (e.g., the election of directors, amendments to the certificate of incorporation, and significant corporate transactions, such as a merger or other sale of our Company or its assets) for the foreseeable future. In addition, if significant stock indices decide to prohibit the inclusion of companies with dual-class stock structures, the price of our Class A Common Stock could be negatively impacted and could become more volatile.
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We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, are relying on exemptions from certain corporate governance requirements that are designed to provide protection to stockholders of companies that are not “controlled companies.”
The Lauder family and their related entities own more than 50% of the total voting power of our common shares and, as a result, we are a “controlled company” under the New York Stock Exchange corporate governance standards. As a controlled company, we are exempt under the New York Stock Exchange standards from the obligation to comply with certain New York Stock Exchange corporate governance requirements, including the requirements that (1) a majority of our board of directors consists of independent directors; (2) we have a nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and (3) we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
While we have voluntarily caused our Board of Directors to have a majority of independent directors and the written charters of our Nominating and ESG Committee and Compensation Committee to have the required provisions, we are not requiring our Nominating and ESG Committee and Compensation Committee to be comprised solely of independent directors. As a result of our use of the “controlled company” exemptions, investors will not have the same protection afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Risk Management and Strategy
Our enterprise risk management framework considers cybersecurity risk in conjunction with our other Company risks as part of the overall risk assessment process. Our enterprise risk management team collaborates with the cybersecurity function, led by the Chief Information Security Officer (“CISO”) , to gather their insights and risk mitigation strategies for managing cybersecurity threats. This integrated approach helps us assess, identify, and manage cybersecurity risks along with our other operational, financial and strategic risks, assisting in more effectively managing interdependencies among risks and enhancing risk mitigation strategies.
To evaluate and enhance our cybersecurity program, we periodically utilize third-party experts to undertake maturity assessments and security testing of the program.
We have also adopted a cybersecurity incident response plan that is designed to effectively identify, analyze, contain, remediate and eradicate, escalate, report, and appropriately document cybersecurity incidents. The plan also includes a materiality assessment framework that sets forth procedures and escalation protocols to support our assessment of whether a cybersecurity incident is material and subject to SEC reporting requirements. Such escalation protocols include the involvement of the CISO and other senior leaders across various functions, including finance, legal, privacy and global communications, as appropriate. We also maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of cybersecurity incidents.
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Governance
Item 2. Properties.
The following table sets forth our principal owned and leased manufacturing, assembly, research and development (“R&D”) and distribution facilities, some of which include contiguous office space, as well as our principal executive offices, as of August 12, 2026. The leases expire at various times through 2040 subject to certain renewal options.
| The Americas | EUKEM | Asia/Pacific(1) | Mainland China | ||||||||||||||||||||||||||||||||||||||||||||
| Owned | Leased | Owned | Leased | Owned | Leased | Owned | Leased | ||||||||||||||||||||||||||||||||||||||||
| Manufacturing | 2 | 2 | 4 | — | 1 | — | — | — | |||||||||||||||||||||||||||||||||||||||
| R&D | 1 | 3 | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||||||||||||||||
| Distribution | — | 6 | — | 3 | 1 | — | — | 1 | |||||||||||||||||||||||||||||||||||||||
| Manufacturing and R&D | 1 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Manufacturing and Assembly | — | 1 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Distribution and Manufacturing | — | — | 1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Principal Executive Offices | — | 1 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Total | 4 | 13 | 5 | 4 | 2 | — | — | 2 | |||||||||||||||||||||||||||||||||||||||
(1) These properties are generally included in the geographic region in which they are located, with the exception of our owned Distribution facility relating to our travel retail business, which is reported within our Asia/Pacific region.
Certain of our manufacturing facilities are utilized primarily for the production of products relating to particular product categories: four for skin care and makeup; three for skin care; two for makeup; two for skin care and fragrance; and one for hair care. As demand changes, certain of our manufacturing facilities can produce products from categories other than their primary category.
We consider our properties to be generally in good condition and believe our facilities are adequate for our operations and provide sufficient capacity to meet anticipated requirements.
Item 3. Legal Proceedings.
For a discussion of legal proceedings, see Item 8. Financial Statements and Supplementary Data – Note 16 – Commitments and Contingencies.
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Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market for Registrant’s Common Equity and Related Stockholder Matters
Our Class A Common Stock is publicly traded on the New York Stock Exchange under the symbol “EL.”
On August 18, 2026, a dividend was declared in the amount of $.35 per share on our Class A and Class B Common Stock. The dividend is payable in cash on September 15, 2026 to stockholders of record at the close of business on August 31, 2026. We expect to continue the payment of cash dividends in the future, but there can be no assurance as to the amounts of any dividends declared or that the Board of Directors will continue to declare them.
As of August 12, 2026, there were 3,143 record holders of Class A Common Stock and 14 record holders of Class B Common Stock.
Share Repurchase Program
We are authorized by the Board of Directors to repurchase shares of our Class A Common Stock in the open market or in privately negotiated transactions, depending on market conditions and other factors. The following table provides information relating to our repurchase of Class A Common Stock during the referenced periods:
| Period | Total Number of Shares Purchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares that May Yet Be Purchased Under the Program(2) | ||||||||||||||||||||||
| April 2026 | — | $ | — | — | 25,073,242 | |||||||||||||||||||||
| May 2026 | 577 | 79.44 | — | 25,073,242 | ||||||||||||||||||||||
| June 2026 | — | — | — | 25,073,242 | ||||||||||||||||||||||
| 577 | 79.44 | — | ||||||||||||||||||||||||
(1)Represents shares that were repurchased by the Company to satisfy tax withholding obligations upon the payout of certain stock-based compensation arrangements.
(2)The Board of Directors has authorized the current repurchase program for up to 256.0 million shares. The total amount was last increased by the Board on October 31, 2018. Our repurchase program does not have an expiration date.
Beginning in December 2022, we suspended the repurchase of shares of our Class A Common Stock under our publicly announced program. We may resume such repurchases in the future.
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Performance Graph
The following graph compares the cumulative five-year total stockholder return (stock price appreciation plus dividends) on the Company’s Class A Common Stock with the cumulative total return of the S&P 500 Index and the S&P 500 Consumer Staples Index. The returns are calculated by assuming an investment of $100 in the Class A Common Stock and in each index on June 30, 2021.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS
We manufacture, market and sell beauty products including those in the skin care, makeup, fragrance and hair care categories, which are distributed in approximately 150 countries and territories.
| Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
| Net sales | $ | 15,049 | 100.0 | % | $ | 14,326 | 100.0 | % | $ | 15,608 | 100.0 | % | ||||||||||||||||||||||||||
| Cost of sales | 3,687 | 24.5 | 3,729 | 26.0 | 4,424 | 28.3 | ||||||||||||||||||||||||||||||||
| Gross profit | 11,362 | 75.5 | 10,597 | 74.0 | 11,184 | 71.7 | ||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 9,685 | 64.4 | 9,456 | 66.0 | 9,621 | 61.6 | ||||||||||||||||||||||||||||||||
| Restructuring and other charges | 813 | 5.4 | 481 | 3.4 | 122 | 0.8 | ||||||||||||||||||||||||||||||||
| Securities class action litigation settlement | 84 | 0.6 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Goodwill impairment | — | — | 13 | 0.1 | 291 | 1.9 | ||||||||||||||||||||||||||||||||
Impairment of other intangible assets | — | — | 1,273 | 8.9 | 180 | 1.2 | ||||||||||||||||||||||||||||||||
Talcum litigation settlement agreements | — | — | 159 | 1.1 | — | — | ||||||||||||||||||||||||||||||||
| Total operating expenses | 10,582 | 70.3 | 11,382 | 79.4 | 10,214 | 65.4 | ||||||||||||||||||||||||||||||||
| Operating income (loss) | 780 | 5.2 | (785) | (5.5) | 970 | 6.2 | ||||||||||||||||||||||||||||||||
| Interest expense | 334 | 2.2 | 357 | 2.5 | 378 | 2.4 | ||||||||||||||||||||||||||||||||
| Interest income and investment income, net | 90 | 0.6 | 114 | 0.8 | 167 | 1.1 | ||||||||||||||||||||||||||||||||
| Other components of net periodic benefit cost | 19 | 0.1 | 12 | 0.1 | (13) | (0.1) | ||||||||||||||||||||||||||||||||
| Earnings (loss) before income taxes | 517 | 3.4 | (1,040) | (7.3) | 772 | 4.9 | ||||||||||||||||||||||||||||||||
| Provision for income taxes | 335 | 2.2 | 93 | 0.6 | 363 | 2.3 | ||||||||||||||||||||||||||||||||
| Net earnings (loss) | 182 | 1.2 | (1,133) | (7.9) | 409 | 2.6 | ||||||||||||||||||||||||||||||||
Net earnings attributable to redeemable noncontrolling interest | — | — | — | — | (19) | (0.1) | ||||||||||||||||||||||||||||||||
| Net earnings (loss) attributable to The Estée Lauder Companies Inc. | $ | 182 | 1.2 | % | $ | (1,133) | (7.9) | % | $ | 390 | 2.5 | % | ||||||||||||||||||||||||||
Percentages not adjusted for differences caused by rounding | ||||||||||||||||||||||||||||||||||||||
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The following table is a comparative summary of operating results for fiscal 2026, 2025 and 2024, for our product categories and geographic regions and reflects the basis of presentation described in Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies and Note 23 – Segment Data and Related Information, for our product categories that meet the definition of reportable segments, for all periods presented. Royalty revenue from license arrangements, and products and services that do not fit within our definitions of skin care, makeup, fragrance and hair care have been included in the “other” category.
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| NET SALES | ||||||||||||||||||||
| By Product Category: | ||||||||||||||||||||
| Skin Care | $ | 7,338 | $ | 6,962 | $ | 7,908 | ||||||||||||||
| Makeup | 4,276 | 4,205 | 4,470 | |||||||||||||||||
| Fragrance | 2,779 | 2,491 | 2,487 | |||||||||||||||||
| Hair Care | 565 | 565 | 629 | |||||||||||||||||
| Other | 103 | 100 | 115 | |||||||||||||||||
| 15,061 | 14,323 | 15,609 | ||||||||||||||||||
Returns associated with restructuring and other activities(1) | (12) | 3 | (1) | |||||||||||||||||
| Net sales | $ | 15,049 | $ | 14,326 | $ | 15,608 | ||||||||||||||
By Geographic Region(2): | ||||||||||||||||||||
| The Americas | $ | 4,463 | $ | 4,410 | $ | 4,579 | ||||||||||||||
| Europe, the United Kingdom and Ireland and Emerging Markets ("EUKEM") | 3,794 | 3,566 | 3,539 | |||||||||||||||||
| Asia/Pacific | 3,746 | 3,606 | 4,587 | |||||||||||||||||
| Mainland China | 3,058 | 2,741 | 2,904 | |||||||||||||||||
| 15,061 | 14,323 | 15,609 | ||||||||||||||||||
Returns associated with restructuring and other activities(1) | (12) | 3 | (1) | |||||||||||||||||
| Net sales | $ | 15,049 | $ | 14,326 | $ | 15,608 | ||||||||||||||
| OPERATING INCOME (LOSS) | ||||||||||||||||||||
| By Product Category: | ||||||||||||||||||||
| Skin Care | $ | 1,416 | $ | 574 | $ | 735 | ||||||||||||||
| Makeup | (70) | (441) | 93 | |||||||||||||||||
| Fragrance | 204 | (378) | 265 | |||||||||||||||||
| Hair Care | (4) | (41) | (52) | |||||||||||||||||
| Other | 57 | (13) | 53 | |||||||||||||||||
| 1,603 | (299) | 1,094 | ||||||||||||||||||
Charges associated with restructuring and other activities(1) | (823) | (486) | (124) | |||||||||||||||||
| Operating income (loss) | $ | 780 | $ | (785) | $ | 970 | ||||||||||||||
By Geographic Region(2): | ||||||||||||||||||||
| The Americas | $ | 211 | $ | (818) | $ | 168 | ||||||||||||||
| EUKEM | 196 | 145 | 102 | |||||||||||||||||
| Asia/Pacific | 823 | 180 | 510 | |||||||||||||||||
| Mainland China | 373 | 194 | 314 | |||||||||||||||||
| 1,603 | (299) | 1,094 | ||||||||||||||||||
Charges associated with restructuring and other activities(1) | (823) | (486) | (124) | |||||||||||||||||
| Operating income (loss) | $ | 780 | $ | (785) | $ | 970 | ||||||||||||||
(1) Returns and charges associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. Accordingly, the discussions of Net sales and Operating results by Product Categories and Geographic Regions below exclude the impacts of returns and charges associated with restructuring and other activities.
(2) The net sales and operating results from our travel retail business are included in the Asia/Pacific region.
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Period-over-period changes in our net sales are generally attributable to the impacts from (i) pricing on our base portfolio, including changes in mix and those due to strategic pricing actions, (ii) volume, including changes driven by the impact of new product innovation, (iii) acquisitions and/or divestitures, and/or (iv) foreign currency translation. The percentages disclosed for these impacts are calculated on an individual basis.
The net sales impact from pricing consists of changes in list prices, due to strategic pricing actions, and mix shifts within and among product categories, geographic regions, brands and distribution channels. The prices at which we sell our products vary by brand, distribution channel (e.g., wholesale or direct-to-consumer) and may also vary by country. Our brands and products cover a broad array of pricing tiers. Prices of skin care and fragrance products are typically higher than makeup and hair care products.
New product innovation includes the introduction of new products, as well as changes related to existing products or markets where they are sold, including reformulations, regional expansion, repackaging and sets. A product is considered "new innovation" for the twelve-month period following the initial shipment date. Our innovation is often launched at different price points than existing products and value derived from innovation may vary from year to year. We continually introduce new products, support new and established products through advertising, merchandising and sampling and phase out existing products that no longer meet the needs of our consumers or our objectives. The economics of developing, producing, launching, supporting and discontinuing products impact our sales and operating performance each period. The introduction of new products often has some cannibalizing effect on sales of existing products, inclusive of potential sales returns, which we take into account in our business planning. The impact of new product introductions, including timing compared to introductions in prior periods, also affects our results.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period helps investors and others compare operating performance between periods. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP. See Reconciliations of Non-GAAP Financial Measures beginning on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
We operate on a global basis, with the majority of our net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, we present certain net sales, operating results, provision for income taxes and diluted net earnings (loss) per common share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of our underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current-period results using prior-year monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.
Overview
We are a leader in prestige beauty, which combines the repeat purchase and relative affordability of consumer goods with high quality products and services. Within prestige beauty, we are diversified by product category, geography, brand, product sub-category, channel, consumer segment and price point. We also leverage consumer analytics and insights across our brand portfolio to grow sales and pursue profitable opportunities. These analytics and insights, combined with our creativity, also inform our innovation to provide a broad, locally-relevant and inclusive range of prestige products with the aim of competing effectively for a greater share of a consumer's beauty routine.
Our global distribution capability and operations allow us to focus on targeted expanded consumer reach wherever consumer demographics and trends are attractive. Our regional organizations, and the expertise of our people there, enable our brands to be more locally and culturally relevant in both product assortment and communications. We are continually evolving the way we connect with our consumers in stores, online and where they travel, including by expanding our digital and social media presence and the engagement of global and local influencers to amplify brand or product stories. We tailor implementation of our strategy by market to drive consumer engagement, recruitment and loyalty. We strive to strengthen our presence in large, image-building core markets, while broadening our presence in emerging markets.
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We approach distribution strategically by product category and location and seek to optimize distribution by matching our brands with appropriate opportunities while seeking to maintain high productivity per door. We are expanding our brands' locations as we continue to seek high-growth opportunities to reach new consumers in online, freestanding stores, specialty-multi and travel retail, which we believe will be higher growth channels in the long term. We also focus on brand-building retail activities, technology-driven activations and omnichannel capabilities that enhance the shopping experience for consumers.
Outlook
While we have seen improvements within our business, we are mindful of areas of volatility and uncertainty that may impact our results. We continue to face challenges in key markets in the West, including in some markets in Western Europe and the United States. Within our Asia travel retail business, we continue to monitor the impacts of the change in duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses. We are also monitoring the conflict in the Middle East as it relates to our business in the domestic markets and travel retail locations in the region. Net sales from locations impacted by the conflict in the Middle East accounted for approximately 2% of consolidated net sales in fiscal 2025. We continue to monitor and assess the impact that these areas of volatility and uncertainty may have on net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.
We are continuing to monitor and assess the potential effects of changing tariff conditions in the United States as well as in other markets in which we operate. These tariffs have led to significant volatility and uncertainty in global markets and difficulty in forecasting demand. We have implemented and are continuing to implement and consider additional mitigation measures. Our strategy remains optimizing our global supply chain network, by sourcing and manufacturing in the geography of sale where feasible. We also continue to leverage trade programs where available and monitor for additional opportunities as countries continue to update their trade programs. We anticipate tariffs to have an adverse effect on fiscal 2027 profitability and cash flows, and depending on actual rates and countries imposing tariffs such adverse impacts could be material.
On February 20, 2026, the U.S. Supreme Court ruled that the U.S. tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the U.S. were unauthorized. The ruling did not address potential refunds, however on March 4, 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to begin refunding all tariffs imposed under IEEPA. During the fiscal 2026 fourth quarter, we submitted claims for a portion of our eligible IEEPA tariffs paid, and have begun to receive refunds. For refunds received during the period, we have recorded these as an offset to cost of sales. As of June 30, 2026, the remaining amount of potential IEEPA tariff refunds not yet submitted or for which refunds have not been received are not considered material to the consolidated financial statements.
We continue to believe that the best way to increase long-term stockholder value is to provide superior products and services in the most efficient and effective manner while recognizing shifts in consumers’ behaviors and shopping practices. Accordingly, our long-term strategy has numerous initiatives across product categories, brands, geographic regions, channels of distribution and functions designed to grow our sales, provide cost efficiencies, leverage our strengths, such as our history of outstanding creativity and innovation, high quality products and services, and engaging communications, and make us more productive and profitable. Following the transition of leadership in the second and third quarters of fiscal 2025, we are executing against "Beauty Reimagined," our previously announced strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work, including through the expansion of the Profit Recovery and Growth Plan ("PRGP") during the fiscal 2025 third quarter, as discussed below.
We continue to monitor the effects of the global macro environment, including the risk of recession; currency volatility; inflationary pressures; supply chain challenges; social and political issues; competitive pressures; legal and regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues. We are also mindful of inflationary pressures (including those caused by tariffs) on our cost base and are monitoring the impact on consumer preferences, the impact of changes being made in the organization, including those related to Beauty Reimagined and the PRGP, as well as the actual and potential impact of changes that have been made and are expected to be made as part of the PRGP on suppliers, retailers and others, and challenges relating to successfully outsourcing select services. Declines in net sales and profitability have, and may continue to, adversely impact the goodwill and other intangible assets associated with our brands, as well as long-lived assets, potentially resulting in impairments.
In December 2021, the Organization for Economic Cooperation and Development issued "Pillar Two" Global Anti-Base Erosion model rules for countries to enact into domestic law that would establish a 15% global minimum tax applied on a country-by-country basis for multinational companies. We are continuing to monitor and evaluate the potential impact of incorporating the global minimum tax in additional countries that have yet to enact the legislation.
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On July 4, 2025, U.S tax legislation was enacted known as the One Big Beautiful Bill Act. This legislation includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business tax provisions. The legislation has multiple effective dates, and we are continuing to evaluate the potential impact of the provisions that are expected to be effective in future fiscal years.
Our ability to recognize deferred tax assets, inclusive of utilizing net operating loss carryforwards, tax credits, and other carryforwards is dependent on the generation of sufficient taxable income in future periods. Accordingly, there can be no assurance that additional valuation allowances on our deferred tax assets will not be required should our financial performance be negatively impacted in the future. Such valuation allowance could be material.
Restructuring Program Component of the Profit Recovery and Growth Plan
As announced on November 1, 2023, we launched the PRGP to help progressively rebuild our profit margins in fiscal years 2025 and 2026.
The PRGP is focused on rebuilding stronger, more sustainable profitability, supporting sales growth acceleration and increasing speed and agility. The plan is designed to improve gross margin, lower the cost base and reduce overhead expenses, while increasing investments in key consumer-facing activities. Upon completion of this plan, we expect to have improved our gross margin and expense base to drive greater operating leverage for the future.
As a component of the PRGP, on February 5, 2024, we announced a two-year restructuring program. The restructuring program’s main focus included the reorganization and rightsizing of certain areas of our business as well as simplification and acceleration of processes. We committed to this course of action on February 1, 2024 and at that time, planned to substantially complete specific initiatives under the restructuring program through fiscal 2026.
After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, we committed to the expansion of the PRGP, including an expansion of the restructuring program.
The expansion of the overall PRGP is focused on three key areas: (i) adopt a more competitive approach to procurement, a key pillar of savings, by further consolidating spending and strategically re-evaluating key supplier relationships; (ii) further improve efficiencies within our supply chain network through a zero-waste approach, aiming to improve demand forecasting and innovation planning to minimize excess inventory and product destruction; and (iii) outsource select services to proven global partners.
The expanded component of the restructuring program, as noted above, began during our fiscal 2025 third quarter with all initiatives to be approved by the end of fiscal 2026. The focus of the overall expanded restructuring program (collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models, all to help rebuild operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth.
As of June 30, 2026, approvals under the Restructuring Program concluded, and by the end of fiscal 2027, the cumulative approved initiatives are expected to be substantially completed.
Based on the total approved initiatives under the Restructuring Program, as of June 30, 2026 we estimate a final net reduction of approximately 10,000 positions globally, at the high end of the previously announced range of 9,000 to 10,000. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.
The total approved initiatives under the Restructuring Program are expected to result in restructuring and other charges of $1,748 million, before taxes, slightly above the high end of the previously announced range of $1,500 million to $1,700 million, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives, which other than the non-cash charges, have been funded from cash provided by operations for initiatives implemented to date, and for the remaining initiatives are expected to result in future cash expenditures funded from cash provided by operations.
Once fully implemented, we expect the Restructuring Program to yield annual target gross benefits of approximately $1,200 million, at the high end of the previously announced range of between $1,000 million and $1,200 million, before taxes, a portion of which is expected to be reinvested in consumer-facing activities.
Further information about the Restructuring Program Component of the Profit Recovery and Growth Plan, is described in Item 8. Financial Statements and Supplementary Data – Note 7 – Charges Associated with Restructuring and Other Activities.
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Securities Class Action Litigation Settlement
On December 7, 2023 and January 22, 2024, purported securities class action complaints were filed in the United States District Court for the Southern District of New York against the Company and its then Chief Executive Officer and Chief Financial Officer. The actions were consolidated on February 20, 2024. On March 22, 2024, plaintiffs filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged materially false and misleading statements between February 3, 2022 and October 31, 2023. On March 31, 2025, the Court denied defendants’ motion to dismiss. On April 2, 2026, the parties reached an agreement in principle to settle the securities class action litigation. In light of these discussions, during the fiscal 2026 third quarter, we recorded a loss contingency of $84 million, net of the estimated probable insurance recoveries, in the consolidated statements of earnings (loss) relating to a potential settlement of the securities class action. As of June 30, 2026, the total settlement amount has been funded, including amounts paid by the insurance carriers. This matter is subject to final approval from the Court.
Annual Impairment Analysis
Aligned with our policy on Goodwill and Other Indefinite-lived Intangible Assets, as described in Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies, we performed our annual impairment assessments as of April 1, 2026. Goodwill and trademark intangible assets were evaluated using either qualitative or quantitative assessments, as appropriate based on the reporting unit or brand. Based on the results of these assessments, no impairment charges were recorded, however, certain trademarks have limited excess fair value over carrying value.
Trademark Intangible Assets with Limited Excess Fair Value
The estimated fair value of the Dr.Jart+ trademark exceeded its carrying value of $37 million by 4%. If all other assumptions are held constant, a decrease of 4% in the estimated future net sales, inclusive of the terminal value, or an increase of 30 basis points in the weighted average cost of capital, would have caused the carrying value of the trademark to approximate its estimated fair value.
The estimated fair value of the Too Faced trademark exceeded its carrying value of $62 million by 13%. If all other assumptions are held constant, a decrease of 11% in the estimated future net sales, inclusive of the terminal value, or an increase of 130 basis points in the weighted average cost of capital, would have caused the carrying value of the trademark to approximate its estimated fair value.
The estimated fair value of the TOM FORD trademark exceeded its carrying value of $1,805 million by 19%. The excess in the current year is primarily driven by a decrease in the weighted average cost of capital as of April 1, 2026 compared to the fair value calculated in the fiscal 2025 second quarter, the period when impairment charges were taken and the estimated fair value of the trademark was equal to its carrying value. If all other assumptions are held constant, an increase of 140 basis points in the weighted average cost of capital would have caused the carrying value of the trademark to approximate its estimated fair value.
Factors That Could Impact Future Impairment Assessments
The key assumptions used to determine the estimated fair value of the trademarks are primarily predicated on the success of future new product launches, the ability to secure strategic price increases, the achievement of distribution expansion plans, and the realization of cost reduction and other efficiency efforts. If such plans do not materialize, or if there are further challenges in the business environments where the brands operate, resulting changes in the key assumptions could negatively impact the estimated fair value of the trademarks. This could potentially lead to recognizing impairment charges in the future.
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Fiscal 2026 as Compared with Fiscal 2025
NET SALES
Year Ended June 30, | ||||||||||||||
| ($ in millions) | 2026 | 2025 | ||||||||||||
| As Reported: | ||||||||||||||
| Net sales | $ | 15,049 | $ | 14,326 | ||||||||||
| $ Change from prior year | 723 | (1,282) | ||||||||||||
| % Change from prior year | 5 | % | (8) | % | ||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
| % Change from prior year in constant currency | 3 | % | (8) | % | ||||||||||
(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Reported net sales increased in fiscal 2026, driven by skin care and fragrance, and to a lesser extent, makeup.
By geographic region, reported net sales increased across all geographic regions in fiscal 2026, led by Mainland China and EUKEM.
The fiscal 2026 reported net sales increase was impacted by approximately $250 million of favorable foreign currency translation.
Reported net sales increased 5% in fiscal 2026, driven by the increase from volume of 2%, the favorable impact from foreign currency translation of 2% and an increase from pricing of 1%, reflecting the favorable impact from strategic pricing actions and changes in mix.
Product Categories
Reported net sales for our product categories for the years ended June 30, 2026 and 2025 were as follows:
Year Ended June 30, | ||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ Change | % Change | % Change in Constant Currency(1) | |||||||||||||||||||||||||||
| Skin Care | $ | 7,338 | $ | 6,962 | $ | 376 | 5 | % | 4 | % | ||||||||||||||||||||||
| Makeup | 4,276 | 4,205 | 71 | 2 | — | |||||||||||||||||||||||||||
| Fragrance | 2,779 | 2,491 | 288 | 12 | 10 | |||||||||||||||||||||||||||
| Hair Care | 565 | 565 | — | — | (1) | |||||||||||||||||||||||||||
| Other | 103 | 100 | 3 | 3 | 3 | |||||||||||||||||||||||||||
| 15,061 | 14,323 | 738 | 5 | 3 | ||||||||||||||||||||||||||||
| Returns associated with restructuring and other activities | (12) | 3 | (15) | (100+) | (100+) | |||||||||||||||||||||||||||
| Net sales | $ | 15,049 | $ | 14,326 | $ | 723 | 5 | % | 3 | % | ||||||||||||||||||||||
(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Skin Care
Reported skin care net sales increased $376 million, or 5%, in fiscal 2026, reflecting higher net sales from La Mer, Estée Lauder and The Ordinary, combined, of approximately $466 million.
Net sales from La Mer increased, reflecting the benefit from new product launches, as well as growth from The Treatment Lotion franchise. The increase in net sales from Estée Lauder reflected growth attributable to hero product franchises, as well as new product launches, which both drove performance during key shopping moments. Net sales from The Ordinary increased, primarily reflecting growth from targeted expanded consumer reach, as well as the benefit from key campaigns and the timing of key shopping moments.
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Skin care net sales were impacted by approximately $115 million of favorable foreign currency translation.
Reported skin care net sales increased 5% in fiscal 2026, driven by an increase from pricing of 3%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 2%. The impact from volume was flat period-over-period.
Makeup
Reported makeup net sales increased $71 million, or 2%, in fiscal 2026, including the favorable impact of foreign currency translation of 2%. Including the favorable impact of foreign currency translation, the increase in makeup net sales was primarily driven by M·A·C, reflecting higher net sales in the lip subcategory, driven by Powder Kiss Lipstick, Lip Pencil, MACximal Silky Matte Lipstick and MACximal Sleek Satin Lipstick. Also contributing to the increase in M·A·C net sales was the benefit from targeted expanded consumer reach.
Makeup net sales were impacted by approximately $84 million of favorable foreign currency translation.
Reported makeup net sales increased 2% in fiscal 2026, driven by the increase from volume of 3% and the favorable impact of foreign currency translation of 2%. Partially offsetting these increases was a decrease from pricing of 4%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.
Fragrance
Reported fragrance net sales increased $288 million, or 12%, in fiscal 2026, reflecting higher net sales from Le Labo, TOM FORD and KILIAN PARIS, combined, of approximately $221 million.
The increase in net sales from Le Labo was led by the Classic Collection, including growth from targeted expanded consumer reach and the benefit from new product launches. Net sales from TOM FORD increased, reflecting the benefit from new product launches which created halo benefits on existing products, with overall growth in both the Signature and Private Blend franchises. Net sales from KILIAN PARIS increased, driven by the Angels' Share and Love, don't be shy franchises including growth attributable to new product launches and key campaigns, as well as growth from targeted expanded consumer reach.
Fragrance net sales were impacted by approximately $48 million of favorable foreign currency translation.
Reported fragrance net sales increased 12% in fiscal 2026, driven by the increase from volume of 7%, an increase from pricing of 3%, reflecting the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 2%.
Hair Care
Reported hair care net sales were flat in fiscal 2026, including the favorable impact of foreign currency translation of 1%. Including the favorable impact of foreign currency translation, hair care net sales results reflected higher net sales from The Ordinary and lower net sales from Aveda.
The increase in net sales from The Ordinary reflected growth of the Multi-Peptide Serum for Hair Density, as well as the benefit from targeted expanded consumer reach.
The decrease in net sales from Aveda reflects the brand’s strategies to improve long-term performance, including (i) planned rebalancing of online promotional activity and (ii) the exit from underperforming doors, including freestanding stores. These declines were partially offset by the impact from its launch in Amazon's U.S. Premium Beauty store during the fiscal 2025 fourth quarter.
Hair care net sales were impacted by approximately $3 million of favorable foreign currency translation.
Reported hair care net sales were flat in fiscal 2026, driven by the increase from pricing of 3%, reflecting changes in mix and the favorable impact of strategic pricing actions, and the favorable impact from foreign currency translation of 1%. These increases were offset by the decrease from volume of 3%.
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Geographic Regions
Reported net sales for our geographic regions for the years ended June 30, 2026 and 2025 were as follows:
Year Ended June 30, | ||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ Change | % Change | % Change in Constant Currency(2) | |||||||||||||||||||||||||||
| The Americas | $ | 4,463 | $ | 4,410 | $ | 53 | 1 | % | 1 | % | ||||||||||||||||||||||
| EUKEM | 3,794 | 3,566 | 228 | 6 | 1 | |||||||||||||||||||||||||||
Asia/Pacific(1) | 3,746 | 3,606 | 140 | 4 | 4 | |||||||||||||||||||||||||||
| Mainland China | 3,058 | 2,741 | 317 | 12 | 9 | |||||||||||||||||||||||||||
| 15,061 | 14,323 | 738 | 5 | 3 | ||||||||||||||||||||||||||||
| Returns associated with restructuring and other activities | (12) | 3 | (15) | (100+) | (100+) | |||||||||||||||||||||||||||
| Net sales | $ | 15,049 | $ | 14,326 | $ | 723 | 5 | % | 3 | % | ||||||||||||||||||||||
(1)The net sales from our travel retail business are included in the Asia/Pacific region.
(2) See “Reconciliations of Non-GAAP Financial Measures” beginning on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Reported net sales increased in fiscal 2026, primarily driven by higher net sales in Mainland China and our travel retail business, combined, of approximately $531 million.
The increase in net sales in Mainland China reflected growth attributable to key shopping moments, including the benefits from key campaigns to drive sales and new product launches.
The increase in net sales in our travel retail business was driven by Asia travel retail, including (i) the increase in net sales in Korea travel retail and Hong Kong SAR travel retail, benefiting from retailer shifts toward more profitable duty-free business models, which helped reduce discounting, as well as the increase in traveling consumers, (ii) net sales growth in Hainan travel retail, reflecting the improvement in retail sales, benefiting from higher traffic and key campaigns to drive growth, and (iii) the net sales decline in the rest of mainland China travel retail, primarily driven by the transitory pressure from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses.
Reported net sales in The Americas increased 1% in fiscal 2026, driven by the increase from volume of 4%. Partially offsetting this increase was a decrease from pricing of 3%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. Reported net sales in EUKEM increased 6% in fiscal 2026, driven by the favorable impact of foreign currency translation of 5% and the increase from volume of 4%. These increases were partially offset by a decrease from pricing of 3%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. Reported net sales in Asia/Pacific increased 4% in fiscal 2026, driven by an increase from pricing of 4%, reflecting changes in mix and the favorable impact from strategic pricing actions, partially offset by the unfavorable impact from foreign currency translation of 1%. The impact from volume was flat period-over-period. Reported net sales in Mainland China increased 12% in fiscal 2026, driven by an increase from pricing of 10%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 3%. Partially offsetting these increases was the decrease from volume of 1%.
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GROSS MARGIN
Gross margin in fiscal 2026 increased to 75.5% as compared with 74.0% in fiscal 2025.
Fiscal 2026 vs. Fiscal 2025 Favorable (Unfavorable) Basis Points | |||||
As Reported: | |||||
| Mix of business | 30 | ||||
| Obsolescence charges | 80 | ||||
| Manufacturing costs and other | 55 | ||||
| Foreign exchange transactions | (15) | ||||
Returns and charges associated with restructuring and other activities | — | ||||
As Reported Gross Margin Basis Point Variance | 150 | ||||
Non-GAAP Financial Measure Adjustments: | |||||
Returns and charges associated with restructuring and other activities | — | ||||
Non-GAAP Gross Margin Basis Point Variance | 150 | ||||
The increase in gross margin in fiscal 2026 is driven by net benefits from the PRGP, partially offset by unfavorable impacts within manufacturing costs and other, reflecting the impact of inflation on our costs, as well as tariffs. The PRGP benefits were driven by the favorable impact of cost efficiencies within our global supply chain network and reductions in excess inventory.
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OPERATING EXPENSES
Operating expenses as a percentage of net sales in fiscal 2026 decreased to 70.3% as compared with 79.4% in fiscal 2025.
Fiscal 2026 vs. Fiscal 2025 Favorable (Unfavorable) Basis Points | |||||
As Reported: | |||||
| Selling | 20 | ||||
| Advertising | 10 | ||||
| Promotional | 10 | ||||
| Store operating costs | (10) | ||||
Consumer-facing operating expenses(1) | 30 | ||||
| General and administrative | 40 | ||||
| Shipping | 20 | ||||
| Marketing | 40 | ||||
| Product development | 40 | ||||
| Stock-based compensation | — | ||||
| Foreign exchange transactions | (10) | ||||
| Non-consumer-facing operating expenses | 130 | ||||
| Charges associated with restructuring and other activities | (200) | ||||
| Securities class action litigation settlement | (60) | ||||
| Impairment of goodwill and other intangible assets | 900 | ||||
Talcum litigation settlement agreements | 110 | ||||
As Reported Operating Expense Margin Basis Point Variance | 910 | ||||
Non-GAAP Financial Measure Adjustments: | |||||
Impact of restructuring and other activities | 210 | ||||
| Securities class action litigation settlement | 60 | ||||
| Impairment of goodwill and other intangible assets | (900) | ||||
Talcum litigation settlement agreements(2) | (110) | ||||
Non-GAAP Operating Expense Margin Basis Point Variance | 170 | ||||
(1)Consumer-facing operating expenses in this table and within the operating expense margin discussion below do not include the impact of co-operative advertising expenses, however, our references to consumer-facing investments throughout the remainder of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations include the consumer-facing operating expenses noted above as well as the impact of co-operative advertising expenses that are recorded as a reduction of revenue.
(2)From the end of August 2024 through October 2024, we entered into agreements with certain plaintiff law firms to resolve over 200 pending cosmetic talcum powder matters, which was a portion of the pending matters that existed at that time, and establish a framework for resolving potential future claims brought by these plaintiff firms from January 1, 2025 through December 31, 2029 (mitigating a portion of our future exposure), subject to annual caps (the “Talcum litigation settlement agreements”). In connection with the Talcum litigation settlement agreements, we recorded a charge of $159 million in the fiscal 2025 first quarter, representing our best estimate of probable losses for current and potential future claims under these agreements.
The favorability in our operating expense margin in fiscal 2026 reflected the impact of the increase in net sales, which offset the overall increase in investments in consumer-facing areas of the business to drive sales, including through key campaigns, new product launches and targeted expanded consumer reach. Non-consumer facing expenses were virtually flat year-over-year, with overall lower expenses within general and administrative, marketing, product development, and shipping, collectively, including lower employee-related costs realized through initiatives as part of the PRGP, with these benefits largely offset by higher employee incentive costs.
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OPERATING RESULTS
Year Ended June 30, | ||||||||||||||
| ($ in millions) | 2026 | 2025 | ||||||||||||
| As Reported: | ||||||||||||||
Operating income (loss) | $ | 780 | $ | (785) | ||||||||||
| $ Change from prior year | 1,565 | (1,755) | ||||||||||||
| % Change from prior year | 100+% | (100+)% | ||||||||||||
| Operating Margin | 5.2 | % | (5.5) | % | ||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change in operating income (loss) from the prior year adjusting for the impact of charges associated with restructuring and other activities, the securities class action litigation settlement, impairment of goodwill and other intangible assets and talcum litigation settlement agreements | 47 | % | (28) | % | ||||||||||
(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
The reported operating margin for fiscal 2026 increased from the prior year, driven by the favorable operating expense margin, which includes the favorable year-over-year impact of goodwill and other intangible asset impairment charges in fiscal 2025 of $1,286 million, as well as the increase in net sales and increase in gross margin, as discussed above.
Product Categories
Reported operating income (loss) for our product categories for the years ended June 30, 2026 and 2025 were as follows:
Year Ended June 30, | |||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | $ Change | % Change (As reported) | % Change (Non-GAAP)(1) | Non-GAAP Financial Measure(1) | |||||||||||||||||||||||||||||
| Skin Care | $ | 1,416 | $ | 574 | $ | 842 | 100+% | 52 | % | Adjusted for the impact of the securities class action litigation settlement and an other intangible asset impairment | |||||||||||||||||||||||||
| Makeup | (70) | (441) | 371 | 84 | (100) | Adjusted for the impact of the securities class action litigation settlement, goodwill and other intangible asset impairments and the Talcum litigation settlement agreements | |||||||||||||||||||||||||||||
| Fragrance | 204 | (378) | 582 | 100+ | 27 | Adjusted for the impact of the securities class action litigation settlement and an other intangible asset impairment | |||||||||||||||||||||||||||||
| Hair Care | (4) | (41) | 37 | 90 | 100 | Adjusted for the impact of the securities class action litigation settlement | |||||||||||||||||||||||||||||
| Other | 57 | (13) | 70 | 100+ | 39 | Adjusted for the impact of an other intangible asset impairment | |||||||||||||||||||||||||||||
| 1,603 | (299) | 1,902 | 100+ | 47 | % | ||||||||||||||||||||||||||||||
Charges associated with restructuring and other activities | (823) | (486) | (337) | (69) | |||||||||||||||||||||||||||||||
Operating income (loss) | $ | 780 | $ | (785) | $ | 1,565 | 100+% | ||||||||||||||||||||||||||||
(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
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Skin Care
Reported skin care operating income increased $842 million, or over 100%, in fiscal 2026, reflecting an increase in net sales and the favorable year-over-year impact of the other intangible asset impairment charge in the prior year related to Dr.Jart+ of $375 million. The increase in operating income was partially offset by an increase in consumer-facing investments, including to support key campaigns, new product launches and targeted expanded consumer reach.
Makeup
Reported makeup operating loss decreased $371 million, or 84%, in fiscal 2026, reflecting the favorable year-over-year impact of other intangible asset impairment charges in the prior year relating to TOM FORD and Too Faced, combined, of $295 million and a goodwill impairment charge relating to Too Faced of $13 million, as well as the favorable year-over-year impact of the charge in fiscal 2025 associated with the Talcum litigation settlement agreements of $159 million. Partially offsetting the increase in operating results was an increase in consumer-facing investments, including to support key campaigns, new product launches and targeted expanded consumer reach.
Fragrance
Reported fragrance operating results increased $582 million, or over 100%, in fiscal 2026, reflecting the favorable year-over-year impact of the other intangible asset impairment charge in the prior year of $549 million relating to TOM FORD, as well as an increase in net sales. Partially offsetting these increases in operating results was an increase in consumer-facing investments, including to support key campaigns, new product launches and targeted expanded consumer reach.
Hair Care
Reported hair care operating loss decreased $37 million, or 90%, in fiscal 2026, reflecting lower cost of sales and lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP which were partially offset by higher employee incentive costs, and lower consumer-facing investments. These increases to operating results were partially offset by the unfavorable allocated impact of the securities class action litigation settlement.
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Geographic Regions
Reported operating income (loss) for our geographic regions for the years ended June 30, 2026 and 2025 were as follows:
Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||
($ in millions) | 2026 | 2025 | $ Change | % Change (As Reported) | % Change (Non-GAAP)(1) | Non-GAAP Financial Measure(1) | ||||||||||||||||||||||||||||||||
| The Americas | $ | 211 | $ | (818) | $ | 1,029 | 100+% | 17 | % | Adjusted for the impact of the securities class action litigation settlement, impairment of goodwill and other intangible assets and the Talcum litigation settlement agreements | ||||||||||||||||||||||||||||
| EUKEM | 196 | 145 | 51 | 35 | 35 | |||||||||||||||||||||||||||||||||
| Asia/Pacific | 823 | 180 | 643 | 100+ | 48 | Adjusted for the impact of an other intangible asset impairment | ||||||||||||||||||||||||||||||||
| Mainland China | 373 | 194 | 179 | 92 | 92 | |||||||||||||||||||||||||||||||||
| 1,603 | (299) | 1,902 | 100+ | 47 | % | |||||||||||||||||||||||||||||||||
Charges associated with restructuring and other activities | (823) | (486) | (337) | (69) | ||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 780 | $ | (785) | $ | 1,565 | 100+% | |||||||||||||||||||||||||||||||
(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Reported operating results in The Americas increased $1,029 million, or over 100%, in fiscal 2026, reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior year relating to TOM FORD and Too Faced, combined, of $898 million and a goodwill impairment charge in the prior year relating to Too Faced of $13 million. Also contributing to the increase was the favorable year-over-year impact of the charge in fiscal 2025 associated with the Talcum litigation settlement agreements of $159 million and higher net sales. Partially offsetting the increase in operating results is the unfavorable impact of the securities class action litigation settlement charge in the fiscal 2026 third quarter and an increase in consumer-facing investments to help drive sales growth.
Reported operating income in EUKEM increased $51 million, or 35%, in fiscal 2026, reflecting higher net sales, partially offset by an increase in consumer-facing investments, including to support targeted expanded consumer reach, key campaigns and new product launches, and an increase in non-consumer-facing expenses, due in part to higher employee incentive costs.
Reported operating income in Asia/Pacific increased $643 million, or over 100%, in fiscal 2026, reflecting the favorable year-over-year impact of the other intangible asset impairment charge in the prior year relating to Dr.Jart+ of $375 million, higher net sales and a decrease in cost of sales, including net benefits from the PRGP.
Reported operating income in Mainland China increased $179 million, or 92%, in fiscal 2026, reflecting higher net sales, as well as the favorable year-over-year timing of recognition of local government subsidies in fiscal 2026, as well as the related impact of the change in policy in fiscal 2025. Partially offsetting the increase in operating income was an increase in consumer-facing investments, including to support key campaigns, new product launches and targeted expanded consumer reach.
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INTEREST AND INVESTMENT INCOME
Year Ended June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
| Interest expense | $ | 334 | $ | 357 | ||||||||||
| Interest income and investment income, net | $ | 90 | $ | 114 | ||||||||||
Interest expense decreased in fiscal 2026, primarily reflecting a lower average debt balance and lower average interest rates compared to the prior year. Interest income and investment income, net decreased in fiscal 2026, primarily driven by lower average interest rates earned compared to the prior year, as well as the unfavorable year-over-year impact of impairments of cost method minority investments.
PROVISION FOR INCOME TAXES
The provision for income taxes represents U.S. federal, foreign, state and local income taxes. The effective rate differs from the federal statutory rate primarily due to the effect of state and local income taxes, the tax impact of stock-based compensation, the taxation of foreign income and changes in unrecognized tax benefits, as well as changes to valuation allowances based on our assessment of the realizability of deferred tax assets. Our effective tax rate will change from year to year based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, unrecognized tax benefits, the tax impact of stock-based compensation, changes to valuation allowances, the interaction of various global tax strategies and the impact from certain acquisitions.
Year Ended June 30, | ||||||||||||||
| ($ in millions) | 2026 | 2025 | ||||||||||||
| Earnings (loss) before income taxes: | $ | 517 | $ | (1,040) | ||||||||||
| As Reported: | ||||||||||||||
| Effective rate for income taxes | 64.8 | % | (8.9) | % | ||||||||||
| Basis-point change from prior year | 7,370 | (5,590) | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
| Effective rate for income taxes | 35.7 | % | 38.8 | % | ||||||||||
(1)Excludes the net impact on the effective tax rates of charges associated with restructuring and other activities in both periods, the securities class action litigation settlement in fiscal 2026, and in fiscal 2025 also excludes the impact of the impairment of goodwill and other intangible assets, U.S. deferred tax asset valuation allowance adjustment and the Talcum litigation settlement agreements. See “Reconciliations of Non-GAAP Financial Measures” on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
The effective tax rate for fiscal 2026 increased approximately 7,370 basis points. The extent of the year over year change was broadly impacted by the loss before income taxes in fiscal 2025. The increase was primarily attributable to the higher effective tax rate on income from our foreign operations of approximately 5,630 basis points, due to our geographical mix of earnings, including the establishment of new valuation allowances on certain foreign deferred tax assets. Further contributing to the increase in the effective tax rate was the unfavorable impact of the One Big Beautiful Bill Act, resulting from an increase in tax deductible interest expense which reduced U.S. taxable income and increased the excess foreign tax credits generated which require a valuation allowance of approximately 1,010 basis points, changes in unrecognized tax benefits related to transfer pricing matters impacting multiple tax jurisdictions of approximately 820 basis points, as well as the unfavorable impact associated with previously issued U.S. stock-based compensation of approximately 590 basis points. The overall increase in the effective tax rate is partially offset by the favorable year-over-year utilization of U.S. general foreign tax credits net of the prior year establishment of a valuation allowance against U.S. general foreign tax credits and research and development tax credit carryforwards of approximately 550 basis points.
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NET EARNINGS (LOSS) ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC.
Year Ended June 30, | ||||||||||||||
| ($ in millions, except per share data) | 2026 | 2025 | ||||||||||||
| As Reported: | ||||||||||||||
| Net earnings (loss) attributable to The Estée Lauder Companies Inc. | $ | 182 | $ | (1,133) | ||||||||||
| $ Change from prior year | 1,315 | (1,523) | ||||||||||||
| % Change from prior year | 100+% | (100+)% | ||||||||||||
| Diluted net earnings (loss) per common share | $ | .50 | $ | (3.15) | ||||||||||
| % Change from prior year | 100+% | (100+)% | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
| % Change in diluted net earnings (loss) per common share from the prior year adjusting for the impact of charges associated with restructuring and other activities, the securities class action litigation settlement, impairment of goodwill and other intangible assets, U.S. deferred tax asset valuation allowance adjustment and the Talcum litigation settlement agreements. | 66 | % | (42) | % | ||||||||||
(1)See “Reconciliations of Non-GAAP Financial Measures” on page 44 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
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RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period, or do not reflect the Company’s underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze our operating performance from period to period. In the future, we expect to incur charges or adjustments similar in nature to those presented below; however, the impact to the Company’s results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP. The following tables present Net sales, Operating income (loss), Provision for income taxes and Diluted net earnings (loss) per common share adjusted to exclude the impact of charges associated with restructuring and other activities; the securities class action litigation settlement; impairment of goodwill and other intangible assets; U.S. deferred tax asset valuation allowance adjustment; the Talcum litigation settlement agreements; and the effects of foreign currency translation. The following tables provide reconciliations between these non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
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Year Ended June 30, | % Change | % Change in Constant Currency | ||||||||||||||||||||||||||||||
| ($ in millions, except per share data) | 2026 | 2025 | Variance | |||||||||||||||||||||||||||||
| Net sales, as reported | $ | 15,049 | $ | 14,326 | $ | 723 | 5 | % | 3 | % | ||||||||||||||||||||||
| Returns associated with restructuring and other activities | 12 | (3) | 15 | |||||||||||||||||||||||||||||
| Net sales, as adjusted | $ | 15,061 | $ | 14,323 | $ | 738 | 5 | % | 3 | % | ||||||||||||||||||||||
| Operating income (loss), as reported | $ | 780 | $ | (785) | $ | 1,565 | 100+% | 100+% | ||||||||||||||||||||||||
| Charges associated with restructuring and other activities | 823 | 486 | 337 | |||||||||||||||||||||||||||||
| Securities class action litigation settlement | 84 | — | 84 | |||||||||||||||||||||||||||||
| Impairment of goodwill and other intangible assets | — | 1,286 | (1,286) | |||||||||||||||||||||||||||||
Talcum litigation settlement agreements | — | 159 | (159) | |||||||||||||||||||||||||||||
| Operating income, as adjusted | $ | 1,687 | $ | 1,146 | $ | 541 | 47 | % | 45 | % | ||||||||||||||||||||||
Provision for income taxes, as reported | $ | 335 | $ | 93 | $ | 242 | 100+% | 100+% | ||||||||||||||||||||||||
Effective rate for income taxes, as reported | 64.8 | % | (8.9) | % | ||||||||||||||||||||||||||||
| Charges associated with restructuring and other activities | 156 | 105 | 51 | |||||||||||||||||||||||||||||
| Securities class action litigation settlement | 18 | — | 18 | |||||||||||||||||||||||||||||
| Impairment of goodwill and other intangible assets | — | 285 | (285) | |||||||||||||||||||||||||||||
U.S. deferred tax asset valuation allowance adjustment | — | (172) | 172 | |||||||||||||||||||||||||||||
Talcum litigation settlement agreements | — | 35 | (35) | |||||||||||||||||||||||||||||
Provision for income taxes, as adjusted | $ | 509 | $ | 346 | $ | 163 | 47 | % | 45 | % | ||||||||||||||||||||||
Effective rate for income taxes, as adjusted | 35.7 | % | 38.8 | % | ||||||||||||||||||||||||||||
| Diluted net earnings (loss) per common share, as reported | $ | .50 | $ | (3.15) | $ | 3.65 | 100+% | 100+% | ||||||||||||||||||||||||
| Charges associated with restructuring and other activities | 1.83 | 1.06 | .77 | |||||||||||||||||||||||||||||
| Securities class action litigation settlement | .18 | — | .18 | |||||||||||||||||||||||||||||
| Impairment of goodwill and other intangible assets | — | 2.78 | (2.78) | |||||||||||||||||||||||||||||
U.S. deferred tax asset valuation allowance adjustment | — | .48 | (.48) | |||||||||||||||||||||||||||||
Talcum litigation settlement agreements | — | .34 | (.34) | |||||||||||||||||||||||||||||
Diluted net earnings per common share, as adjusted | $ | 2.51 | $ | 1.51 | $ | 1.00 | 66 | % | 64 | % | ||||||||||||||||||||||
As diluted net earnings per common share, as adjusted, is used as a measure of the Company’s performance, we consider the impact of current and deferred income taxes when calculating the per-share impact of each of the reconciling items.
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The following table reconciles the change in net sales by product category and geographic region, as reported, to the change in net sales excluding the effects of foreign currency translation:
| As Reported | ||||||||||||||||||||||||||||||||||||||||||||
Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Variance | Impact of foreign currency translation | Variance, in constant currency | % Change, as reported | % Change, in constant currency | |||||||||||||||||||||||||||||||||||||
| By Product Category: | ||||||||||||||||||||||||||||||||||||||||||||
| Skin Care | $ | 7,338 | $ | 6,962 | $ | 376 | $ | (115) | $ | 261 | 5 | % | 4 | % | ||||||||||||||||||||||||||||||
| Makeup | 4,276 | 4,205 | 71 | (84) | (13) | 2 | — | |||||||||||||||||||||||||||||||||||||
| Fragrance | 2,779 | 2,491 | 288 | (48) | 240 | 12 | 10 | |||||||||||||||||||||||||||||||||||||
| Hair Care | 565 | 565 | — | (3) | (3) | — | (1) | |||||||||||||||||||||||||||||||||||||
| Other | 103 | 100 | 3 | — | 3 | 3 | 3 | |||||||||||||||||||||||||||||||||||||
| 15,061 | 14,323 | 738 | (250) | 488 | 5 | 3 | ||||||||||||||||||||||||||||||||||||||
| Returns associated with restructuring and other activities | (12) | 3 | (15) | — | (15) | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 15,049 | $ | 14,326 | $ | 723 | $ | (250) | $ | 473 | 5 | % | 3 | % | ||||||||||||||||||||||||||||||
By Geographic Region: | ||||||||||||||||||||||||||||||||||||||||||||
| The Americas | $ | 4,463 | $ | 4,410 | $ | 53 | $ | (14) | $ | 39 | 1 | % | 1 | % | ||||||||||||||||||||||||||||||
| EUKEM | 3,794 | 3,566 | 228 | (179) | 49 | 6 | 1 | |||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 3,746 | 3,606 | 140 | 22 | 162 | 4 | 4 | |||||||||||||||||||||||||||||||||||||
| Mainland China | 3,058 | 2,741 | 317 | (79) | 238 | 12 | 9 | |||||||||||||||||||||||||||||||||||||
| 15,061 | 14,323 | 738 | (250) | 488 | 5 | 3 | ||||||||||||||||||||||||||||||||||||||
| Returns associated with restructuring and other activities | (12) | 3 | (15) | — | (15) | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 15,049 | $ | 14,326 | $ | 723 | $ | (250) | $ | 473 | 5 | % | 3 | % | ||||||||||||||||||||||||||||||
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The following table reconciles the change in operating results by product category and geographic region, as reported, to the change in operating results excluding the impact of the securities class action litigation settlement, impairment of goodwill and other intangible assets and the Talcum litigation settlement agreements:
| As Reported | Add: Changes in impairment of goodwill and other intangible assets | Add: Securities class action litigation settlement | Add: Talcum litigation settlement agreements | Variance, as adjusted | % Change, as reported | % Change, as adjusted | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Variance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| By Product Category: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Skin Care | $ | 1,416 | $ | 574 | $ | 842 | $ | (375) | $ | 27 | $ | — | $ | 494 | 100 | +% | 52 | % | ||||||||||||||||||||||||||||||||||||||
| Makeup | (70) | (441) | 371 | (308) | 35 | (159) | (61) | 84 | (100 | +) | ||||||||||||||||||||||||||||||||||||||||||||||
| Fragrance | 204 | (378) | 582 | (549) | 13 | — | 46 | 100 | + | 27 | ||||||||||||||||||||||||||||||||||||||||||||||
| Hair Care | (4) | (41) | 37 | — | 9 | — | 46 | 90 | 100 | + | ||||||||||||||||||||||||||||||||||||||||||||||
| Other | 57 | (13) | 70 | (54) | — | — | 16 | 100 | + | 39 | ||||||||||||||||||||||||||||||||||||||||||||||
| 1,603 | (299) | $ | 1,902 | $ | (1,286) | $ | 84 | $ | (159) | $ | 541 | 100 | +% | 47 | % | |||||||||||||||||||||||||||||||||||||||||
| Charges associated with restructuring and other activities | (823) | (486) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 780 | $ | (785) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
By Geographic Region: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Americas | $ | 211 | $ | (818) | $ | 1,029 | $ | (911) | $ | 84 | $ | (159) | $ | 43 | 100 | +% | 17 | % | ||||||||||||||||||||||||||||||||||||||
| EUKEM | 196 | 145 | 51 | — | — | 51 | 35 | 35 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 823 | 180 | 643 | (375) | — | — | 268 | 100 | + | 48 | ||||||||||||||||||||||||||||||||||||||||||||||
| Mainland China | 373 | 194 | 179 | — | — | — | 179 | 92 | 92 | |||||||||||||||||||||||||||||||||||||||||||||||
| 1,603 | (299) | $ | 1,902 | $ | (1,286) | $ | 84 | $ | (159) | $ | 541 | 100 | +% | 47 | % | |||||||||||||||||||||||||||||||||||||||||
| Charges associated with restructuring and other activities | (823) | (486) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 780 | $ | (785) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fiscal 2025 as Compared with Fiscal 2024
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 for the fiscal 2025 to fiscal 2024 comparative discussion for our net sales and operating results on a consolidated basis and by product category. Refer below for the fiscal 2025 to fiscal 2024 net sales and operating results by geographic region comparative discussion under the revised geographic region structure, effective July 1, 2025, as recast for comparability purposes.
NET SALES
Geographic Regions
Reported net sales for our geographic regions for the years ended June 30, 2025 and 2024 were as follows:
Year Ended June 30, | ||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | $ Change | % Change | % Change in Constant Currency(2) | |||||||||||||||||||||||||||
| The Americas | $ | 4,410 | $ | 4,579 | $ | (169) | (4) | % | (3) | % | ||||||||||||||||||||||
EUKEM | 3,566 | 3,539 | 27 | 1 | (1) | |||||||||||||||||||||||||||
Asia/Pacific(1) | 3,606 | 4,587 | (981) | (21) | (21) | |||||||||||||||||||||||||||
Mainland China | 2,741 | 2,904 | (163) | (6) | (6) | |||||||||||||||||||||||||||
| 14,323 | 15,609 | (1,286) | (8) | (8) | ||||||||||||||||||||||||||||
| Returns associated with restructuring and other activities | 3 | (1) | 4 | 100+ | 100+ | |||||||||||||||||||||||||||
| Net sales | $ | 14,326 | $ | 15,608 | $ | (1,282) | (8) | % | (8) | % | ||||||||||||||||||||||
(2) See “Reconciliations of Non-GAAP Financial Measures” beginning on page 50 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Reported net sales decreased in fiscal 2025, primarily driven by lower net sales in our travel retail business, and to a lesser extent, in Mainland China, North America and Korea, combined, of approximately $1,150 million.
The decrease in net sales from our travel retail business was primarily driven by Asia travel retail, reflecting ongoing subdued sentiment and lower conversion from Chinese consumers, the difficult comparison to the prior year due to our resumption of replenishment orders in the second half of fiscal 2024 and our strategic decision to reduce our exposure to reseller activity, as well as retailer shifts in strategies toward more profitable duty-free business models in both Korea and mainland China, which led to lower replenishment orders.
The decrease in net sales in Mainland China reflected the overall challenging retail environment, including subdued consumer sentiment.
The decrease in net sales in North America reflected ongoing retail softness for some brands, and pressure from subdued consumer confidence and sentiment in the second half of fiscal 2025, which led to elevated inventory levels and destocking at certain retailers, as well as the timing of shipments, which further pressured net sales compared to the prior year. Partially offsetting the net sales decline for North America in fiscal 2025 was the impact from the launch of eleven brands in Amazon's U.S. Premium Beauty store as of June 2025 compared to three brands as of June 2024, as well as the launch of three brands in the Amazon.ca (Canada) Premium Beauty store in fiscal 2025.
The net sales decline in Korea reflects the impact of political and social unrest, which reduced retail traffic and dampened retail sales, as well as the exit of Dr.Jart+ from the travel retail channel in Korea during the fiscal 2025 second quarter.
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Reported net sales in The Americas decreased 4% in fiscal 2025, driven by the decrease from volume of 8% and the unfavorable impact from foreign currency translation of 1%. These decreases were partially offset by an increase from pricing of 6%, reflecting the favorable impact from strategic pricing actions and changes in mix. Reported net sales in EUKEM increased 1% in fiscal 2025, driven by the increase from pricing of 4%, reflecting the favorable impact from strategic pricing actions, partially offset by changes in mix, and the favorable impact from foreign currency translation of 1%. Partially offsetting these increases was the decrease from volume of 4%. Reported net sales in Asia/Pacific decreased 21% in fiscal 2025, driven by the decrease from volume of 20%. Also contributing to the decrease was a decrease from pricing of 1%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions, and the unfavorable impact from foreign currency translation of 1%. Reported net sales in Mainland China decreased 6% in fiscal 2025, driven by the decrease from volume of 9%. Partially offsetting this decrease was an increase from pricing of 4%, reflecting the favorable impact from strategic pricing actions and changes in mix.
OPERATING RESULTS
Geographic Regions
Reported operating (loss) income for our geographic regions for the years ended June 30, 2025 and 2024 were as follows:
Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||
($ in millions) | 2025 | 2024 | $ Change | % Change (As Reported) | % Change (Non-GAAP)(1) | Non-GAAP Financial Measure(1) | ||||||||||||||||||||||||||||||||
| The Americas | $ | (818) | $ | 168 | $ | (986) | (100+)% | 38 | % | Adjusted for the impact of the impairment of goodwill and other intangible assets, the Talcum litigation settlement agreements and the change in fair value of DECIEM acquisition-related stock options | ||||||||||||||||||||||||||||
EUKEM | 145 | 102 | 43 | 42 | 31 | Adjusted for the impact of the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax | ||||||||||||||||||||||||||||||||
| Asia/Pacific | 180 | 510 | (330) | (65) | (43) | Adjusted for the impact of the impairment of goodwill and other intangible assets | ||||||||||||||||||||||||||||||||
Mainland China | 194 | 314 | (120) | (38) | (38) | |||||||||||||||||||||||||||||||||
| (299) | 1,094 | (1,393) | (100 | +) | (28) | % | ||||||||||||||||||||||||||||||||
Charges associated with restructuring and other activities | (486) | (124) | (362) | (100 | +) | |||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (785) | $ | 970 | $ | (1,755) | (100+)% | |||||||||||||||||||||||||||||||
(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 50 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Reported operating results in The Americas decreased $986 million, or over 100%, in fiscal 2025, reflecting the unfavorable year-over-year impacts of other intangible asset impairment charges relating to TOM FORD and Too Faced, combined, of $898 million and a goodwill impairment charge relating to Too Faced of $13 million. Also contributing to the decrease in operating results were lower net sales and the unfavorable year-over-year impact of the charge in fiscal 2025 associated with the Talcum litigation settlement agreements of $159 million. Partially offsetting the decrease in operating results in The Americas was lower cost of sales and a decrease in non-consumer-facing expenses, which included net benefits of the PRGP.
Reported operating income in EUKEM increased $43 million, or 42%, in fiscal 2025, reflecting lower cost of sales, including net benefits from the PRGP, and higher net sales, partially offset by an increase in consumer-facing investments to drive sales.
Reported operating income in Asia/Pacific decreased $330 million, or 65%, in fiscal 2025, reflecting a decrease in net sales, partially offset by lower cost of sales and a decrease in non-consumer-facing expenses, which included net benefits of the PRGP as well as lower shipping expenses due to a decrease in net sales and the favorable year-over-year impact of $96 million in goodwill and other intangible asset impairment charges relating to Dr.Jart+.
Reported operating income in Mainland China decreased $120 million, or 38%, in fiscal 2025, reflecting lower net sales and the unfavorable year-over-year impact of a change in policy related to local government subsidies in China, partially offset by lower cost of sales.
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RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
The following table reconciles the change in net sales by geographic region, as reported, to the change in net sales excluding the effects of foreign currency translation:
| As Reported | ||||||||||||||||||||||||||||||||||||||||||||
| Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | Variance | Impact of foreign currency translation | Variance, in constant currency | % Change, as reported | % Change, in constant currency | |||||||||||||||||||||||||||||||||||||
| By Geographic Region: | ||||||||||||||||||||||||||||||||||||||||||||
| The Americas | $ | 4,410 | $ | 4,579 | $ | (169) | $ | 53 | $ | (116) | (4) | % | (3) | % | ||||||||||||||||||||||||||||||
| EUKEM | 3,566 | 3,539 | 27 | (49) | (22) | 1 | (1) | |||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 3,606 | 4,587 | (981) | 29 | (952) | (21) | (21) | |||||||||||||||||||||||||||||||||||||
| Mainland China | 2,741 | 2,904 | (163) | (5) | (168) | (6) | (6) | |||||||||||||||||||||||||||||||||||||
| 14,323 | 15,609 | (1,286) | 28 | (1,258) | (8) | % | (8) | % | ||||||||||||||||||||||||||||||||||||
| Returns associated with restructuring and other activities | 3 | (1) | 4 | — | 4 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 14,326 | $ | 15,608 | $ | (1,282) | $ | 28 | $ | (1,254) | ||||||||||||||||||||||||||||||||||
The following table reconciles the change in operating results by geographic region, as reported, to the change in operating results excluding the impact of the impairment of goodwill and other intangible assets, the Talcum litigation settlement agreements and the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax:
| As Reported | Add: Changes in impairments of goodwill and other intangible assets | Add: Talcum litigation settlement agreements | Add: Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax | Variance, as adjusted | % Change, as reported | % Change, as adjusted | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | Variance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
By Geographic Region: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Americas | $ | (818) | $ | 168 | $ | (986) | $ | 911 | $ | 159 | $ | (14) | $ | 70 | (100+)% | 38 | % | |||||||||||||||||||||||||||||||||||||||
| EUKEM | 145 | 102 | 43 | — | — | (9) | 34 | 42 | 31 | |||||||||||||||||||||||||||||||||||||||||||||||
| Asia/Pacific | 180 | 510 | (330) | (96) | — | — | (426) | (65) | (43) | |||||||||||||||||||||||||||||||||||||||||||||||
| Mainland China | 194 | 314 | (120) | — | — | — | (120) | (38) | (38) | |||||||||||||||||||||||||||||||||||||||||||||||
| (299) | 1,094 | $ | (1,393) | $ | 815 | $ | 159 | $ | (23) | $ | (442) | (100+)% | (28) | % | ||||||||||||||||||||||||||||||||||||||||||
| Charges associated with restructuring and other activities | (486) | (124) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | (785) | $ | 970 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal sources of funds historically have been cash flows from operations, borrowings pursuant to our commercial paper program, borrowings from the issuance of long-term debt and committed and uncommitted credit lines provided by banks and other lenders in the United States and abroad. At June 30, 2026, we had cash and cash equivalents of $3,498 million compared with $2,921 million at June 30, 2025. Our cash and cash equivalents are maintained at a number of financial institutions. To mitigate the risk of uninsured balances, we select financial institutions based on their credit ratings and financial strength, and we perform ongoing evaluations of these institutions to limit our concentration risk exposure.
Based on past performance and current expectations, we believe that cash on hand, cash generated from operations, available credit lines and access to credit markets will be adequate to support seasonal working capital needs, currently planned business operations, information technology enhancements, capital expenditures, acquisitions, dividends, stock repurchases, restructuring initiatives, commitments and other contractual obligations on both a near-term and long-term basis.
The Tax Cuts and Jobs Act resulted in the Transition Tax on unrepatriated earnings of our foreign subsidiaries and changed the tax law in ways that present opportunities to repatriate cash without additional U.S. federal income tax. We continue to analyze the permanent reinvestment assertion on our remaining applicable foreign earnings. We do not believe that continuing to reinvest these remaining applicable foreign earnings impairs our ability to meet our domestic debt or working capital obligations. If these reinvested earnings were repatriated into the United States as dividends, we would be subject to state income taxes and applicable foreign taxes in certain jurisdictions.
Tariffs negatively impacted our operating results during fiscal 2026 and we are continuing to monitor and assess the potential effects of changing tariff conditions globally.
Credit Ratings
Changes in our credit ratings will likely result in changes in our borrowing costs. Our credit ratings also impact the cost of our revolving credit facilities. Downgrades in our credit ratings may reduce our ability to issue commercial paper and/or long-term debt and would likely increase the relative costs of borrowing. A credit rating is not a recommendation to buy, sell, or hold securities, is subject to revision or withdrawal at any time by the assigning rating organization, and should be evaluated independently of any other rating. As of August 12, 2026, our long-term debt is rated A- with a negative outlook by Standard & Poor’s and A3 with a negative outlook by Moody’s.
Debt and Access to Liquidity
Total debt as a percent of total capitalization was 66% and 65% at June 30, 2026 and 2025, respectively.
For further information regarding our current and long-term debt and available financing, see Item 8. Financial Statements and Supplementary Data – Note 11 – Debt.
Cash Flows
Year Ended June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
| Net cash provided by operating activities | $ | 1,773 | $ | 1,272 | ||||||||||
| Net cash used for investing activities | $ | (489) | $ | (623) | ||||||||||
Net cash used for financing activities | $ | (712) | $ | (1,144) | ||||||||||
The change in net cash flows provided by operating activities was primarily driven by higher net earnings, excluding non-cash items, and the favorable change in operating assets and liabilities variances.
The change in net cash flows used for investing activities was primarily driven by a favorable year-over-year impact from lower capital expenditures compared to the prior year.
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The change in net cash flows used for financing activities primarily reflected a decrease in repayments of long-term debt due to the repayment of the outstanding principal balance of our $500 million, 2.000% Senior Notes that matured during the fiscal 2025 second quarter, a decrease in dividends paid to stockholders in the current year, and the favorable year-over-year impact of settlements of cross-currency swap contracts. These decreases were partially offset by payments of the remaining deferred consideration in the fiscal 2026 first and third quarters associated with the fiscal 2023 acquisition of TOM FORD.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 for the fiscal 2025 to fiscal 2024 comparative discussions.
Dividends
For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock during the year ended June 30, 2026 and through August 12, 2026, see Item 8. Financial Statements and Supplementary Data – Note 17 – Common Stock.
Pension and Post-retirement Plan Funding
Several factors influence the annual funding requirements for our pension plans. For our domestic trust-based noncontributory qualified defined benefit pension plan (“U.S. Qualified Plan”), we seek to maintain appropriate funded percentages. For any future contributions to the U.S. Qualified Plan, we would seek to contribute an amount or amounts that would not be less than the minimum required by the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) and subsequent pension legislation, and would not be more than the maximum amount deductible for income tax purposes. For each international plan, our funding policies are determined by local laws and regulations. In addition, amounts necessary to fund future obligations under these plans could vary depending on estimated assumptions. The effect of our pension plan funding on future operating results will depend on economic conditions, employee demographics, mortality rates, the number of participants electing to take lump-sum distributions, investment performance and funding decisions.
For the U.S. Qualified Plan, we maintain an investment strategy of matching the duration of a substantial portion of the plan assets with the duration of the underlying plan liabilities. This strategy assists us in maintaining our overall funded ratio. For fiscal 2026 and 2025, we met or exceeded all contribution requirements under ERISA regulations for the U.S. Qualified Plan.
The following table summarizes actual and expected benefit payments and contributions for our other pension and post-retirement plans:
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | Expected 2027 | 2026 | 2025 | |||||||||||||||||
| Non-qualified domestic noncontributory pension plan benefit payments | $ | 31 | $ | 15 | $ | 9 | ||||||||||||||
| International defined benefit pension plan contributions | $ | 27 | $ | 32 | $ | 35 | ||||||||||||||
| Post-retirement plan benefit payments | $ | 10 | $ | 10 | $ | 14 | ||||||||||||||
Commitments and Contingencies
For a discussion of our commitments and contingencies, see Item 8. Financial Statements and Supplementary Data – Note 16 – Commitments and Contingencies.
Contractual Obligations
For a discussion of our contractual obligations, see Item 8. Financial Statements and Supplementary Data – Note 16 – Commitments and Contingencies (Contractual Obligations).
Derivative Financial Instruments and Hedging Activities
For a discussion of our derivative financial instruments and hedging activities, see Item 8. Financial Statements and Supplementary Data – Note 12 – Derivative Financial Instruments.
Foreign Exchange Risk Management
For a discussion of foreign exchange risk management, see Item 8. Financial Statements and Supplementary Data – Note 12 – Derivative Financial Instruments (Fair value hedges, Cash Flow Hedges, Net Investment Hedges).
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Credit Risk
For a discussion of credit risk, see Item 8. Financial Statements and Supplementary Data – Note 12 – Derivative Financial Instruments (Credit Risk).
Market Risk
We address certain financial exposures through a controlled program of market risk management that includes the use of foreign currency forward contracts to reduce the effects of fluctuating foreign currency exchange rates and to mitigate the change in fair value of specific assets and liabilities on the balance sheet, anticipated transactions and the net investment in certain foreign operations. To perform a sensitivity analysis of our foreign currency forward contracts, we assess the change in fair values from the impact of hypothetical changes in foreign currency exchange rates. A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our portfolio would have resulted in a net decrease in the fair value of our portfolio of approximately $164 million and $223 million as of June 30, 2026 and 2025, respectively. This potential change does not consider our underlying foreign currency exposures.
We also enter into cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt and to hedge a portion of the net investment in certain foreign operations. A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our cross-currency swap contracts would have resulted in a net decrease in the fair value of our cross-currency swap contracts of approximately $76 million and $85 million as of June 30, 2026 and 2025, respectively.
In addition, we enter into interest rate derivatives to manage the effects of interest rate movements on our funded indebtedness, including future debt issuances. Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $72 million and $43 million as of June 30, 2026 and 2025, respectively.
Our sensitivity analysis represents an estimate of reasonably possible net losses that would be recognized on our portfolio of derivative financial instruments assuming hypothetical movements in future market rates and is not necessarily indicative of actual results, which may or may not occur. It does not represent the maximum possible loss or any expected loss that may occur, since actual future gains and losses will differ from those estimated, based upon actual fluctuations in market rates, operating exposures, and the timing thereof, and changes in our portfolio of derivative financial instruments during the year. We believe, however, that any such loss incurred would be offset by the effects of market rate movements on the respective underlying transactions for which the derivative financial instrument was intended.
OFF-BALANCE SHEET ARRANGEMENTS
We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.
RECENTLY ISSUED ACCOUNTING STANDARDS
Refer to Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies for discussion regarding the potential impact of accounting standards that were recently issued but not yet effective, on our consolidated financial statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition at June 30, 2026 and our results of operations for the three fiscal years ended June 30, 2026 are based upon our consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in those financial statements. These estimates and assumptions can be subjective and complex and, consequently, actual results could differ from those estimates. We consider accounting estimates to be critical if the accounting estimate both (i) involves a significant level of estimation uncertainty, and (ii) has had or is reasonably likely to have a material impact on the Company's financial condition or results of operations. Our critical accounting policies relate to Goodwill and Other Indefinite-lived Intangible Assets – Impairment Assessment and Income Taxes.
Our management has discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of our Board of Directors.
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Goodwill and Other Indefinite-lived Intangible Assets – Impairment Assessment
Goodwill is calculated as the excess of the cost of purchased businesses over the estimated fair value of their underlying net assets. Other indefinite-lived intangible assets consist of trademarks. Goodwill and other indefinite-lived intangible assets are not amortized.
When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The quantitative impairment test for goodwill encompasses calculating the estimated fair value of a reporting unit and comparing the estimated fair value to its carrying value. If the carrying value exceeds the estimated fair value, an impairment charge is recorded, up to the total amount of goodwill allocated to that reporting unit.
When testing other indefinite-lived intangible assets for impairment, we also have the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the other indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative test. The quantitative impairment test for other indefinite-lived intangible assets encompasses calculating the estimated fair value of an other indefinite-lived intangible asset and comparing the estimated fair value to its carrying value. If the carrying value exceeds the estimated fair value, an impairment charge is recorded.
We elected to perform the qualitative assessment for the goodwill in certain of our reporting units and for certain of our other indefinite-lived intangible assets. This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors to determine if it was more-likely-than-not that the estimated fair values of the reporting units and other indefinite-lived intangible assets were below their carrying values. We considered macroeconomic factors including global economic growth, general macroeconomic trends for the markets in which the reporting units operate and the intangible assets are employed, and the growth of the global prestige beauty industry. In addition to these macroeconomic factors, among other things, we considered current results and forecasts for the respective reporting units and brands, any changes in the nature of the business, any significant legal, regulatory, contractual, political or other business climate factors, changes in the industry/competitive environment, changes in the composition or carrying amount of net assets and the Company's intention to sell or dispose of a reporting unit or cease the use of a trademark.
A quantitative assessment was performed for the goodwill in certain of our reporting units and for certain of our other indefinite-lived intangible assets. We engaged third-party valuation specialists and used industry accepted valuation models and criteria that were reviewed and approved by various levels of management. To determine the estimated fair value of the reporting units, we used an equal weighting of the income and market approaches. Under the income approach, we determined the estimated fair value using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflected the relative risk of the cash flows. Under the market approach, we utilized market multiples from publicly traded companies with similar operating and investment characteristics as the reporting unit. The significant assumptions used in each quantitative assessment using these two approaches include revenue growth rates and profit margins, a terminal value, a weighted average cost of capital used to discount future cash flows and comparable market multiples for the reporting unit. To determine the estimated fair value of other indefinite-lived intangible assets, we used an income approach, specifically the relief-from-royalty method. This method assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use the comparable asset. The significant assumptions used in each quantitative assessment using this approach include revenue growth rates and profit margins, a terminal value, a weighted average cost of capital used to discount future cash flows and a royalty rate.
For further discussion of the methods used and factors considered in our estimates as part of the impairment testing for goodwill and other indefinite-lived intangible assets, see Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies and Note 5 – Goodwill and Other Intangible Assets.
Income Taxes
We calculate and provide for income taxes in each tax jurisdiction in which we operate. As the application of various tax laws relevant to our global business is often uncertain, significant judgment is required in determining our annual tax expense and in evaluating our tax positions. The provision for income taxes includes the amounts payable or refundable for the current year, the effect of deferred taxes and impacts from uncertain tax positions.
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We recognize deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credit and other carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates when the assets and liabilities are expected to be realized or settled. We regularly review deferred tax assets for realizability and establish valuation allowances based on available evidence including historical operating losses, projected future taxable income, expected timing of the reversals of existing temporary differences, and appropriate tax planning strategies. If our assessment of the realizability of a deferred tax asset changes, an increase to a valuation allowance will result in a reduction of net earnings at that time, while the reduction of a valuation allowance will result in an increase of net earnings at that time.
We provide uncertain tax position reserves for U.S. federal, state, local and foreign tax exposures relating to periods subject to audit. The development of these reserves requires judgments about tax issues, potential outcomes and timing, and is a subjective critical estimate. We assess our tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions where it is more-likely-than-not that a tax benefit will not be sustained, no tax benefit has been recognized in the consolidated financial statements. We classify applicable interest and penalties as a component of the provision for income taxes. Although the outcome relating to these exposures is uncertain, in our opinion adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. If actual outcomes differ materially from these estimates, they could have a material impact on our consolidated net earnings.
For further discussion of Income Taxes, see Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies and Note 8 – Income Taxes.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
We and our representatives from time to time make written or oral forward-looking statements, including in this and other filings with the Securities and Exchange Commission, in our press releases and in our reports to stockholders, which may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like “expect,” “will,” “will likely result,” “would,” “believe,” “estimate,” “planned,” “plans,” “intends,” “may,” “should,” “could,” “anticipate,” “estimate,” “project,” “projected,” “forecast,” and “forecasted” or similar expressions. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, actual results may differ materially from our expectations. Factors that could cause actual results to differ from expectations include, without limitation:
(1)increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses;
(2)our ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in our business;
(3)consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell our products, an increase in the ownership concentration within the retail industry, ownership of retailers by our competitors or ownership of competitors by our customers that are retailers and our inability to collect receivables;
(4)destocking and tighter working capital management by retailers;
(5)the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs;
(6)shifts in the preferences of consumers as to how they perceive value and where and how they shop;
(7)social, political and economic risks to our foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States;
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(8)changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, our business, including those relating to our products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result;
(9)foreign currency fluctuations affecting our results of operations and the value of our foreign assets, the relative prices at which we and our foreign competitors sell products in the same markets and our operating and manufacturing costs outside of the United States;
(10)changes in global or local conditions, including those due to volatility in the global credit and equity markets, government economic policies, natural or man-made disasters, real or perceived epidemics, supply chain challenges, inflation, or increased energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase our products while traveling, the financial strength of our customers, suppliers or other contract counterparties, our operations, the cost and availability of capital which we may need for new equipment, facilities or acquisitions, the returns that we are able to generate on our pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying our critical accounting estimates;
(11)shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture our products or at our distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings;
(12)real estate rates and availability, which may affect our ability to increase or maintain the number of retail locations at which we sell our products and the costs associated with our other facilities;
(13)changes in product mix to products which are less profitable;
(14)our ability to acquire, develop or implement new information technology, including operational technology and websites, on a timely basis and within our cost estimates; to maintain continuous operations of our new and existing information technology; and to secure the data and other information that may be stored in such technologies or other systems or media;
(15)our ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom;
(16)consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation;
(17)the timing and impact of acquisitions, investments and divestitures; and
(18)additional factors as described in our filings with the Securities and Exchange Commission, including this Annual Report on Form 10-K for the fiscal year ended June 30, 2026.
We assume no responsibility to update forward-looking statements made herein or otherwise.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is set forth in Item 7 of this Annual Report on Form 10-K under the caption Liquidity and Capital Resources – Market Risk and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The information required by this item appears beginning on page F-1 of this Annual Report on Form 10-K and is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have evaluated the effectiveness of our disclosure controls and procedures, and, based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of June 30, 2026.
As part of our review of internal control over financial reporting, we make changes to systems and processes to improve such controls and increase efficiencies, while ensuring that we maintain an effective internal control environment. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of fiscal 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s report on internal control over financial reporting and the report of independent registered public accounting firm on our internal control over financial reporting are incorporated herein from pages F-2 and F-3, respectively.
Item 9B. Other Information.
Trading Arrangements
During the fiscal 2026 fourth quarter, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
Disclosure Required Pursuant to Section 13(r) of the Securities Exchange Act of 1934
During the fiscal 2026 fourth quarter, the Company made payments of five hundred and twenty-nine U.S. dollars to maintain its intellectual property rights in Iran, as part of its intellectual property protection efforts, under a specific license granted by the U.S. Department of Treasury’s Office of Foreign Asset Control (OFAC). The Company does not generate any revenues or profits from this activity, and plans to continue these activities, as authorized under the specific license. These trademarks are registered with the Intellectual Property Center of the Islamic Republic of Iran (IPC) through intellectual property counsel and service providers located in the United Arab Emirates and Iran. The payments were made to IPC at its account at the Central Bank of Iran, which was designated by OFAC as sanctioned under its counterterrorism authority pursuant to Executive Order 13224 on September 20, 2019.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this Item, not already provided herein under Item 1. Business – Information about our Executive Officers, will be included in our Proxy Statement for the 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”). The 2026 Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, 2026 and such information is incorporated herein by reference.
The Company has an insider trading policy which governs the purchase, sale, and/or other dispositions of our securities (and related derivative securities) by directors, officers and employees and other covered persons and is designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company. A copy of our Securities Trading Policy is included as Exhibit 19.1 to this Annual Report on Form 10-K.
Item 11. Executive Compensation.
The information required by this Item will be included in the 2026 Proxy Statement. The 2026 Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, 2026 and such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item, not already provided under Equity Compensation Plan Information as set forth below, will be included in the 2026 Proxy Statement. The 2026 Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, 2026 and such information is incorporated herein by reference.
Equity Compensation Plan Information
The following table summarizes the equity compensation plans under which our securities may be issued as of June 30, 2026 and does not include grants made or cancelled and options exercised after such date. The securities that may be issued consist solely of shares of our Class A Common Stock and all plans were approved by stockholders of the Company.
Equity Compensation Plan Information as of June 30, 2026
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights(2) | Weighted-average exercise price of outstanding options, warrants and rights(3) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)(4) | |||||||||||||||||
Equity compensation plans approved by security holders(1) | 14,996,797 | $169.67 | 11,757,860 | |||||||||||||||||
(1)Includes the Amended and Restated Fiscal 2002 Share Incentive Plan (the “2002 Plan”) and the Amended and Restated Non-Employee Director Share Incentive Plan (the “Director Plan”).
(2)Consists of 8,646,747 shares issuable upon exercise of outstanding options, 5,460,285 shares issuable upon conversion of outstanding Restricted Stock Units, 795,633 shares issuable upon conversion of outstanding Performance Share Units (“PSUs”) (assuming maximum payout for unvested PSUs, including those pending approval by the Stock Plan Subcommittee of our Board of Directors), and 94,132 shares issuable upon conversion of Share Units.
(3)Calculated based upon outstanding options in respect of 8,646,747 shares of our Class A Common Stock.
(4)The 2002 Plan authorizes the grant of shares and benefits other than stock options. As of June 30, 2026, there were 11,462,646 shares of Class A Common Stock available for issuance under the 2002 Plan (assuming maximum payout for unvested PSUs, including those pending approval by the Stock Plan Subcommittee of our Board of Directors). Shares underlying grants cancelled or forfeited under prior plans or agreements may be used for grants under the 2002 Plan. The Director Plan currently provides for an annual grant of options and stock units to non-employee directors. As of June 30, 2026, there were 295,214 shares available for issuance under the Director Plan.
If all of the outstanding options, warrants, rights, stock units and share units, as well as the securities available for future issuance, included in the first and third columns in the table above were converted to shares of Class A Common Stock as of June 30, 2026, the total shares of Common Stock outstanding (i.e. Class A plus Class B) would increase 7% to 388,553,224. Of the outstanding options to purchase 8,646,747 shares of Class A Common Stock, options to purchase 87,460 shares have an exercise price less than $78.95, the closing price on June 30, 2026. Assuming the exercise of only in-the-money options, the total shares outstanding would increase by less than 1% to 361,886,027.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item will be included in the 2026 Proxy Statement. The 2026 Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, 2026 and such information is incorporated herein by reference.
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Item 14. Principal Accounting Fees and Services.
The information required by this Item will be included in the 2026 Proxy Statement. The 2026 Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, 2026 and such information is incorporated herein by reference.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a)1 and 2. Financial Statements and Schedules - See index on Page F-1.
3. Exhibits:
| Exhibit Number | Description | |||||||
| 3.1 | Restated Certificate of Incorporation of The Estée Lauder Companies Inc. (filed as Exhibit 3.1 to our Form 8-K filed on November 18, 2025).* | |||||||
| 3.2 | Amended and Restated Bylaws (filed as Exhibit 3.2 to our Form 8-K filed on May 23, 2025).* | |||||||
| 4.1 | Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed as Exhibit 4.1 to our Form 10-K filed on August 20, 2025).* | |||||||
| 4.2 | Indenture, dated November 5, 1999, between the Company and State Street Bank and Trust Company, N.A. (filed as Exhibit 4 to Amendment No. 1 to our Form S-3 (No. 333-85947) filed on November 5, 1999).* | |||||||
| 4.3 | Officers’ Certificate, dated September 29, 2003, defining certain terms of the 5.75% Senior Notes due 2033 (filed as Exhibit 4.2 to our Form 8-K filed on September 29, 2003).* | |||||||
| 4.4 | Global Note for 5.75% Senior Notes due 2033 (filed as Exhibit 4.3 to our Form 8-K filed on September 29, 2003).* | |||||||
| 4.5 | Officers’ Certificate, dated May 1, 2007, defining certain terms of the 6.000% Senior Notes due 2037 (filed as Exhibit 4.2 to our Form 8-K filed on May 1, 2007).* | |||||||
| 4.6 | Global Note for 6.000% Senior Notes due 2037 (filed as Exhibit 4.4 to our Form 8-K filed on May 1, 2007).* | |||||||
4.7 | Officers’ Certificate, dated August 2, 2012, defining certain terms of the 3.700% Senior Notes due 2042 (filed as Exhibit 4.2 to our Form 8-K filed on August 2, 2012).* | |||||||
4.8 | Global Note for the 3.700% Senior Notes due 2042 (filed as Exhibit 4.4 to our Form 8-K filed on August 2, 2012).* | |||||||
4.9 | Officers’ Certificate, dated June 4, 2015, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.1 to our Form 8-K filed on June 4, 2015).* | |||||||
4.10 | Global Note for the 4.375% Senior Notes due 2045 (filed as Exhibit 4.2 to our Form 8-K filed on June 4, 2015).* | |||||||
4.11 | Officers’ Certificate, dated May 10, 2016, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.3 to our Form 8-K filed on May 10, 2016).* | |||||||
4.12 | Global Note for the 4.375% Senior Notes due 2045 (filed as Exhibit B in Exhibit 4.3 to our Form 8-K filed on May 10, 2016).* | |||||||
4.13 | Officers’ Certificate, dated February 9, 2017, defining certain terms of the 3.150% Senior Notes due 2027 (filed as Exhibit 4.3 to our Form 8-K filed on February 9, 2017).* | |||||||
4.14 | Form of Global Note for the 3.150% Senior Notes due 2027 (included as Exhibit A in Exhibit 4.3 to our Form 8-K filed on February 9, 2017).* | |||||||
4.15 | Officers’ Certificate, dated February 9, 2017, defining certain terms of the 4.150% Senior Notes due 2047 (filed as Exhibit 4.5 to our Form 8-K filed on February 9, 2017).* | |||||||
4.16 | Form of Global Note for the 4.150% Senior Notes due 2047 (included as Exhibit A in Exhibit 4.5 to our Form 8-K filed on February 9, 2017).* | |||||||
| 4.17 | Officers’ Certificate, dated November 21, 2019, defining certain terms of the 2.375% Senior Notes due 2029 (filed as Exhibit 4.3 to our Form 8-K filed on November 21, 2019).* | |||||||
| 4.18 | Form of Global Note for the 2.375% Senior Notes due 2029 (included as Exhibit A in Exhibit 4.3 to our Form 8-K filed on November 21, 2019).* | |||||||
| 4.19 | Officers’ Certificate, dated November 21, 2019, defining certain terms of the 3.125% Senior Notes due 2049 (filed as Exhibit 4.5 to our Form 8-K filed on November 21, 2019).* | |||||||
| 4.20 | Form of Global Note for the 3.125% Senior Notes due 2049 (included as Exhibit A in Exhibit 4.5 to our Form 8-K filed on November 21, 2019).* | |||||||
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| Exhibit Number | Description | |||||||
| 4.21 | Officers’ Certificate, dated April 13, 2020, defining certain terms of the 2.600% Senior Notes due 2030 (filed as Exhibit 4.1 to our Form 8-K filed on April 13, 2020).* | |||||||
| 4.22 | Form of Global Note for the 2.600% Senior Notes due 2030 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on April 13, 2020).* | |||||||
| 4.23 | Officers’ Certificate, dated March 4, 2021, defining certain terms of the 1.950% Senior Notes due 2031 (filed as Exhibit 4.1 to our Form 8-K filed on March 4, 2021).* | |||||||
| 4.24 | Form of Global Note for the 1.950% Senior Notes due 2031 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on March 4, 2021).* | |||||||
| 4.25 | Officers’ Certificate, dated May 12, 2023, defining certain terms of the 4.375% Senior Notes due 2028 (filed as Exhibit 4.1 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.26 | Form of Global Note for the 4.375% Senior Notes due 2028 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.27 | Officers’ Certificate, dated May 12, 2023, defining certain terms of the 4.650% Senior Notes due 2033 (filed as Exhibit 4.3 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.28 | Form of Global Note for the 4.650% Senior Notes due 2033 (included as Exhibit A in Exhibit 4.3 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.29 | Officers’ Certificate, dated May 12, 2023, defining certain terms of the 5.150% Senior Notes due 2053 (filed as Exhibit 4.5 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.30 | Form of Global Note for the 5.150% Senior Notes due 2053 (included as Exhibit A in Exhibit 4.5 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.31 | Officers’ Certificate, dated February 14, 2024, defining certain terms of the 5.000% Senior Notes due 2034 (filed as Exhibit 4.1 to our Form 8-K filed on February 14, 2024).* | |||||||
| 4.32 | Form of Global Note for the 5.000% Senior Notes due 2034 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on February 14, 2024).* | |||||||
| 10.1 | Stockholders’ Agreement, dated November 22, 1995 (filed as Exhibit 10.1 to our Form 10-K filed on September 15, 2003).* | |||||||
| 10.1a | Amendment No. 1 to Stockholders’ Agreement (filed as Exhibit 10.1 to our Form 10-Q filed on October 30, 1996).* | |||||||
| 10.1b | Amendment No. 2 to Stockholders’ Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on January 28, 1997).* | |||||||
| 10.1c | Amendment No. 3 to Stockholders’ Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on April 29, 1997).* | |||||||
| 10.1d | Amendment No. 4 to Stockholders’ Agreement (filed as Exhibit 10.1d to our Form 10-K filed on September 18, 2000).* | |||||||
| 10.1e | Amendment No. 5 to Stockholders’ Agreement (filed as Exhibit 10.1e to our Form 10-K filed on September 17, 2002).* | |||||||
| 10.1f | Amendment No. 6 to Stockholders’ Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on January 27, 2005).* | |||||||
| 10.1g | Amendment No. 7 to Stockholders’ Agreement (filed as Exhibit 10.7 to our Form 10-Q filed on October 30, 2009).* | |||||||
| 10.2 | Registration Rights Agreement, dated November 22, 1995 (filed as Exhibit 10.2 to our Form 10-K filed on September 15, 2003).* | |||||||
| 10.2a | First Amendment to Registration Rights Agreement (originally filed as Exhibit 10.3 to our Form 10-K filed on September 10, 1996) (re-filed as Exhibit 10.2a to our Form 10-K filed on August 25, 2017).* | |||||||
| 10.2b | Second Amendment to Registration Rights Agreement (filed as Exhibit 10.1 to our Form 10-Q filed on April 29, 1997).* | |||||||
| 10.2c | Third Amendment to Registration Rights Agreement (filed as Exhibit 10.2c to our Form 10-K filed on September 17, 2001).* | |||||||
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| Exhibit Number | Description | |||||||
| 10.2d | Fourth Amendment to Registration Rights Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on January 29, 2004).* | |||||||
| 10.3 | The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2019, as further amended through January 1, 2022 (filed as Exhibit 10.2 to our Form 10-Q filed on February 3, 2022).*† | |||||||
| 10.3a | Amendment to amended and restated The Estee Lauder Companies Retirement Growth Account Plan, effective as of May 31, 2022 (filed as Exhibit 10.1 to our Form 10-Q filed on May 3, 2022).*† | |||||||
| 10.3b | The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2023 (filed as Exhibit 10.1 to our Form 10-Q filed on February 2, 2023).*† | |||||||
10.3c | Amendments to The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2023, as further amended effective January 1, 2025 (filed as Exhibit 10.5 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.4 | The Estee Lauder Inc. Retirement Benefits Restoration Plan (filed as Exhibit 10.5 to our Form 10-K filed on August 20, 2010).*† | |||||||
| 10.5 | Executive Annual Incentive Plan (filed as Exhibit 10.5a to our Form 10-K filed on August 18, 2023).*† | |||||||
| 10.5a | Executive Annual Incentive Plan (filed as Exhibit 10.5b to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.6 | Employment Agreement with William P. Lauder (filed as Exhibit 10.1 to our Form 8-K filed on September 17, 2010).*† | |||||||
| 10.6a | Amendment to Employment Agreement with William P. Lauder (filed as Exhibit 10.1 to our Form 8-K filed on February 27, 2013).*† | |||||||
| 10.7 | Employment Agreement with Jane Hertzmark Hudis (filed as Exhibit 10.13 to our Form 10-K filed on August 24, 2022).*† | |||||||
| 10.8 | Employment Agreement with Jane Lauder (filed as Exhibit 10.1 to our Form 10-Q filed on May 3, 2023).*† | |||||||
| 10.9 | Employment Agreement with Stéphane de La Faverie (filed as Exhibit 10.13 to our Form 10-K filed on August 19, 2024).*† | |||||||
| 10.9a | Amended and Restated Employment Agreement with Stéphane de La Faverie (filed as Exhibit 10.2 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.10 | Employment Agreement with Akhil Shrivastava (filed as Exhibit 10.1 to our Form 8-K filed on July 23, 2024).*† | |||||||
| 10.11 | Employment Agreement with Rashida La Lande (filed as Exhibit 10.15 to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.12 | Employment Agreement with Roberto Canevari.† | |||||||
| 10.13 | Form of Deferred Compensation Agreement (interest-based) with Outside Directors (filed as Exhibit 10.14 to our Form 10-K filed on September 17, 2001).*† | |||||||
| 10.13a | Form of Deferred Compensation Agreement (interest-based) with Outside Directors (including Election Form) (filed as Exhibit 10.12a to our Form 10-K filed on August 24, 2018).*† | |||||||
| 10.14 | Form of Deferred Compensation Agreement (stock-based) with Outside Directors (filed as Exhibit 10.15 to our Form 10-K filed on September 17, 2001).*† | |||||||
| 10.14a | Form of Deferred Compensation Agreement (stock-based) with Outside Directors (including Election Form) (filed as Exhibit 10.13a to our Form 10-K filed on August 24, 2018).*† | |||||||
| 10.15 | The Estee Lauder Companies Inc. Non-Employee Director Share Incentive Plan (as amended and restated on November 9, 2007) (filed as Exhibit 99.1 to our Form S-8 filed on November 9, 2007).*† | |||||||
| 10.15a | The Estee Lauder Companies Inc. Non-Employee Director Share Incentive Plan (as amended on July 14, 2011) (filed as Exhibit 10.15a to our Form 10-K filed on August 22, 2011).*† | |||||||
| 10.15b | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (filed as Exhibit 10.2 to our Form 8-K filed on November 16, 2015).*† | |||||||
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| Exhibit Number | Description | |||||||
| 10.15c | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (as of November 1, 2017) (filed as Exhibit 10.1 to our Form 10-Q filed on November 1, 2017).*† | |||||||
| 10.15d | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (as of August 22, 2019) (filed as Exhibit 10.1 to our Form 10-Q filed on October 31, 2019).*† | |||||||
| 10.15e | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (as of July 13, 2021) (filed as Exhibit 10.15e to our Form 10-K filed on August 27, 2021).*† | |||||||
| 10.16 | Summary of Compensation for Non-Employee Directors of the Company (filed as Exhibit 10.4 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.17 | Form of Stock Option Agreement for Annual Stock Option Grants under Non-Employee Director Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 99.2 to our Form S-8 filed on November 9, 2007).*† | |||||||
| 10.17a | Form of Stock Option Agreement for Annual Stock Option Grants under the Amended and Restated Non-Employee Director Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.2 to our Form 10-Q filed on October 31, 2019).*† | |||||||
| 10.18 | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.17 to our Form 10-K filed on August 17, 2012).*† | |||||||
| 10.18a | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Form 8-K filed on November 16, 2015).*† | |||||||
| 10.18b | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.16b to our Form 10-K filed on August 25, 2017).*† | |||||||
| 10.18c | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Form 8-K filed on November 19, 2019).*† | |||||||
| 10.18d | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Form 8-K filed on November 13, 2024).*† | |||||||
| 10.18e | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16y to our Form 10-K filed on August 20, 2014).*† | |||||||
| 10.18f | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16m to our Form 10-K filed on August 25, 2017).*† | |||||||
| 10.18g | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17l to our Form 10-K filed on August 23, 2019).*† | |||||||
| 10.18h | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Form 8-K filed on August 21, 2025).*† | |||||||
| 10.18i | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant).† | |||||||
| 10.18j | Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18t to our Form 10-K filed on August 27, 2021).*† | |||||||
| 10.18k | Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.3 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.18l | Form of Non-annual Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant).† | |||||||
| 10.18m | Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18bb to our Form 10-K filed on August 28, 2020).*† | |||||||
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| Exhibit Number | Description | |||||||
| 10.18n | Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18cc to our Form 10-K filed on August 28, 2020).*† | |||||||
| 10.18o | Form of Non-annual Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18dd to our Form 10-K filed on August 28, 2020).*† | |||||||
| 10.18p | Form of Restricted Stock Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.21r to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.18q | Form of Non-annual Restricted Stock Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.21s to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.18r | Form of PRGP Non-annual Restricted Stock Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.21t to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.19 | $2.5 Billion Credit Facility, dated as of June 7, 2024 among The Estée Lauder Companies Inc., the Eligible Subsidiaries of the Company, as defined therein, the lenders listed therein, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to our Form 8-K filed on June 7, 2024).* | |||||||
| 10.20 | Services Agreement, dated January 1, 2003, among Estee Lauder Inc., Melville Management Corp., Leonard A. Lauder, and William P. Lauder (filed as Exhibit 10.2 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.20a | Amended and Restated Services Agreement, dated as of August 18, 2026, by and among Estee Lauder Inc. and Melville Management Corporation. | |||||||
| 10.20b | Agreement of Sublease, dated May 18, 2022, between Editions de Parfums LLC, Sublandlord and Melville Management Corporation, Subtenant (filed as Exhibit 10.21a to our Form 10-K filed on August 24, 2022).* | |||||||
| 10.21 | Services Agreement, dated November 22, 1995, between Estee Lauder Inc. and RSL Investment Corp. (filed as Exhibit 10.3 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22 | Agreement of Sublease and Guarantee of Sublease, dated April 1, 2005, among Aramis Inc., RSL Management Corp., and Ronald S. Lauder (filed as Exhibit 10.4 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22a | First Amendment to Sublease, dated February 28, 2007, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.5 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22b | Second Amendment to Sublease, dated January 27, 2010, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.6 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22c | Third Amendment to Sublease, dated November 3, 2010, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.1 to our Form 10-Q filed on February 4, 2011).* | |||||||
| 10.22d | Fourth Amendment to Sublease, dated March 4, 2020, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.1 to our Form 10-Q filed on May 1, 2020).* | |||||||
| 10.23 | Form of Art Loan Agreement between Lender and Estee Lauder Inc. (filed as Exhibit 10.7 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.24 | Creative Consultant Agreement, dated April 6, 2011, between Estee Lauder Inc. and Aerin Lauder Zinterhofer (filed as Exhibit 10.1 to our Form 8-K filed on April 8, 2011).*† | |||||||
| 10.24a | First Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer dated October 28, 2014 (filed as Exhibit 10.23a to our Form 10-K filed on August 20, 2015).*† | |||||||
| 10.24b | Second Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer effective July 1, 2016 (filed as Exhibit 10.23b to our Form 10-K filed on August 24, 2016).*† | |||||||
| 10.24c | Third Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer effective July 1, 2021 (filed as Exhibit 10.24c to our Form 10-K filed on August 27, 2021).*† | |||||||
| 10.24d | Fourth Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer effective July 1, 2024 (filed as Exhibit 10.25d to our Form 10-K filed on August 19, 2024).*† | |||||||
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| Exhibit Number | Description | |||||||
| 10.25 | License Agreement, dated April 6, 2011, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc. (filed as Exhibit 10.2 to our Form 8-K filed on April 8, 2011).* | |||||||
| 10.25a | First Amendment to the April 6, 2011 License Agreement, dated January 22, 2019, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc. (filed as Exhibit 10.1 to our Form 10-Q filed on May 1, 2019).* | |||||||
| 10.25b | Second Amendment to the April 6, 2011 License Agreement, dated February 22, 2019, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc. (filed as Exhibit 10.2 to our Form 10-Q filed on May 1, 2019).* | |||||||
| 19.1 | ||||||||
| 21.1 | List of subsidiaries. | |||||||
| 23.1 | Consent of PricewaterhouseCoopers LLP. | |||||||
| 24.1 | Power of Attorney. | |||||||
| 31.1 | Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO). | |||||||
| 31.2 | Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO). | |||||||
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO). (furnished) | |||||||
| 32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO). (furnished) | |||||||
97.1 | The Estée Lauder Companies Inc. Incentive-Based Compensation Recovery Policy (2023 Clawback Policy) (filed as Exhibit 97.1 to our Form 10-K filed on August 19, 2024).* | |||||||
| 101.1 | The following materials from The Estée Lauder Companies Inc.’s Form 10-K for the year ended June 30, 2026 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Earnings (Loss), (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements. | |||||||
| 104 | The cover page from The Estée Lauder Companies Inc.’s Form 10-K for the year ended June 30, 2026 is formatted in iXBRL. | |||||||
____________________
* Incorporated herein by reference.
† Exhibit is a management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary.
None.
65
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| THE ESTÉE LAUDER COMPANIES INC. | ||||||||
| By | /s/ AKHIL SHRIVASTAVA | |||||||
Akhil Shrivastava Executive Vice President and Chief Financial Officer | ||||||||
| Date: August 19, 2026 | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
| Signature | Title (s) | Date | ||||||||||||
STÉPHANE DE LA FAVERIE* | President, Chief Executive Officer and a Director (Principal Executive Officer) | August 19, 2026 | ||||||||||||
Stéphane de La Faverie | ||||||||||||||
| CHARLENE BARSHEFSKY* | Director | August 19, 2026 | ||||||||||||
| Charlene Barshefsky | ||||||||||||||
| PAUL J. FRIBOURG* | Director | August 19, 2026 | ||||||||||||
| Paul J. Fribourg | ||||||||||||||
| JENNIFER HYMAN* | Director | August 19, 2026 | ||||||||||||
| Jennifer Hyman | ||||||||||||||
GARY M. LAUDER* | Director | August 19, 2026 | ||||||||||||
Gary M. Lauder | ||||||||||||||
| JANE LAUDER* | Director | August 19, 2026 | ||||||||||||
| Jane Lauder | ||||||||||||||
| WILLIAM P. LAUDER* | Chair of the Board | August 19, 2026 | ||||||||||||
| William P. Lauder | ||||||||||||||
| ANNABELLE YU LONG* | Director | August 19, 2026 | ||||||||||||
| Annabelle Yu Long | ||||||||||||||
| ARTURO NUÑEZ* | Director | August 19, 2026 | ||||||||||||
| Arturo Nuñez | ||||||||||||||
| BARRY S. STERNLICHT* | Director | August 19, 2026 | ||||||||||||
| Barry S. Sternlicht | ||||||||||||||
| DANA STRONG* | Director | August 19, 2026 | ||||||||||||
| Dana Strong | ||||||||||||||
| JENNIFER TEJADA* | Director | August 19, 2026 | ||||||||||||
| Jennifer Tejada | ||||||||||||||
| RICHARD F. ZANNINO* | Director | August 19, 2026 | ||||||||||||
| Richard F. Zannino | ||||||||||||||
ERIC L. ZINTERHOFER* | Director | August 19, 2026 | ||||||||||||
Eric L. Zinterhofer | ||||||||||||||
/s/ AKHIL SHRIVASTAVA | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | August 19, 2026 | ||||||||||||
Akhil Shrivastava | ||||||||||||||
___________________________________________
* By signing his name hereto, Akhil Shrivastava signs this document in the capacities indicated above and on behalf of the persons indicated above pursuant to powers of attorney duly executed by such persons and filed herewith.
| By | /s/ AKHIL SHRIVASTAVA | ||||
Akhil Shrivastava (Attorney-in-Fact) | |||||
66
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THE ESTÉE LAUDER COMPANIES INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||||||
| Financial Statements: | ||||||||
Management’s Report on Internal Control Over Financial Reporting | F- | 2 | ||||||
Report of Independent Registered Public Accounting Firm ( | F- | 3 | ||||||
Consolidated Statements of Earnings (Loss) | F- | 5 | ||||||
Consolidated Statements of Comprehensive Income (Loss) | F- | 6 | ||||||
Consolidated Balance Sheets | F- | 7 | ||||||
Consolidated Statements of Equity and Redeemable Noncontrolling Interest | F- | 8 | ||||||
Consolidated Statements of Cash Flows | F- | 9 | ||||||
Notes to Consolidated Financial Statements | F- | 10 | ||||||
| Financial Statement Schedule: | ||||||||
Schedule II - Valuation and Qualifying Accounts | S- | 1 | ||||||
All other schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto.
F-1
Table of Contents
Management’s Report on Internal Control over Financial Reporting
Management of The Estée Lauder Companies Inc. (including its subsidiaries) (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended).
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision of and with the participation of the Chief Executive Officer and the Chief Financial Officer, the Company’s management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company’s management has concluded that, as of June 30, 2026, the Company’s internal control over financial reporting was effective.
The effectiveness of the Company’s internal control over financial reporting as of June 30, 2026 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under the heading “Report of Independent Registered Public Accounting Firm.”
/s/ Stéphane de La Faverie | /s/ Akhil Shrivastava | |||||||||||||
Stéphane de La Faverie | Akhil Shrivastava | |||||||||||||
| President and Chief Executive Officer | Executive Vice President and Chief Financial Officer | |||||||||||||
August 19, 2026
F-2
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of The Estée Lauder Companies Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of The Estée Lauder Companies Inc. and its subsidiaries (the “Company”) as of June 30, 2026 and 2025, and the related consolidated statements of earnings (loss), of comprehensive income (loss), of equity and redeemable noncontrolling interest and of cash flows for each of the three years in the period ended June 30, 2026, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended June 30, 2026 appearing on page S-1 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
F-3
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Other Indefinite-Lived Intangible Asset Impairment Assessments – Certain Trademarks
As described in Notes 2 and 5 to the consolidated financial statements, the Company’s consolidated other indefinite-lived intangible assets balance was $3,081 million as of June 30, 2026, a significant portion of which related to certain trademarks. Management assesses other indefinite-lived intangible assets at least annually for impairment as of the beginning of the fiscal fourth quarter or more frequently if certain events or circumstances exist. As disclosed by management, based on the results of these assessments, no impairment charges were recorded. The estimated fair value of other indefinite-lived intangible assets was determined by management using an income approach, specifically the relief-from-royalty method. The significant assumptions used in each quantitative assessment using this approach include revenue growth rates and profit margins, a terminal value, a weighted average cost of capital used to discount future cash flows, and a royalty rate.
The principal considerations for our determination that performing procedures relating to the other indefinite-lived intangible asset impairment assessments of certain trademarks is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of certain trademarks; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, weighted average cost of capital, and royalty rate, as applicable to the trademark; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s other indefinite-lived intangible asset impairment assessments, including controls over the valuation of certain trademarks. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of certain trademarks; (ii) evaluating the appropriateness of the relief-from-royalty method used by management; (iii) testing the completeness and accuracy of the underlying data used in the relief-from-royalty method; and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, weighted average cost of capital, and royalty rate, as applicable to the trademark. Evaluating management’s assumption related to revenue growth rates involved evaluating whether the assumption was reasonable considering (i) the current and past performance of the business; (ii) the consistency with external market and industry data; and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the relief-from-royalty method and (ii) the reasonableness of the weighted average cost of capital and royalty rate assumptions, as applicable to the trademark.
| /s/ PricewaterhouseCoopers LLP | |||||
New York, New York | |||||
| August 19, 2026 | |||||
| We have served as the Company’s auditor since 2020. | |||||
F-4
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
Year Ended June 30, | ||||||||||||||||||||
| (In millions, except per share data) | 2026 | 2025 | 2024 | |||||||||||||||||
| Net sales | $ | $ | $ | |||||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Gross profit | ||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||
| Restructuring and other charges | ||||||||||||||||||||
| Securities class action litigation settlement | ||||||||||||||||||||
Goodwill impairment | ||||||||||||||||||||
Impairment of other intangible assets | ||||||||||||||||||||
Talcum litigation settlement agreements | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
Operating income (loss) | ( | |||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Interest income and investment income, net | ||||||||||||||||||||
| Other components of net periodic benefit cost | ( | |||||||||||||||||||
Earnings (loss) before income taxes | ( | |||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||
Net earnings (loss) | ( | |||||||||||||||||||
| Net earnings attributable to redeemable noncontrolling interest | ( | |||||||||||||||||||
Net earnings (loss) attributable to The Estée Lauder Companies Inc. | $ | $ | ( | $ | ||||||||||||||||
Net earnings (loss) attributable to The Estée Lauder Companies Inc. per common share | ||||||||||||||||||||
| Basic | $ | $ | ( | $ | ||||||||||||||||
| Diluted | $ | $ | ( | $ | ||||||||||||||||
| Weighted-average common shares outstanding | ||||||||||||||||||||
| Basic | ||||||||||||||||||||
| Diluted | ||||||||||||||||||||
See notes to consolidated financial statements.
F-5
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
Net earnings (loss) | $ | $ | ( | $ | ||||||||||||||||
| Other comprehensive (loss) income: | ||||||||||||||||||||
| Net cash flow hedge | ( | ( | ||||||||||||||||||
| Cross-currency swap contract - fair value hedge | ( | |||||||||||||||||||
| Retirement plan and other retiree benefit adjustments | ( | ( | ||||||||||||||||||
| Translation adjustments | ( | ( | ||||||||||||||||||
| Income tax effect on components of other comprehensive income (loss) | ( | ( | ||||||||||||||||||
| Total other comprehensive (loss) income, net of tax | ( | ( | ||||||||||||||||||
Comprehensive income (loss) | ( | |||||||||||||||||||
| Comprehensive income attributable to redeemable noncontrolling interest: | ||||||||||||||||||||
| Net earnings | ( | |||||||||||||||||||
| Translation adjustments | ||||||||||||||||||||
| Total comprehensive income attributable to redeemable noncontrolling interest | ( | |||||||||||||||||||
Comprehensive income (loss) attributable to The Estée Lauder Companies Inc. | $ | $ | ( | $ | ||||||||||||||||
See notes to consolidated financial statements.
F-6
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED BALANCE SHEETS
June 30, | ||||||||||||||
(In millions, except share and per share data) | 2026 | 2025 | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Accounts receivable, net | ||||||||||||||
| Inventory and promotional merchandise | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property, plant and equipment, net | ||||||||||||||
| Other assets | ||||||||||||||
| Operating lease right-of-use assets | ||||||||||||||
| Goodwill | ||||||||||||||
| Other intangible assets, net | ||||||||||||||
| Other assets | ||||||||||||||
| Total other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current liabilities | ||||||||||||||
| Current debt | $ | $ | ||||||||||||
| Accounts payable | ||||||||||||||
| Operating lease liabilities | ||||||||||||||
| Other accrued liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Noncurrent liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Long-term operating lease liabilities | ||||||||||||||
| Other noncurrent liabilities | ||||||||||||||
| Total noncurrent liabilities | ||||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
Common stock, $ | ||||||||||||||
| Paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Less: Treasury stock, at cost; | ( | ( | ||||||||||||
| Total equity | ||||||||||||||
Total liabilities and equity | $ | $ | ||||||||||||
See notes to consolidated financial statements.
F-7
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
Year Ended June 30, | ||||||||||||||||||||
| (In millions, except per share data) | 2026 | 2025 | 2024 | |||||||||||||||||
| Common stock, beginning of year | $ | $ | $ | |||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Common stock, end of year | ||||||||||||||||||||
| Paid-in capital, beginning of year | ||||||||||||||||||||
| Common stock dividends | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
Purchase of shares from redeemable noncontrolling interest | ||||||||||||||||||||
| Paid-in capital, end of year | ||||||||||||||||||||
| Retained earnings, beginning of year | ||||||||||||||||||||
| Common stock dividends | ( | ( | ( | |||||||||||||||||
Net earnings (loss) attributable to The Estée Lauder Companies Inc. | ( | |||||||||||||||||||
| Retained earnings, end of year | ||||||||||||||||||||
Accumulated other comprehensive loss, beginning of year | ( | ( | ( | |||||||||||||||||
| Other comprehensive (loss) income attributable to The Estée Lauder Companies Inc. | ( | ( | ||||||||||||||||||
Purchase of shares from redeemable noncontrolling interest | ( | |||||||||||||||||||
Accumulated other comprehensive loss, end of year | ( | ( | ( | |||||||||||||||||
| Treasury stock, beginning of year | ( | ( | ( | |||||||||||||||||
| Stock-based compensation | ( | ( | ( | |||||||||||||||||
| Treasury stock, end of year | ( | ( | ( | |||||||||||||||||
| Total equity | $ | $ | $ | |||||||||||||||||
| Redeemable noncontrolling interest, beginning of year | $ | $ | $ | |||||||||||||||||
Net earnings attributable to redeemable noncontrolling interest | ||||||||||||||||||||
Purchase of shares from redeemable noncontrolling interest | ( | |||||||||||||||||||
| Translation adjustments | ( | |||||||||||||||||||
| Redeemable noncontrolling interest, end of year | $ | $ | $ | |||||||||||||||||
| Cash dividends declared per common share | $ | $ | $ | |||||||||||||||||
See notes to consolidated financial statements.
F-8
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| Cash flows from operating activities | ||||||||||||||||||||
| Net earnings (loss) | $ | $ | ( | $ | ||||||||||||||||
| Adjustments to reconcile net earnings (loss) to net cash flows from operating activities: | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Deferred income taxes | ( | ( | ( | |||||||||||||||||
| Non-cash stock-based compensation | ||||||||||||||||||||
| Net loss on disposal of property, plant and equipment | ||||||||||||||||||||
| Non-cash restructuring and other charges | ||||||||||||||||||||
| Pension and post-retirement benefit expense | ||||||||||||||||||||
| Pension and post-retirement benefit contributions | ( | ( | ( | |||||||||||||||||
Impairment of goodwill and other intangible assets | ||||||||||||||||||||
Other adjustments and non-cash items | ||||||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Decrease (increase) in accounts receivable, net | ( | |||||||||||||||||||
| Decrease in inventory and promotional merchandise | ||||||||||||||||||||
| (Increase) decrease in other assets, net | ( | ( | ||||||||||||||||||
| Increase (decrease) in accounts payable | ( | |||||||||||||||||||
| Increase (decrease) in other accrued and noncurrent liabilities | ( | |||||||||||||||||||
| Decrease in operating lease assets and liabilities, net | ( | ( | ( | |||||||||||||||||
| Net cash flows provided by operating activities | ||||||||||||||||||||
| Cash flows from investing activities | ||||||||||||||||||||
| Capital expenditures | ( | ( | ( | |||||||||||||||||
Proceeds from sale of property, plant and equipment | ||||||||||||||||||||
| Proceeds from property, plant and equipment insurance recoveries | ||||||||||||||||||||
| Purchases of investments | ( | ( | ( | |||||||||||||||||
| Proceeds from disposition of investments | ||||||||||||||||||||
| Payment for acquired business | ( | |||||||||||||||||||
| Settlement of net investment hedges | ( | ( | ( | |||||||||||||||||
| Net cash flows used for investing activities | ( | ( | ( | |||||||||||||||||
| Cash flows from financing activities | ||||||||||||||||||||
| Repayments of current debt, net | ( | |||||||||||||||||||
| Repayments of commercial paper (maturities after three months) | ( | |||||||||||||||||||
| Proceeds from issuance of long-term debt, net | ||||||||||||||||||||
Repayments of long-term debt | ( | ( | ( | |||||||||||||||||
| Debt issuance costs | ( | |||||||||||||||||||
| Payment of deferred consideration | ( | |||||||||||||||||||
Settlement of cross-currency swaps | ||||||||||||||||||||
| Net proceeds from stock-based compensation transactions | ||||||||||||||||||||
| Dividends paid to stockholders | ( | ( | ( | |||||||||||||||||
| Payments to acquire treasury stock | ( | ( | ( | |||||||||||||||||
| Payment for acquisition of noncontrolling interest | ( | |||||||||||||||||||
Payment for acquisition of redeemable noncontrolling interest | ( | |||||||||||||||||||
| Net cash flows used for financing activities | ( | ( | ( | |||||||||||||||||
| Effect of exchange rate changes on Cash and cash equivalents | ||||||||||||||||||||
| Net increase (decrease) in Cash and cash equivalents | ( | ( | ||||||||||||||||||
| Cash and cash equivalents at beginning of year | ||||||||||||||||||||
| Cash and cash equivalents at end of year | $ | $ | $ | |||||||||||||||||
See notes to consolidated financial statements.
F-9
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS
The Estée Lauder Companies Inc. manufactures, markets and sells skin care, makeup, fragrance and hair care products around the world. Products are marketed under owned brand names, including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, Jo Malone London, Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, The Ordinary, NIOD, Avestan and Loopha. The Estée Lauder Companies Inc. is also the global licensee of the AERIN, Balmain and Dr. Andrew Weil brand names for beauty-related products.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated.
Certain amounts in the notes to the consolidated financial statements of prior years have been reclassified to conform to current-year presentation.
Management Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, pension and other post-retirement benefit costs, business combinations and asset acquisitions, goodwill, other indefinite-lived intangible assets and long-lived assets, income taxes and legal contingencies. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, as relevant, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions will be reflected in the consolidated financial statements in future periods.
Currency Translation and Transactions
All assets and liabilities of foreign subsidiaries and affiliates are translated at year-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation (losses) gains, net of tax, reported as translation adjustments through other comprehensive (loss) income (“OCI”) attributable to The Estée Lauder Companies Inc. were $(127 ) million, $90 million and $(135 ) million, net of tax, in fiscal 2026, 2025 and 2024, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency, and these subsidiaries are not material to the Company's consolidated financial statements or liquidity in fiscal 2026, 2025 and 2024. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings.
The Company enters into foreign currency forward contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. Additionally, the Company enters into foreign currency forward contracts and cross-currency swap contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 12 – Derivative Financial Instruments for further discussion. The Company categorizes these instruments as entered into for purposes other than trading.
Net exchange (losses) gains on foreign currency transactions of $(20 ) million, $58 million and $77 million in fiscal 2026, 2025 and 2024, respectively, are included within Net sales and Selling, general and administrative expenses within the accompanying consolidated statements of earnings (loss). The impact recorded within Net sales relates solely to foreign currency forward contract derivatives. See Note 12 – Derivative Financial Instruments for further discussion.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash and Cash Equivalents
Cash and cash equivalents include $868 million and $1,017 million of short-term time deposits at June 30, 2026 and 2025, respectively. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Investments
Investments in the common stock of privately-held companies in which the Company has the ability to exercise significant influence, but less than a controlling financial interest, are accounted for under the equity method of accounting. For those equity securities without readily determinable fair values where the Company does not have the ability to exercise significant influence, the Company records them at cost, less impairment, plus/minus subsequent observable price changes, and performs an assessment each quarter to determine whether or not a triggering event has occurred that results in changes in fair value. Collectively, these investments were not material to the Company’s consolidated financial statements as of June 30, 2026 and 2025 and are included in Other assets in the accompanying consolidated balance sheets.
Accounts Receivable
Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions. Payment terms are short-term in nature and are generally less than one year.
See Note 14 – Revenue Recognition for additional information.
Inventory and Promotional Merchandise
Inventory and promotional merchandise only includes inventory considered saleable or usable in future periods, and is stated at the lower of cost or net realizable value, with cost being based on standard cost and production variances, which approximate actual cost on the first-in, first-out method. Cost components include raw materials, componentry, direct labor and overhead (e.g., indirect labor, utilities, depreciation, purchasing, receiving, inspection and warehousing) as well as inbound freight. Manufacturing overhead is allocated to the cost of inventory based on the normal production capacity. Unallocated overhead during periods of abnormally low production levels are recognized as cost of sales in the period in which they are incurred. Promotional merchandise is charged to expense at the time the merchandise is shipped to the Company’s customers. Included in inventory and promotional merchandise is an inventory obsolescence reserve, which represents the difference between the cost of the inventory and its net realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age and historical results. In addition, and as necessary, specific reserves may be established for future known or anticipated events.
Derivative Financial Instruments
The Company’s derivative financial instruments are recorded as either assets or liabilities on the balance sheet and measured at fair value. All derivatives are (i) designated as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge"), (ii) designated as a hedge of a forecasted transaction to manage the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge"), (iii) designated as a hedge of a net investment in certain foreign operations ("net investment hedge"), or (iv) not designated as a hedging instrument.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For each derivative contract entered into, where the Company looks to obtain hedge accounting treatment, the Company formally and contemporaneously documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction, the nature of the risk being hedged, and how the hedging instruments’ effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively. This process includes linking all derivatives to specific assets and liabilities on the balance sheet, net investments in certain foreign operations, or to specific firm commitments or forecasted transactions. At inception, the Company evaluates the effectiveness of hedge relationships quantitatively, and has elected to perform, after initial evaluation, qualitative effectiveness assessments of certain hedge relationships to support an ongoing expectation of high effectiveness, if effectiveness testing is required. If based on the qualitative assessment, it is determined that a derivative has ceased to be a highly effective hedge, the Company will perform a quantitative assessment to determine whether to discontinue hedge accounting with respect to that derivative prospectively.
For a fair value hedge, changes in the fair value of a derivative are recorded in current-period earnings, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk (including losses or gains on unrecognized firm commitments). For a cash flow hedge, changes in the fair value of a derivative of a forecasted transaction are recorded in OCI. Gains and losses deferred in OCI are then recognized in current-period earnings when earnings are affected by the variability of cash flows of the hedged forecasted transaction. The Company also enters into foreign currency forward contracts and cross-currency swap contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. The net gain or loss on these contracts is recorded within translation adjustments, as a component of accumulated other comprehensive loss ("AOCI") on the Company’s consolidated balance sheets, until the sale or substantially complete liquidation of the underlying assets of the Company’s investment. For derivative instruments, such as foreign currency forward contracts or option contracts, not designated as hedging instruments, changes in the fair value are reported in current-period earnings.
All derivative gains and losses relating to fair value hedges and cash flow hedges are recognized in the same income statement line as the hedged items. Cash flows from derivatives are classified within the consolidated statements of cash flows in the same category as the items being hedged. The cross-currency swap contracts designated as fair value hedges are classified within financing activities. The cross-currency swap contracts designated as net investment hedges are classified within investing activities. The foreign currency forward contracts designated as net investment hedges are classified within investing activities, except the portion related to the excluded component which is classified within operating activities. Cash flows, and their related gains and losses, from the remaining derivative instruments are classified within operating activities.
From a consolidated balance sheet perspective, derivatives with fair values in a net asset position are bifurcated based on the cash flows expected to occur within the next twelve months (current asset or liability) and those expected to occur beyond twelve months (noncurrent asset or liability). Derivatives with fair values in a net liability position are classified in total as current, regardless of the maturity date.
See Note 12 – Derivative Financial Instruments for further discussion.
Property, Plant and Equipment
Property, plant and equipment, including leasehold and other improvements that extend an asset’s useful life or productive capabilities, are carried at cost less accumulated depreciation and amortization. Costs incurred for computer software developed or obtained for internal use are capitalized during the application development stage and expensed as incurred during the preliminary project and post-implementation stages. Costs incurred for website development are capitalized within each applicable development stage as required. Capital costs incurred while an asset is being built, including any applicable interest costs, are classified as construction in progress and are reclassified to its respective asset class when placed into service. For financial statement purposes, depreciation is provided principally on the straight-line method over the estimated useful lives of the assets ranging from 2 to 40 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lives of the respective leases or the expected useful lives of those improvements.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Business Combinations and Asset Acquisitions
The Company evaluates whether a transaction meets the definition of a business. The Company first applies a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, the Company further considers whether the set of assets or acquired entities have at a minimum, inputs and processes that have the ability to create outputs in the form of revenue. If the assets or acquired entities meet this criteria, the transaction is accounted for as a business combination.
The Company uses the acquisition method of accounting for acquired businesses. Under the acquisition method, the Company's consolidated financial statements reflect the operations of an acquired business starting from the closing date of the acquisition. The Company allocates the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. Any residual purchase price is recorded as goodwill.
The Company recognizes assets acquired in an asset acquisition based on the cost to the Company on a relative fair value basis, which includes transaction costs in addition to consideration transferred and liabilities assumed or issued as part of the transaction. Neither goodwill nor bargain purchase gains are recognized in an asset acquisition; any excess of consideration transferred over the fair value of the net assets acquired, or the opposite, is allocated to qualifying assets based on their relative fair values.
Goodwill and Other Indefinite-lived Intangible Assets
Goodwill is calculated as the excess of the cost of purchased businesses over the estimated fair value of their underlying net assets. Other indefinite-lived intangible assets consist of trademarks. Goodwill and other indefinite-lived intangible assets are not amortized.
The Company assesses goodwill and other indefinite-lived intangible assets at least annually for impairment as of the beginning of the fiscal fourth quarter or more frequently if certain events or circumstances exist. The Company tests goodwill for impairment at the reporting unit level, which is one level below the Company’s operating segments. The Company identifies its reporting units by assessing whether the components of its operating segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components. The Company makes certain judgments and assumptions in allocating assets and liabilities to determine carrying values for its reporting units. When testing goodwill for impairment, the Company has the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The quantitative impairment test for goodwill encompasses calculating the estimated fair value of a reporting unit and comparing the estimated fair value to its carrying value. If the carrying value exceeds the estimated fair value, an impairment charge is recorded, up to the total amount of goodwill allocated to that reporting unit. When testing other indefinite-lived intangible assets for impairment, the Company also has the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the other indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative test. The quantitative impairment test for other indefinite-lived intangible assets encompasses calculating the estimated fair value of an other indefinite-lived intangible asset and comparing the estimated fair value to its carrying value. If the carrying value exceeds the estimated fair value, an impairment charge is recorded.
See Note 5 – Goodwill and Other Intangible Assets for further information.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-Lived Assets
The Company reviews long-lived assets, primarily intangible assets subject to amortization, right-of-use assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash flows from the use and eventual disposition of an asset group to its carrying value. The asset group is defined as the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be measured and recorded for the excess of the carrying value over the estimated fair value. The calculated impairment loss for an asset group only reduces the carrying amounts of the long-lived assets of the group and is allocated on a pro rata basis using the relative carrying amounts of those assets, however, the allocated impairment loss cannot reduce the carrying amount of a long-lived asset below its estimated fair value.
Leases
The Company recognizes a lease liability and a related right-of-use (“ROU”) asset at the commencement date for leases on its consolidated balance sheet, excluding short-term leases as noted below. The lease liability is equal to the present value of unpaid lease payments over the remaining lease term. The Company’s lease term at the commencement date may reflect options to extend or terminate the lease when it is reasonably certain that such options will be exercised. To determine the present value of the lease liability, if the rate implicit in the lease is not readily determinable, the Company uses an incremental borrowing rate, which is defined as the rate of interest that the Company would have to pay to borrow (on a collateralized basis over a similar term) an amount equal to the lease payments in similar economic environments. The ROU asset is based on the corresponding lease liability adjusted for certain items such as initial direct costs, prepaid lease payments and lease incentives received. Both operating and finance lease ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. After an ROU asset is impaired, any remaining balance of the ROU asset is amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful life.
After the lease commencement date, the Company evaluates lease modifications, if any, that could result in a change in the accounting for leases. For a lease modification, an evaluation is performed to determine if it should be treated as either a separate lease or a change in the accounting of an existing lease. In addition, significant changes in events or circumstances within the Company’s control are assessed to determine whether a change in the accounting for leases is required.
For lease modifications that result in partial termination of the lease, the Company has elected the proportional method whereby the carrying amount of the ROU asset is decreased in proportion with the full or partial termination of the lease based on the adjustment to the carrying value of the lease liability.
Certain of the Company’s leases contain variable lease payments for the right to use an underlying asset that vary due to changes in facts and circumstances occurring after the commencement date, other than the passage of time. Variable lease payments that are dependent on an index or rate (e.g., Consumer Price Index) are included in the initial measurement of the lease liability, the initial measurement of the ROU asset, and the lease classification test based on the index or rate as of the commencement date. Any changes from the commencement date estimation of the index- and rate-based variable payments are expensed as incurred in the period of the change. Variable lease payments that are not known at the commencement date and are determinable based on the performance or use of the underlying asset, are not included in the initial measurement of the lease liability or the ROU asset, but instead are expensed as incurred. The Company’s variable lease payments primarily include rents based on a percentage of sales in excess of stipulated levels, common area maintenance and real estate taxes based on the percentage of the total square footage leased by the Company, as well as variable costs relating to embedded leases, such as third-party manufacturing and logistics agreements.
Certain of the Company’s contracts contain lease components as well as non-lease components, such as an agreement to purchase services. For purposes of allocating contract consideration, the Company does not separate the lease components from non-lease components for all asset classes.
Short-term leases (i.e. leases with a term of 12 months or less) are not recorded as ROU assets or lease liabilities on the Company’s consolidated balance sheets, and the related lease payments are recognized in earnings on a straight-line basis over the lease term.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For certain leases relating to automobiles, information technology equipment and office equipment, the Company utilizes the portfolio approach. Under this approach, the Company combines and accounts for leases with similar characteristics (e.g., lease term, discount rates, etc.) as a single lease (as a portfolio), provided its application is not materially different when compared to the application at the individual lease level.
See Note 6 – Leases for further information.
Concentration of Credit Risk
The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to department stores, duty-free retailers, specialty-multi retailers, online pure players, perfumeries and pharmacies, and salons and spas. The Company grants credit to qualified customers. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments.
The Company’s largest customer for the year ended June 30, 2026 sells products primarily in China travel retail. This customer accounted for $161 million, or 10 %, and $97 million, or 7 %, of the Company's accounts receivable at June 30, 2026 and 2025, respectively.
Revenue Recognition
Performance Obligations
The Company recognizes revenue at a point in time when it satisfies a performance obligation by transferring control over a product and other promised goods and services to a customer.
The Company sells wholesale to customers in distribution channels that include department stores, travel retail, specialty-multi retailers, perfumeries and pharmacies, salons/spas and through various online sites operated by authorized retailers, including pure-play sites. The primary performance obligation related to these channels of distribution is product sales where revenue is recognized as control of the product transfers to the customer. In the Americas region, revenue is generally recognized at the time the product is made available and provided to the customer’s carrier at the Company’s location, and in the Europe, the United Kingdom and Ireland and Emerging Markets, Asia/Pacific and Mainland China regions, revenue is generally recognized based upon the customer’s receipt. The Company has certain arrangements with customers whereby it is responsible for shipping and handling through the named place of destination, which occurs after the customer has obtained control. As a result, the Company has made a policy election that permits the Company to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost rather than as an additional promised service. For these arrangements, the Company accrues all shipping and handling expenses related to the shipped products in the period that the revenue is recognized.
The Company also sells direct to consumers across freestanding stores, its brands' websites and through third-party online platforms. At Company-operated freestanding stores, revenue is recognized when control of the product is transferred at the point of sale. Revenue from online sales is recognized when control of the product is transferred, generally based upon the consumer’s receipt.
In connection with the sale of product, the Company may provide other promised goods and services that are deemed to be performance obligations. These are comprised of gift with purchase and purchase with purchase promotions, customer loyalty program obligations, gift cards and other promotional products including samples and testers.
The Company provides gift with purchase promotional products to certain customers generally without additional charge and also provides purchase with purchase promotional products to certain customers at a discount in relation to prices charged for saleable product. Revenue is allocated between saleable product, gift with purchase product and purchase with purchase product based on the estimated relative standalone selling prices. Revenue is deferred and ultimately recognized based on the timing differences, if any, between when control of these promotional products and control of the related saleable products transfer to the Company’s customer (e.g., a third-party retailer), which is calculated based on the weighted-average number of days between promotional periods. The estimated standalone selling price allocated to these promotional products is based on a cost plus margin approach.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company offers a number of different loyalty programs to its customers across brands, regions and distribution channels including points-based programs, tier-based programs and other programs. Revenue is allocated between the saleable product and the material right loyalty obligations based on relative standalone selling prices when the consumer purchases the products that are earning them the right to the future benefits. Deferred revenue related to the Company’s loyalty programs is estimated based on the standalone selling price and is adjusted for an estimated breakage factor. Standalone selling price is determined primarily using the observable market price of the good or service benefit if it is sold by the Company or a cost plus margin approach for goods/services not directly sold by the Company. Breakage rates consider historical patterns of redemption and/or expiration. Revenue is recognized when the benefits are redeemed or expire.
The Company also offers gift cards through Company-operated freestanding stores and Company-owned websites. The related deferred revenue is estimated based on expected breakage that considers historical patterns of redemption taking into consideration escheatment laws as applicable.
In situations where promotional products are provided by the Company to its customers at the same time as the related saleable product, such as shipments of samples and testers, the cost of these promotional products are recognized as a cost of sales at the same time as the related revenue is recognized and no deferral of revenue is required.
Product Returns, Sales Incentives and Other Forms of Variable Consideration
In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, markdowns, margin adjustments and early-payment discounts. The Company also enters into arrangements containing other forms of variable consideration and makes payments to certain of its customers related to demonstration, advertising and counter construction. These activities may be arranged either with unrelated third parties or in conjunction with the customer. To the extent the Company receives a distinct good or service in exchange for consideration and the fair value of the benefit can be reasonably estimated, the Company’s share of the demonstration and advertising costs of these transactions (regardless of to whom they were paid) are reflected in Selling, general and administrative expenses in the accompanying consolidated statements of earnings (loss), and for counter construction, the costs are capitalized into property, plant and equipment and depreciated over their useful lives into Selling, general and administrative expenses in the accompanying consolidated statements of earnings (loss). When the Company does not receive a distinct good or service or for which the Company cannot reasonably estimate the fair value of the good or service in these types of arrangements, the consideration payable to the customer is recorded as an adjustment to revenue at the later of when (i) the Company recognizes revenue for the transfer of the related goods or services to the customer, or (ii) the Company pays, or promises to pay, the consideration.
For the sale of goods with a right of return, the Company only recognizes revenue for the consideration it expects to be entitled to (considering the products to be returned) and records a sales return accrual within Other accrued liabilities for the amount it expects to credit back its customers. In addition, the Company recognizes an asset included in Inventory and promotional merchandise and a corresponding adjustment to Cost of sales for the right to recover goods from customers associated with the estimated returns.
The sales return accrual and corresponding asset include estimates that directly impact reported net sales. These estimates are calculated based on a history of actual returns, estimated future returns and information provided by retailers regarding their inventory levels. Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations. In addition, as necessary, sales return accruals and the related assets may be established for significant future known or anticipated events. The types of known or anticipated events that are considered, and will continue to be considered, include the financial condition of the Company’s customers, store closings by retailers, changes in the retail environment and the Company’s decision to continue to support new and existing products.
The Company estimates sales incentives and other variable consideration using the most likely amount method and records accruals within Other accrued liabilities when control of the related product is transferred to the customer. Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates. These estimates are supported by historical results as well as specific facts and circumstances related to the current period.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
See Note 14 – Revenue Recognition for further discussion and revenue disaggregated by geographic region. For revenue disaggregated by product category, see Note 23 – Segment Data and Related Information.
Royalty Revenue - License Arrangements
The Company has license arrangements for the license of the TOM FORD trademark to the Marcolin Group (“Marcolin”) for eyewear and Ermenegildo Zegna N.V. (“Zegna”) for fashionwear, which represents a revenue-generating activity in the ordinary course of business for the Company.
The Company’s performance obligation is to license the TOM FORD trademark to Marcolin and to Zegna, which grants them the right to access the symbolic intellectual property. The licensing arrangements stipulate that licensees must pay a sales-based royalty, with a guaranteed minimum, to the Company. The Company satisfies its performance obligation over the license period as it fulfills its promise to grant the licensees rights to use and benefit from the intellectual property, as well as maintain the intellectual property. As such, revenue for both the Marcolin and Zegna arrangements is recognized over time. Royalty payments are collected on a quarterly basis. The Company expects the guaranteed minimum royalty amounts to be exceeded and, as a result, sales-based royalties will be recognized in the period in which the sales occur. The upfront payment received from Marcolin in connection with the license arrangement is recognized on a straight-line basis over the estimated economic life of the license.
See Note 14 – Revenue Recognition for further information regarding the revenue recognition impacts.
Advertising and Promotion
Research and Development
Research and development expenses of $278 million, $316 million and $360 million in fiscal 2026, 2025 and 2024, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings (loss) and are expensed as incurred.
Shipping and Handling
Shipping and handling expenses of $731 million, $729 million and $792 million in fiscal 2026, 2025 and 2024, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings (loss) and include distribution center costs, promotional shipping costs, third-party logistics costs and outbound freight.
Royalty Fees - License Arrangements
The Company’s license agreements where it is the licensee provide the Company with worldwide rights to manufacture, market and sell beauty and beauty-related products (or particular categories thereof) using the licensors’ trademarks. The Company's current license arrangements have an initial term of approximately 5 years to 10 years, and are renewable subject to the Company’s compliance with the license agreement provisions. As of June 30, 2026, the remaining terms considering available renewal periods range from 4 years to 24 years. Under each license, the Company is required to pay royalties to the licensor, at least annually, based on net sales to third parties.
Certain license agreements may require minimum royalty payments, incremental royalties based on net sales levels and minimum spending on advertising and promotional activities. Royalty expenses are accrued in the period in which net sales are recognized while advertising and promotional expenses are accrued at the time these costs are incurred.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock-Based Compensation
The Company records stock-based compensation, measured at the fair value of the awards that are ultimately expected to vest, as an expense in the consolidated financial statements, net of estimated forfeitures. All excess tax deficiencies and tax benefits related to stock-based compensation awards are recorded as income tax expense or benefit in the accompanying consolidated statements of earnings (loss).
Income Taxes
The Company calculates and provides for income taxes in each tax jurisdiction in which it operates. As the application of various tax laws relevant to the Company’s global business is often uncertain, significant judgment is required in determining the Company’s annual tax expense and in evaluating the Company’s tax positions. The provision for income taxes includes the amounts payable or refundable for the current year, the effect of deferred taxes and impacts from uncertain tax positions.
The Company recognizes deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credit and other carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates when the assets and liabilities are expected to be realized or settled. The Company regularly reviews deferred tax assets for realizability and establishes valuation allowances based on available evidence including historical operating losses, projected future taxable income, expected timing of the reversals of existing temporary differences, and appropriate tax planning strategies. If the Company’s assessment of the realizability of a deferred tax asset changes, an increase to a valuation allowance will result in a reduction of net earnings at that time, while the reduction of a valuation allowance will result in an increase of net earnings at that time.
The Company provides uncertain tax position reserves for U.S. federal, state, local and foreign tax exposures relating to periods subject to audit. The development of these reserves requires judgments about tax issues, potential outcomes and timing, and is a subjective critical estimate. The Company assesses its tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions where it is more-likely-than-not that a tax benefit will not be sustained, no tax benefit has been recognized in the consolidated financial statements. The Company classifies applicable interest and penalties as a component of the provision for income taxes. Although the outcome relating to these exposures is uncertain, in management’s opinion adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. If actual outcomes differ materially from these estimates, they could have a material impact on the Company’s consolidated net earnings (loss).
Redeemable Noncontrolling Interest
On May 18, 2021, the Company acquired additional shares in DECIEM, a Toronto-based skin care company. The Company originally acquired a minority interest in DECIEM in June 2017. The acquisition of additional shares increased the Company's equity interest and was considered a step acquisition. As part of the increase in the Company's investment, the Company was granted the right to purchase (“Call Option”), and granted the remaining investors a right to sell to the Company (“Put Option”), the remaining interests after a r period, with a purchase price based on the future performance of DECIEM (the “net Put (Call) Option”).
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As a result of this redemption feature, the Company recorded redeemable noncontrolling interest, at its acquisition‑date fair value, that was classified as mezzanine equity in the accompanying consolidated balance sheets. Noncontrolling interest is adjusted each reporting period for income attributable to the noncontrolling interest. Each reporting period, an adjustment, if any, is then recorded to adjust the noncontrolling interest to the higher of either the redemption value, assuming it was redeemable at the reporting date, or its carrying value. If and when applicable, these adjustments are recorded in Paid-in capital and are not reflected in the accompanying consolidated statements of earnings (loss). In addition, based on the Company's policy election, if the redemption value exceeds the fair value of the noncontrolling interest on a cumulative basis, an adjustment is recorded in Retained earnings and the Company will adjust Net earnings (loss) attributable to The Estée Lauder Companies Inc. as required by the two-class method when calculating net earnings per common share. Prior to May 31, 2024, the fair value of the noncontrolling interest per share was calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) and the following key assumptions into the Monte Carlo method: risk-free rate, term to mid of last twelve-month period, operating leverage adjustment, net sales discount rate, EBITDA discount rate, EBITDA volatility and net sales volatility. The Company was not required to record any adjustments, as described above.
On May 31, 2024, the Company purchased the remaining interest of approximately 24 % on a fully diluted basis in DECIEM at a contractually calculated amount pursuant to the terms of the net Put (Call) Option, which resulted in the settlement of the redeemable noncontrolling interest and DECIEM stock options for $743 million and $114 million, respectively. Transaction costs associated with the purchase were $2 million and were recorded as an adjustment to Paid-in capital. As this purchase did not result in a change in control of DECIEM, the change in ownership interest was accounted for as an equity transaction. Differences between the balance of the redeemable noncontrolling interest at the date of redemption of the remaining interests and the consideration paid were recognized in Paid-in capital in the accompanying consolidated balance sheets and are not reflected in the accompanying consolidated statements of earnings (loss). As such, any adjustments in the consideration paid will be recognized in Paid-in capital. Payments for the acquisition of redeemable noncontrolling interest, inclusive of transaction costs, are classified as financing activities and payments to settle the DECIEM stock option liability are classified within operating activities within the accompanying consolidated statements of cash flows. As of June 30, 2026, the consideration paid to acquire the remaining interest is subject to the final calculation of the purchase price pursuant to the contract. These adjustments are not expected to be material.
Recently Adopted Accounting Standards
FASB ASU No. 2023-09 – Improvements to Income Tax Disclosures (Topic 740)
In December 2023, the FASB issued authoritative guidance to amend and enhance existing annual income tax disclosures primarily focusing on two reporting areas: (1) greater disaggregation of information in the effective tax rate reconciliations and (2) disclosure of income taxes paid, disaggregated by applicable jurisdiction.
Companies are required to use specific categories to prepare and disclose a tabular rate reconciliation (using both percentages and reporting currency amounts) of:
•the reported income tax expense (or benefit) from continuing operations and the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal income tax rate of the jurisdiction of domicile; and
•reconciling items within certain categories that are equal to or greater than a specified quantitative threshold, including the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items.
The guidance also requires companies to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign jurisdictions including individual jurisdictions with amounts paid equal to or greater than a specified quantitative threshold. The guidance also codifies existing U.S. Securities and Exchange Commission ("SEC") rules that require companies to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign as well as income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign jurisdictions.
Effective for the Company: The guidance became effective for the Company’s fiscal year ended June 30, 2026 Form 10-K and has been applied on a retrospective basis.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impact on consolidated financial statements: The Company applied the disclosure requirements as required by the amendment. Such information is included in Note 8 – Income Taxes and Note 22 – Statement of Cash Flows.
Recently Issued Accounting Standards
FASB ASU No. 2026-02 – Environmental Credits and Environmental Credit Obligations (Topic 818)
In May 2026, the FASB issued authoritative guidance establishing requirements for the recognition, measurement, presentation and disclosure of environmental credits and environmental credit obligations. Environmental credit assets should be recognized and measured, including both initial and subsequent measurement, based on their intended use as well as how the credits are obtained. Costs for environmental credits that do not meet the asset recognition criteria are expensed as incurred. Environmental credit obligation liabilities are measured based on the carrying amount of the environmental credit owned that are considered probable of being used to settle the obligation (funded portion), with any excess liability measured based on the fair value of the environmental credits necessary to settle that portion of the liability (unfunded portion) at the reporting date, with certain exceptions. Environmental credit assets and environmental credit obligations should be presented separately within an entity’s consolidated balance sheet. Entities are required to provide several quantitative and qualitative disclosures for their environmental credits and environmental obligations in annual reporting periods.
Effective for the Company: The guidance becomes effective for the Company’s first quarter of fiscal 2029 and is applied on a retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings (prior reporting periods are not recast). Early adoption is permitted as of the beginning of an annual reporting period.
Impact on consolidated financial statements: The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.
FASB ASU No. 2025-10 – Accounting for Government Grants Received by Business Entities (Topic 832)
In December 2025, the FASB issued authoritative guidance on the recognition, measurement, and presentation of government grants received by business entities. A government grant is defined as a transfer of a monetary asset or a tangible nonmonetary asset, other than in an exchange transaction, from a government to an entity. Government grants are recognized in earnings in the same periods that the costs for which the grant was intended to compensate are recognized. A government grant can be recognized once it is probable that both of the following conditions are met: (1) the company will comply with the conditions attached to the grant and (2) the grant will be received. The guidance differentiates between a grant related to an asset and a grant related to income, which is based on the purpose and conditions of the grant. A grant related to an asset is a government grant that is conditioned on the purchase, construction, or acquisition of an asset and is recognized on the balance sheet once the probable threshold is met and the related costs are incurred. The guidance allows companies to make an accounting policy election to use either a deferred income approach or a cost accumulation approach for recognition of a grant of an asset. A grant related to income is a government grant that does not meet the definition of a grant related to an asset and is recognized in earnings on a systematic and rational basis over the periods the related costs are recognized as expenses. The guidance allows alternative accounting policies for the financial statement presentation of a government grant, depending on the type of grant as well as new disclosure requirements for grants related to an asset and grants of tangible nonmonetary assets.
Effective for the Company: The guidance becomes effective for the Company’s first quarter of fiscal 2030. The guidance can be applied on a modified prospective basis, modified retrospective basis or a full retrospective basis. Early adoption is permitted.
Impact on consolidated financial statements: The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FASB ASU No. 2025-06 – Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40)
In September 2025, the FASB issued authoritative guidance to modernize the accounting for the costs to develop software for internal use to align better with current software development methods, such as agile programming. Capitalization of eligible costs will begin when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, entities are required to consider whether there is significant uncertainty associated with the development activities of the software. The new standard does not change the types of costs that are capitalizable once the threshold for capitalization is met. Capitalization ceases when the software project is substantially complete and ready for its intended use, which typically occurs after all substantial testing is completed. Furthermore, the guidance supersedes website development costs guidance and incorporates the recognition requirements for website-specific development costs into Subtopic 350-40. The guidance clarifies that existing disclosure requirements under ASC 360 for property, plant and equipment apply to capitalized costs under the new standard, regardless of how the internal-use software is classified on the balance sheet or how it was acquired.
Effective for the Company: The guidance becomes effective for the Company’s first quarter of fiscal 2029. The guidance can be applied prospectively, retrospectively or through a modified transition approach. Early adoption is permitted.
Impact on consolidated financial statements: The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.
FASB ASU No. 2025-05 – Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326)
In July 2025, the FASB issued guidance related to the estimation of expected credit losses for current accounts receivable and current contract assets. The amendment allows entities to elect a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. Entities electing the practical expedient are still required to adjust historical loss information to reflect current conditions to the extent that historical loss information does not reflect current conditions. An entity that elects to use the practical expedient is required to disclose that fact.
Effective for the Company: The guidance becomes effective for the Company’s first quarter of fiscal 2027 and is applied prospectively. Early adoption is permitted.
Impact on consolidated financial statements: The Company will elect to adopt the practical expedient beginning in the first quarter of fiscal 2027 on a prospective basis. The adoption of this practical expedient is not expected to have a material impact on the Company's consolidated financial statements.
FASB ASU No. 2024-03 and 2025-01 – Disaggregation of Income Statement Expenses (Subtopic 220-40)
In November 2024 and January 2025, the FASB issued authoritative guidance requiring disclosures, in a tabular format in the notes to the consolidated financial statements, on the disaggregation of relevant expense captions that are included on the face of the consolidated statement of earnings (loss) within continuing operations. The relevant expense captions are required to be disaggregated into natural expense categories including purchases of inventory, employee compensation, depreciation and intangible asset amortization. The guidance also requires certain expenses, gains or losses that require disclosure under existing U.S. GAAP, and that are recorded in a relevant expense caption on the face of the consolidated statement of earnings (loss), to be presented in the same tabular disclosure. Qualitative disclosures about any remaining amounts in relevant expense line items are required as well. In addition, companies are required to disclose the total amount of selling expenses and, on an annual basis, how it defines selling expenses.
Effective for the Company: The guidance is effective for the Company’s fiscal year ending June 30, 2028 Form 10-K and then in interim periods beginning in the Company’s first quarter of fiscal 2029. Early adoption is permitted. The guidance should be applied on a prospective basis; however, retrospective application is permitted.
Impact on consolidated financial statements: The Company is currently evaluating the impact that this guidance will have on its consolidated financial statement disclosures.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – INVENTORY AND PROMOTIONAL MERCHANDISE
Inventory and promotional merchandise consists of the following:
June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
| Raw materials | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
| Finished goods | ||||||||||||||
| Promotional merchandise | ||||||||||||||
| Total inventory and promotional merchandise | $ | $ | ||||||||||||
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
June 30, | ||||||||||||||
($ in millions) | 2026 | 2025 | ||||||||||||
| Assets (Useful Life) | ||||||||||||||
Land and improvements(1) | $ | $ | ||||||||||||
Buildings and improvements ( | ||||||||||||||
Machinery and equipment ( | ||||||||||||||
Computer hardware and software ( | ||||||||||||||
Furniture and fixtures ( | ||||||||||||||
| Leasehold improvements | ||||||||||||||
| Construction in progress | ||||||||||||||
| Total property, plant and equipment, gross | ||||||||||||||
| Less accumulated depreciation and amortization | ( | ( | ||||||||||||
| Total property, plant and equipment, net | $ | $ | ||||||||||||
(1) Land improvements are depreciated over a 10 year useful life.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The Company assigns goodwill at the time of acquisition to a reporting unit, which is one level below the Company's operating segments. The skin care, makeup, fragrance and hair care product categories are the Company's operating segments.
The following table presents goodwill by product category and the related change in the carrying amount:
| (In millions) | Skin Care | Makeup | Fragrance | Hair Care | Total | |||||||||||||||||||||||||||
| Balance as of June 30, 2024 | ||||||||||||||||||||||||||||||||
| Goodwill | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Accumulated impairments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Impairment charges | ( | ( | ||||||||||||||||||||||||||||||
| Translation adjustments, goodwill | ||||||||||||||||||||||||||||||||
| Translation adjustments, accumulated impairments | ( | ( | ||||||||||||||||||||||||||||||
| ( | ( | ( | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | ||||||||||||||||||||||||||||||||
| Goodwill | ||||||||||||||||||||||||||||||||
| Accumulated impairments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Goodwill acquired during the year | ||||||||||||||||||||||||||||||||
| Translation adjustments, goodwill | ( | ( | ( | |||||||||||||||||||||||||||||
| Translation adjustments, accumulated impairments | ||||||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | ||||||||||||||||||||||||||||||||
| Goodwill | ||||||||||||||||||||||||||||||||
| Accumulated impairments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Total goodwill | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Other Intangible Assets
Other intangible assets primarily include trademarks and customer lists, as well as patents, resulting from or related to businesses and assets purchased by the Company. Indefinite-lived intangible assets (e.g., trademarks) are not subject to amortization and are assessed at least annually for impairment as of the beginning of the fiscal fourth quarter or more frequently if certain events or circumstances exist. Definite-lived intangible assets (e.g., customer lists) are amortized on a straight-line basis over their expected period of benefit, approximately 7 years to 14 years. The costs incurred and expensed by the Company to extend or renew the term of acquired intangible assets during fiscal 2026, 2025 and 2024 were not material to the Company’s consolidated statements of earnings (loss).
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other intangible assets consist of the following:
| June 30, 2026 | June 30, 2025 | |||||||||||||||||||||||||||||||||||||
| (In millions) | Gross Carrying Value | Accumulated Amortization | Total Net Book Value | Gross Carrying Value | Accumulated Amortization | Total Net Book Value | ||||||||||||||||||||||||||||||||
| Amortizable intangible assets: | ||||||||||||||||||||||||||||||||||||||
| Customer lists and other | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Non-amortizable intangible assets: | ||||||||||||||||||||||||||||||||||||||
| Trademarks | ||||||||||||||||||||||||||||||||||||||
Total other intangible assets, net | $ | $ | ||||||||||||||||||||||||||||||||||||
The aggregate amortization expense related to amortizable intangible assets for fiscal 2026, 2025 and 2024 was $105 million, $131 million and $144 million, respectively. The estimated aggregate amortization expense for each of the next five fiscal years is as follows:
| Fiscal | ||||||||||||||||||||||||||||||||
| (In millions) | 2027 | 2028 | 2029 | 2030 | 2031 | |||||||||||||||||||||||||||
| Estimated aggregate amortization expense | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Fiscal 2025 Impairment Analysis
For further information on the Company's policies relating to its impairment assessment of goodwill and other indefinite-lived intangible assets and long-lived assets, see Goodwill and Other Indefinite-lived Intangible Assets and Long-Lived Assets within Note 2 – Summary of Significant Accounting Policies.
During the fiscal 2025 second quarter, the TOM FORD brand experienced lower-than-expected growth within key geographic regions and channels, including in mainland China, Asia travel retail and Hong Kong SAR. Also during the fiscal 2025 second quarter, the Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels. As a result, the Company made revisions to the internal forecasts relating to its TOM FORD brand and Too Faced reporting unit. Additionally, there were increases in the weighted average cost of capital for both the TOM FORD brand and Too Faced reporting unit as compared to the prior-year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024.
The Company concluded that the changes in circumstances in the TOM FORD brand and Too Faced reporting unit, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of the TOM FORD trademark and the Too Faced trademark and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the TOM FORD and Too Faced trademarks and Too Faced goodwill as well as a recoverability test for the Too Faced long-lived assets as of December 31, 2024. The Company concluded that the carrying value of the trademark intangible assets exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method, and recorded an impairment charge of $773 million for TOM FORD and $75 million for Too Faced. The Company concluded that the carrying amounts of the long-lived assets for Too Faced were recoverable. Additionally, as a result of the interim impairment review, the remaining carrying value of Too Faced’s goodwill was not recoverable and the Company recorded an impairment charge of $13 zero . The significant assumptions used in the relief-from-royalty method include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates. The most significant unobservable input used to estimate the fair value of the TOM FORD and Too Faced trademark intangible assets was the weighted average cost of capital, which was 11.5 14
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2025, the Company determined that the carrying value of the Dr.Jart+ and Too Faced trademarks exceeded their estimated fair values. As it relates to Dr.Jart+, a decision was made in the prior year in the reporting unit’s operating plan to exit the travel retail channel. A revised strategy was implemented that included increased direct investment in other areas of the business, including in mainland China, to support the brand’s future growth. However, given the lower-than-expected growth within key geographic regions in fiscal 2025, specifically within mainland China and Korea, it was determined that revisions to the internal forecasts were necessary which were finalized and approved in the fiscal 2025 fourth quarter in connection with the brand’s annual planning process, and reflected in the goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2025. The Too Faced reporting unit continued to experience lower-than-expected results in key geographic regions and channels and as such, it was determined that revisions to the internal forecasts were necessary. These changes in circumstances were also indicators that the carrying amounts of their respective long-lived assets, including customer lists, may not be recoverable.
For purposes of calculating the estimated fair values of the trademark intangible assets, the Company utilized the relief-from-royalty method and recorded an impairment charge of $83 million for Dr.Jart+ and $50 million for Too Faced. The Company then performed a recoverability analysis of the Dr.Jart+ and Too Faced long-lived asset groups and, based on the estimated undiscounted cash flows of the asset groups, concluded that the carrying amount of the long-lived assets for Dr.Jart+ were not recoverable, whereas for Too Faced were recoverable. For purposes of calculating the impairment charge for the long-lived assets of Dr.Jart+, the asset group was determined to be the reporting unit. The estimated fair value of the asset group was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the asset group. As a result, the calculated impairment charge to be allocated to the long-lived assets of Dr.Jart+ was $292 million. The Company concluded that the carrying value of the Dr.Jart+ customer list intangible asset exceeded its estimated fair value, which was determined utilizing the multi-period excess earnings income approach by discounting the incremental after-tax cash flows over multiple periods. The estimated fair value of all other long-lived assets of Dr. Jart+ exceeded their carrying values. As a result, the $292 million impairment charge was allocated entirely to the Dr.Jart+ customer list intangible asset.
The significant assumptions used in the calculations of the Dr.Jart+ and Too Faced trademark and Dr.Jart+ customer list impairments include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates for trademarks. The most significant unobservable input used to estimate the impairments was the weighted average cost of capital, which was 10.5 % for Dr.Jart+ for both the trademark and customer list impairments, and 13.5 % for Too Faced.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the impairment charges for the three and twelve months ended June 30, 2025 and the remaining trademark, customer list and goodwill carrying values as of June 30, 2025, for the TOM FORD brand and the Too Faced and Dr.Jart+ reporting units, are as follows:
| Carrying Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Three Months Ended June 30, 2025 | Twelve Months Ended June 30, 2025 | As of June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brand/Reporting Unit | Geographic Region | Trademark | Customer List | Goodwill | Trademark | Customer List | Goodwill | Trademark(2) | Customer List | Goodwill | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| TOM FORD | The Americas | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Too Faced | The Americas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dr.Jart+(3) | Asia/Pacific | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)The date of the fair value measurement for the TOM FORD trademark intangible asset was December 31, 2024. The dates of the fair value measurement for the Too Faced trademark intangible asset and Too Faced reporting unit were December 31, 2024 and April 1, 2025. The date of the fair value measurement for the Dr. Jart+ trademark intangible asset and asset group was April 1, 2025.
(2)The carrying values of the trademark intangible assets, immediately subsequent to the impairment charges, are equal to their estimated fair values. The carrying values as of June 30, 2025 are consistent with the carrying values at the fair value measurement date, with the exception of the impact of foreign currency translation for Dr.Jart+.
(3)The carrying value of the Dr.Jart+ asset group, immediately subsequent to the customer list impairment charge, was equal to its estimated fair value.
The impairment charge related to the TOM FORD trademark intangible asset of $773 million was reflected in the fragrance, makeup and other product categories of $549 million, $170 million and $54 million, respectively. The trademark and goodwill impairment charges related to Too Faced were reflected in the makeup product category. The trademark and customer list impairment charges related to Dr.Jart+ were reflected in the skin care product category. The aggregate trademark and customer list impairment charges are recorded in the Impairment of other intangible assets line item in the accompanying consolidated statements of earnings (loss).
Fiscal 2024 Impairment Analysis
Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024, the Company determined that the carrying value of the Dr.Jart+ reporting unit and trademark exceeded their estimated fair values. Given the lower-than-expected growth within key geographic regions, the reporting unit has made a strategic shift in its operating plan to exit the travel retail channel. This revised strategy also includes increased direct investment in other areas of the business, including in mainland China, to support the brand’s future growth. As a result of these changes in strategy, the Company made revisions to the internal forecasts relating to the Dr.Jart+ reporting unit which were finalized and approved in the fiscal 2024 fourth quarter, and reflected in the goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024. These changes in circumstances were also indicators that the carrying amounts of its respective long-lived assets may not be recoverable. The Company concluded that the carrying value of the trademark intangible asset exceeded its estimated fair value, which was determined utilizing the relief-from-royalty method to determine discounted projected future cash flows and recorded an impairment charge of $180 291 10.5
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the impairment charges for the twelve months ended June 30, 2024 and the remaining trademark and goodwill carrying values as of June 30, 2024 are as follows:
Impairment Charges(1) | Carrying Value | ||||||||||||||||||||||||||||||||||
| (In millions) | Twelve Months Ended June 30, 2024 | As of June 30, 2024 | |||||||||||||||||||||||||||||||||
| Brand/Reporting Unit | Geographic Region | Trademark | Goodwill | Trademark(2) | Goodwill | ||||||||||||||||||||||||||||||
Dr.Jart+ | Asia/Pacific | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
(1) The date of the fair value measurement for the Dr.Jart+ reporting unit and trademark intangible asset was April 1, 2024.
(2) The carrying value of the trademark intangible asset, immediately subsequent to the impairment charge, is equal to its estimated fair value. The carrying value as of June 30, 2024 is consistent with the carrying value at the fair value measurement date, with the exception of the impact of foreign currency translation.
The impairment charges for the twelve months ended June 30, 2024 were reflected in the skin care product category.
NOTE 6 – LEASES
The Company has operating and finance leases primarily for real estate properties, including corporate offices, facilities to support the Company’s manufacturing, assembly, research and development and distribution operations and retail stores, as well as information technology equipment, automobiles and office equipment, with remaining terms of approximately 1 year to 54 years. Some of the Company’s lease contracts include options at commencement to extend the leases for up to 30 years, while others include options to terminate the leases within 25 years.
A summary of total lease costs and other information relating to the Company’s finance and operating leases is as follows:
June 30, | ||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2024 | |||||||||||||||||
Total lease cost | ||||||||||||||||||||
Finance lease cost: | ||||||||||||||||||||
Amortization of right-of-use assets | $ | $ | $ | |||||||||||||||||
Interest on lease liabilities | ||||||||||||||||||||
Operating lease cost | ||||||||||||||||||||
Short-term lease cost | ||||||||||||||||||||
Variable lease cost | ||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||
Other information | ||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
Financing cash flows from finance leases | $ | $ | $ | |||||||||||||||||
Operating cash flows from operating leases | $ | $ | $ | |||||||||||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | $ | $ | |||||||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | $ | |||||||||||||||||
Weighted-average remaining lease term – finance leases | ||||||||||||||||||||
Weighted-average remaining lease term – operating leases | ||||||||||||||||||||
Weighted-average discount rate – finance leases | % | % | % | |||||||||||||||||
Weighted-average discount rate – operating leases | % | % | % | |||||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows:
| (In millions) | Operating Leases | Finance Leases | ||||||||||||
| Fiscal 2027 | $ | $ | ||||||||||||
| Fiscal 2028 | ||||||||||||||
| Fiscal 2029 | ||||||||||||||
| Fiscal 2030 | ||||||||||||||
| Fiscal 2031 | ||||||||||||||
| Thereafter | ||||||||||||||
| Total future minimum lease payments | ||||||||||||||
| Less imputed interest | ( | |||||||||||||
| Total | $ | $ | ||||||||||||
Operating and finance lease liabilities included in the consolidated balance sheet are as follows:
June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (In millions) | Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||||
Total current liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
Total noncurrent liabilities | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
NOTE 7 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES
Restructuring Program Component of the Profit Recovery and Growth Plan
As announced on November 1, 2023, the Company launched the Profit Recovery and Growth Plan ("PRGP"), to help progressively rebuild its profit margins in fiscal years 2025 and 2026.
The PRGP is focused on rebuilding stronger, more sustainable profitability, supporting sales growth acceleration and increasing speed and agility. The plan is designed to improve gross margin, lower the cost base and reduce overhead expenses, while increasing investments in key consumer-facing activities.
As a component of the PRGP, on February 5, 2024, the Company announced a two-year restructuring program. The restructuring program’s main focus included the reorganization and rightsizing of certain areas of the Company as well as simplification and acceleration of processes. The Company committed to this course of action on February 1, 2024.
In connection with the restructuring program, the Company estimated a net reduction in the range of approximately 1,800 to 3,000 positions globally. This reduction took into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas.
The Company planned to substantially complete specific initiatives under the restructuring program through fiscal 2026, and expected that the restructuring program would result in restructuring and other charges totaling between $500 million and $700 million, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, the Company committed to the expansion of the PRGP, including an expansion of the restructuring program, with updated ranges of net reductions in positions globally and expected restructuring and other charges, as discussed below.
The expansion of the overall PRGP is focused on three key areas: (i) adopt a more competitive approach to procurement, a key pillar of savings, by further consolidating spending and strategically re-evaluating key supplier relationships; (ii) further improve efficiencies within our supply chain network through a zero-waste approach, aiming to improve demand forecasting and innovation planning to minimize excess inventory and product destruction; and (iii) outsource select services to proven global partners.
The expanded component of the restructuring program, as noted above, began during the Company’s fiscal 2025 third quarter with all initiatives expected to be approved by the end of fiscal 2026, with specific initiatives under the expanded component of the restructuring program expected to be substantially completed by the end of fiscal 2027. The focus of the overall expanded restructuring program (now, collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models.
As of June 30, 2026, approvals under the Restructuring Program concluded, and by the end of fiscal 2027, the cumulative approved initiatives are expected to be substantially completed.
In connection with the Restructuring Program, the Company had initially expected a net reduction in the range of approximately 5,800 to 7,000 positions globally, which was updated during fiscal 2026 to a range of 9,000 to 10,000 . Based on the total approved initiatives, as of June 30 2026, the Company estimates a final net reduction of approximately 10,000 positions globally. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.
The Company had initially expected that the Restructuring Program would result in restructuring and other charges totaling between $1,200 million and $1,600 million, before taxes, which was updated during fiscal 2026 to a range of $1,500 million and $1,700 million. Based on the total approved initiatives, as of June 30, 2026, the Company now estimates total restructuring and other charges of $1,748 million, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives, which other than the non-cash charges, have been funded from cash provided by operations for initiatives implemented to date, and for the remaining initiatives are expected to result in future cash expenditures funded from cash provided by operations.
Restructuring Program Approvals
Cumulative charges for initiatives approved by the Company in connection with the Restructuring Program as of June 30, 2026 were:
| Sales Returns (included in Net Sales) | Cost of Sales | Operating Expenses | Total | |||||||||||||||||||||||||||||
| (In millions) | Restructuring Charges | Other Charges | ||||||||||||||||||||||||||||||
Total Charges Approved | ||||||||||||||||||||||||||||||||
Fiscal 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Fiscal 2025 | ||||||||||||||||||||||||||||||||
| Fiscal 2026 | ||||||||||||||||||||||||||||||||
| Cumulative charges approved through June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Included in the above table, cumulative restructuring charges for initiatives approved by the Company in connection with the Restructuring Program as of June 30, 2026, by major cost type, were:
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| (In millions) | Employee- Related Costs | Asset- Related Costs | Contract Terminations | Other Exit Costs | Total | |||||||||||||||||||||||||||
Restructuring Charges Approved | ||||||||||||||||||||||||||||||||
Fiscal 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Fiscal 2025 | ||||||||||||||||||||||||||||||||
| Fiscal 2026 | ||||||||||||||||||||||||||||||||
Cumulative charges approved through June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Specific actions taken since the Restructuring Program inception include:
•Enterprise Business Services – The Company approved initiatives in connection with the transformation of its global operating model to (i) consolidate certain service providers, (ii) expand outsourced services, and (iii) redesign and standardize the related end-to-end business processes, leveraging advanced technology to improve productivity. These actions will primarily result in other charges, including professional services related to the design, implementation and execution of the initiative. These charges include transition and transformation support, process design, and costs to support the global project management office for this initiative. These actions will also result in employee severance through a net reduction in workforce and contract termination charges.
•Value Chain Optimization – The Company approved initiatives to reduce spans and layers, as well as right-size organizational capabilities and facilities within its supply chain and research and development functions and networks. These actions will primarily result in employee severance through a net reduction in workforce, as well as asset-related costs and costs to decommission and relocate activities.
•Enabling Function Re-Invention – The Company approved initiatives to reorganize and right-size various corporate functions. Additionally, as a result of the reorganization and right-sizing of various areas of the organization as previously approved under the Restructuring Program, the Company approved initiatives to exit office leases. These activities will primarily result in employee severance through a net reduction in workforce and asset-related costs.
•Future of Brand-led Model – The Company approved initiatives to reorganize and simplify its global marketing and creative operating model, as well as redesign spans and layers in its marketing, creative and other functions within the brand and product category structures to make them leaner, faster and more agile and drive greater efficiency and effectiveness. These activities will primarily result in employee severance through a net reduction in workforce.
•Go-to-Market Operating Model Acceleration – The Company approved initiatives to optimize and right-size the organizational structure within its geographic regions to drive greater efficiency and effectiveness. Additionally, initiatives were approved to reorganize and optimize the selling model within its geographic regions, and to right-size select brand organizations, given its strategic focus on accelerating best-in-class consumer coverage, including its evolution toward high-growth channels, and the constant evaluation of its brand portfolio. These activities will result in employee severance through a net reduction in workforce, costs associated with sales returns and inventory write-offs, as well as asset-related costs.
•Digital Organization Transformation – The Company approved initiatives to reorganize and right-size its technology functions, which support its internal enterprise operations and commercial capabilities in order to create a leaner, more efficient and more agile organization. Additionally, initiatives were approved to modernize the Company's direct-to-consumer digital technology infrastructure to deliver best-in-class omnichannel consumer experiences. These activities will primarily result in employee severance through a net reduction in workforce, as well as asset-related costs.
Once the relevant accounting criteria have been met, the Company expects to record cumulative restructuring and other charges of approximately $1,748 million (before tax) in connection with these initiatives, which other than the non-cash charges, have been funded from cash provided by operations for initiatives implemented to date, and for the remaining initiatives, are expected to result in future cash expenditures funded from cash provided by operations.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restructuring Program Restructuring and Other Charges
The Company classifies restructuring charges as follows:
Employee-Related Costs – Employee-related costs are primarily comprised of severance and other post-employment benefit costs, calculated based on salary levels, prior service and other statutory minimum benefits, if applicable.
Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets (including operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative.
Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration.
Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and outplacement for separated employees.
The Company classifies other charges associated with restructuring activities as follows:
Sales Returns and Cost of Sales – Product returns (offset by the related cost of sales) and inventory write-offs or write-downs as a direct result of an approved restructuring initiative to exit certain businesses or locations are recorded as a component of Net sales and/or Cost of sales when estimable and reasonably assured.
Other Charges – Other charges related to the design and implementation of approved initiatives are charged to Operating expenses as incurred and primarily include the following:
•Consulting and other professional services for transition support, transformational organization design of the future structures and processes, as well as the implementation and execution thereof;
•Temporary labor backfill;
•Costs to establish and maintain a Project Management Office for the duration of the Restructuring Program, including internal costs for employees dedicated solely to project management activities, and consulting services to assist with business case development and execution; and
•Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative.
The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met.
Total cumulative charges recorded associated with restructuring and other activities for the Restructuring Program were:
| Sales Returns (included in Net Sales) | Cost of Sales | Operating Expenses | Total | |||||||||||||||||||||||||||||
| (In millions) | Restructuring Charges | Other Charges | ||||||||||||||||||||||||||||||
Total Charges | ||||||||||||||||||||||||||||||||
Fiscal 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Fiscal 2025 | ||||||||||||||||||||||||||||||||
| Fiscal 2026 | ( | |||||||||||||||||||||||||||||||
Cumulative charges through June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| (In millions) | Employee- Related Costs | Asset- Related Costs | Contract Terminations | Other Exit Costs | Total | |||||||||||||||||||||||||||
Restructuring Charges | ||||||||||||||||||||||||||||||||
Fiscal 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Fiscal 2025 | ||||||||||||||||||||||||||||||||
| Fiscal 2026 | ||||||||||||||||||||||||||||||||
Cumulative charges through June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Changes in accrued restructuring charges from the Restructuring Program inception through June 30, 2026 were:
| (In millions) | Employee- Related Costs | Asset- Related Costs | Contract Terminations | Other Exit Costs | Total | |||||||||||||||||||||||||||
Charges | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Cash payments | ||||||||||||||||||||||||||||||||
| Non-cash asset-related costs | ( | ( | ||||||||||||||||||||||||||||||
Translation and other adjustments | ( | ( | ||||||||||||||||||||||||||||||
Balance at June 30, 2024 | ||||||||||||||||||||||||||||||||
Charges | ||||||||||||||||||||||||||||||||
Cash payments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Non-cash asset-related costs | ( | ( | ||||||||||||||||||||||||||||||
Translation and other adjustments | ( | ( | ||||||||||||||||||||||||||||||
Balance at June 30, 2025 | ||||||||||||||||||||||||||||||||
| Charges | ||||||||||||||||||||||||||||||||
| Cash payments | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Non-cash asset-related costs | ( | ( | ||||||||||||||||||||||||||||||
Translation and other adjustments | ( | ( | ||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Accrued restructuring charges at June 30, 2026 relating to the Restructuring Program are expected to result in cash expenditures funded from cash provided by operations of approximately $530 million, $85 million, and $17 million for fiscal 2027, 2028, and 2029, respectively.
Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 – INCOME TAXES
The provision for income taxes is comprised of the following:
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | $ | $ | |||||||||||||||||
| Foreign | ||||||||||||||||||||
| State and local | ||||||||||||||||||||
| Total current provision for income taxes | ||||||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | ( | ( | ( | |||||||||||||||||
| Foreign | ( | ( | ( | |||||||||||||||||
| State and local | ( | ( | ( | |||||||||||||||||
| Total deferred benefit for income taxes | ( | ( | ( | |||||||||||||||||
| Total provision for income taxes | $ | $ | $ | |||||||||||||||||
Earnings (loss) before income taxes from the Company’s operations in the United States were $117 million, $(1,813 ) million and $(575 ) million for fiscal years 2026, 2025 and 2024, respectively. Earnings before income taxes from the Company’s foreign operations were $400 million, $773 million and $1,347 million for fiscal 2026, 2025 and 2024, respectively.
On July 4, 2025, the One Big Beautiful Bill Act was enacted. This legislation includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (the "TCJA"), modifications to the international tax framework and the restoration of certain business tax provisions. The legislation has multiple effective dates, with certain provisions becoming effective in fiscal 2026. The most impactful provision effective beginning in fiscal 2026 relates to the expansion of the business interest expense deduction limitation. The resulting increase in tax deductible interest expense reduced U.S. taxable income and increased the excess U.S. foreign tax credits generated which require a valuation allowance. The unfavorable impact of the One Big Beautiful Bill Act for fiscal 2026 was $52 million.
In December 2021, the Organization for Economic Cooperation and Development issued "Pillar Two" Global Anti-Base Erosion model rules for countries to enact into domestic law that would establish a 15% global minimum tax applied on a country-by-country basis for multinational companies. In certain countries that have enacted legislation incorporating the global minimum tax, it became effective for the Company at the beginning of fiscal 2025. The estimated tax impact of such legislation has been included in the provision for income taxes for the fiscal years ended June 30, 2026 and 2025 and was not material.
On August 26, 2024, the U.S. Tax Court issued a decision in Varian Medical Systems, Inc. v. Commissioner. The decision related to the TCJA deduction for certain deemed foreign dividends otherwise subject to the Transition Tax on unrepatriated earnings of applicable foreign subsidiaries. Based on the Company's evaluation of the technical merits of this decision, in fiscal 2025 the Company filed a protective refund claim with the U.S. Internal Revenue Service. Since the Company believed it was more-likely-than-not that such income tax benefit would not be sustained, the Company accrued a $73 million estimated tax benefit in the provision for income taxes in fiscal 2025, offset by an uncertain tax position reserve for the estimated $73 million Transition Tax at issue. As a result, there was no net impact to the provision for income taxes and accompanying consolidated statement of earnings (loss), or to the accompanying consolidated balance sheet as of and for the year ended June 30, 2025. On April 8, 2026, the U.S. Tax Court issued its second opinion in Varian Medical Systems v. Commissioner (“Varian Two”). In Varian Two, the U.S. Tax Court concluded that the TCJA deduction for certain deemed foreign dividends is limited to directly owned foreign subsidiaries while also clarifying the manner of calculating the impact of the allowable deduction on U.S. foreign tax credits. Following its evaluation of the technical merits of Varian Two, the Company has maintained its $73 million protective refund claim and continues to believe, based on the information available as of June 30, 2026, that it is more likely than not that such claim will not be sustained, and as such has not adjusted the previously recorded uncertain tax position reserve for the $73 million income tax benefit as of June 30, 2026.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual effective tax rate on earnings (loss) before income taxes, including the primary components, is as follows:
Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025(1)(2) | 2024 | ||||||||||||||||||||||||||||||||||||
| ($ in millions) | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
| $ | % | $ | ( | % | $ | % | ||||||||||||||||||||||||||||||||
| Increase (decrease) due to: | ||||||||||||||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect(3) | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||
| Foreign tax effects | ||||||||||||||||||||||||||||||||||||||
| China | ||||||||||||||||||||||||||||||||||||||
| Statutory income tax rate differential | ( | |||||||||||||||||||||||||||||||||||||
| Withholding tax | ( | |||||||||||||||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||||||||||||||
Korea | ||||||||||||||||||||||||||||||||||||||
| Statutory income tax rate differential | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Withholding tax | ( | |||||||||||||||||||||||||||||||||||||
| Nondeductible goodwill impairment | ||||||||||||||||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||||||||||||||
Switzerland | ||||||||||||||||||||||||||||||||||||||
| Statutory income tax rate differential | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||
| Local income tax | ( | |||||||||||||||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||||||||||||||
All other foreign jurisdictions(4) | ( | |||||||||||||||||||||||||||||||||||||
| Effects of cross-border tax laws | ||||||||||||||||||||||||||||||||||||||
| Global intangible low-tax income (GILTI) | ( | |||||||||||||||||||||||||||||||||||||
| Subpart F income | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Foreign derived intangible income (FDII) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Branch income | ( | |||||||||||||||||||||||||||||||||||||
| U.S. foreign tax credits (FTCs) | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||||||||||||||||
| Research & development tax credit | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||
| Changes in valuation allowances | ( | |||||||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - excess tax provision expense | ( | |||||||||||||||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | ( | |||||||||||||||||||||||||||||||||||||
| Other adjustments | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Effective tax rate | $ | % | $ | ( | % | $ | % | |||||||||||||||||||||||||||||||
(1)In fiscal 2025, as a result of the loss before income taxes, all reconciling items to the effective tax rate that are income tax expenses are presented as decreases to the rate, and all reconciling items that are income tax benefits are presented as increases to the rate. Amounts presented as increases from the U.S. federal statutory income tax benefit are expenses and decreases are benefits.
(2)For fiscal 2025, the reconciling items between the Company's U.S. federal statutory income tax rate and the Company's actual effective tax rate were materially impacted by the decrease in earnings before income taxes from fiscal 2024 to fiscal 2025.
(3)For fiscal 2026 state income taxes in California and Oklahoma make up greater than 50% of the tax effect in this line item. For fiscal 2025 state income taxes in California, Massachusetts, North Carolina, and Texas make up greater than 50% of the tax effect in this line item. For fiscal 2024 state income taxes in California and Maryland make up greater than 50% of the tax effect in this line item.
(4)This line item includes the impact of foreign valuation allowances of approximately $26 million, $16 million and $(1 ) million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company recognized $21 million, $35 million and $23 million of income tax expense for U.S. and foreign tax deficiencies associated with stock-based compensation for the fiscal years ended June 30, 2026, 2025 and 2024, respectively, in the accompanying consolidated statements of earnings (loss).
The Company has approximately $4,220 million of undistributed earnings of foreign subsidiaries as of June 30, 2026, a portion of which is considered permanently reinvested for which no deferred income taxes have been provided. If these reinvested earnings were repatriated into the United States as dividends, the Company would be subject to approximately $91 million in taxes, primarily related to foreign withholding taxes as well as additional state and local income taxes.
Significant components of the Company’s deferred tax assets and liabilities were as follows:
June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Compensation-related expenses | $ | $ | ||||||||||||
| Inventory | ||||||||||||||
| Retirement benefit obligations | ||||||||||||||
| Various accruals not currently deductible | ||||||||||||||
| Net operating loss, credit and other carryforwards | ||||||||||||||
| Unrecognized state tax benefits and accrued interest | ||||||||||||||
| Lease liabilities | ||||||||||||||
| Research-related expenses | ||||||||||||||
| Other differences between tax and financial statement values | ||||||||||||||
| Valuation allowance for deferred tax assets | ( | ( | ||||||||||||
| Total deferred tax assets | ||||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Fixed assets and intangibles | ( | ( | ||||||||||||
| ROU assets | ( | ( | ||||||||||||
| Other differences between tax and financial statement values | ( | ( | ||||||||||||
| Total deferred tax liabilities | ( | ( | ||||||||||||
| Total net deferred tax assets | $ | $ | ||||||||||||
As of June 30, 2026, the Company had net deferred tax assets of $1,026 million, of which $1,427 million is included in Other assets and $401 million is included in Other noncurrent liabilities in the accompanying consolidated balance sheets. As of June 30, 2025, the Company had net deferred tax assets of $913 million, of which $1,339 million is included in Other assets and $426 million is included in Other noncurrent liabilities in the accompanying consolidated balance sheets.
As of June 30, 2026 and 2025, certain subsidiaries had $1,013 million and $972 million of foreign net operating loss carryforwards, respectively, the tax effect of which was $219 million and $213 million, respectively, as well as U.S. federal tax credit carryforwards of $178 million and $172 million, respectively, and state and local income tax credit carryforwards of $14 million and $11 million, respectively. With the exception of $588 million of net operating losses with an indefinite carryforward period as of June 30, 2026, these net operating loss carryforwards expire at various dates through fiscal 2039. The state and local income tax credit carryforwards will begin to expire in fiscal 2029.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has recorded a valuation allowance of $525 million and $454 million as of June 30, 2026 and 2025, respectively, principally against certain net operating loss carryforwards and tax credit carryforwards. A valuation allowance has been provided for those deferred tax assets for which, in the opinion of management, it is more-likely-than-not that the deferred tax assets will not be realized. During fiscal 2025, the Company established a U.S. valuation allowance of $172 million against general U.S. foreign tax credit and research and development tax credit carryforwards as it was determined more-likely-than-not that these deferred tax assets would not be realized. This determination was driven by the Company's weighing of relevant evidence including lower U.S. taxable income in fiscal 2025 as compared to recent years, reflecting reduced income from its travel retail business, and the resulting uncertainty about the ability to realize the carryforwards prior to expiration.
As of June 30, 2026, 2025 and 2024, the Company had gross unrecognized tax benefits of $174 million, $140 million, and $65 million, respectively. At June 30, 2026, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $167 million. The increase in the gross amount of unrecognized tax benefits as of June 30, 2026 as compared to June 30, 2025 was primarily attributable to having established uncertain tax position reserves arising from transfer pricing matters impacting multiple tax jurisdictions.
The Company classifies applicable interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The total gross accrued interest and penalty expense recorded during fiscal 2026, 2025 and 2024 in the accompanying consolidated statements of earnings (loss) was $3 million, $2 million and $3 million, respectively. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at June 30, 2026 and 2025 was $22 million and $19 million, respectively.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
Balance of gross unrecognized tax benefits, beginning of year | $ | $ | $ | |||||||||||||||||
| Gross amounts of increases as a result of tax positions taken during a prior period | ||||||||||||||||||||
| Gross amounts of decreases as a result of tax positions taken during a prior period | ( | ( | ( | |||||||||||||||||
| Gross amounts of increases as a result of tax positions taken during the current period | ||||||||||||||||||||
Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities | ( | ( | ( | |||||||||||||||||
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations | ( | ( | ( | |||||||||||||||||
Balance of gross unrecognized tax benefits, end of year | $ | $ | $ | |||||||||||||||||
Earnings from the Company’s global operations are subject to tax in various jurisdictions both within and outside the United States. The Company participates in the U.S. Internal Revenue Service (the “IRS”) Compliance Assurance Program (“CAP”). The objective of CAP is to reduce taxpayer burden and uncertainty while assuring the IRS of the accuracy of income tax returns prior to filing, thereby reducing or eliminating the need for post-filing examinations.
During the fiscal 2026 second quarter, the Company received notification of the formal conclusion of the compliance process with respect to its fiscal 2024 income tax return under the IRS CAP, which had no impact on the Company’s consolidated financial statements for the year ended June 30, 2026.
Subsequent to June 30, 2026, the IRS completed its examination procedures with respect to fiscal 2025 under the IRS CAP, and the Company expects to receive formal notification during fiscal 2027. There was no impact to the Company’s consolidated financial statements. As of June 30, 2026, the compliance process was ongoing with respect to fiscal 2026.
The Company is currently undergoing income tax examinations and controversies in several state, local and foreign jurisdictions. These matters are in various stages of completion and involve complex multi-jurisdictional issues common among multinational enterprises, including transfer pricing, which may require an extended period of time for resolution.
During fiscal 2026, the Company concluded various state, local and foreign income tax audits and examinations while several other matters, including those noted above, were initiated or remained pending.
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Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tax years subject to examination vary depending on the tax jurisdiction. As of June 30, 2026, the following tax years remain subject to examination by the major tax jurisdictions indicated:
| Major Jurisdiction | Open Fiscal Years | |||||||
| Belgium | 2020 – 2026 | |||||||
| Canada | 2023 – 2026 | |||||||
| China | 2023 – 2026 | |||||||
| France | 2022 – 2026 | |||||||
| Germany | 2017 – 2026 | |||||||
| Hong Kong | 2020 – 2026 | |||||||
India | 2016 – 2018, 2020 – 2026 | |||||||
| Italy | 2021 – 2026 | |||||||
| Japan | 2021 – 2026 | |||||||
| Korea | 2021 – 2026 | |||||||
| Spain | 2018 – 2019, 2026 | |||||||
| Switzerland | 2024 – 2026 | |||||||
| United Kingdom | 2022 – 2026 | |||||||
| United States | 2025 – 2026 | |||||||
| State of California | 2020 – 2026 | |||||||
| State and City of New York | 2019 – 2026 | |||||||
The Company is also subject to income tax examinations in numerous other state, local and foreign jurisdictions. The Company believes that its income tax reserves are adequate for all years subject to examination.
NOTE 9 – SUPPLIER FINANCE PROGRAMS
Under its supplier finance programs, the Company agrees to pay the banks the stated amount of confirmed invoices from its designated suppliers on the due dates of the invoices. The Company may terminate the agreements upon written notice (with notice periods ranging from 30 to 60 days) or immediately upon a breach. The supplier invoices that have been confirmed as valid under the programs require payment in full within 90 days of the invoice date.
Changes in outstanding obligations confirmed as valid under the Company's supplier finance programs are as follows:
| June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
Confirmed obligations outstanding, beginning of year | $ | $ | ||||||||||||
| Invoices confirmed during the year | ||||||||||||||
| Confirmed invoices paid during the year | ( | ( | ||||||||||||
| Translation adjustments | ||||||||||||||
Confirmed obligations outstanding, end of year | $ | $ | ||||||||||||
Confirmed obligations outstanding as of June 30, 2026 and 2025 are included in in the accompanying consolidated balance sheets.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 – OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
Accrued employee compensation | $ | $ | ||||||||||||
| Accrued income taxes | ||||||||||||||
Accrued payroll and other non-income taxes | ||||||||||||||
Accrued restructuring | ||||||||||||||
| Accrued sales incentives | ||||||||||||||
Accrued selling, advertising, marketing, promotion and product development | ||||||||||||||
| Deferred revenue | ||||||||||||||
| Other | ||||||||||||||
Total other accrued liabilities | $ | $ | ||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 – DEBT
The Company’s current and long-term debt and available financing consist of the following:
Debt at June 30, | Available financing at June 30, 2026 | |||||||||||||||||||||||||
| (In millions) | 2026 | 2025 | Committed | Uncommitted | ||||||||||||||||||||||
| $ | $ | $ | — | $ | — | |||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
| — | — | |||||||||||||||||||||||||
Commercial paper | — | |||||||||||||||||||||||||
| Other current borrowings | — | — | — | |||||||||||||||||||||||
| Other long-term borrowings | — | — | ||||||||||||||||||||||||
Revolving credit facilities | — | |||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
| Less current debt including current maturities | ( | ( | ||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
F-39
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2026, the Company’s long-term debt consisted of the following:
Notes(1) | Issue Date | Price | Yield | Principal | Unamortized Debt (Discount) Premium | Interest rate swap adjustments | Debt Issuance Costs | Semi-annual interest payments | ||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2053 Senior Notes | May 2023 | % | % | $ | $ | ( | $ | — | $ | ( | May 15/November 15 | |||||||||||||||||||||||||||||||||||||||
| 2049 Senior Notes | November 2019 | ( | — | ( | June 1/December 1 | |||||||||||||||||||||||||||||||||||||||||||||
2047 Senior Notes(2) | February 2017 | ( | — | ( | March 15/September 15 | |||||||||||||||||||||||||||||||||||||||||||||
2045 Senior Notes(3) | June 2015 | ( | — | ( | June 15/December 15 | |||||||||||||||||||||||||||||||||||||||||||||
2045 Senior Notes(3) | May 2016 | — | ( | June 15/December 15 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2042 Senior Notes | August 2012 | ( | — | ( | February 15/August 15 | |||||||||||||||||||||||||||||||||||||||||||||
2037 Senior Notes(4) | May 2007 | ( | — | ( | May 15/November 15 | |||||||||||||||||||||||||||||||||||||||||||||
2034 Senior Notes(5)(6) | February 2024 | ( | ( | ( | February 14/August 14 | |||||||||||||||||||||||||||||||||||||||||||||
October 2033 Senior Notes(7) | September 2003 | ( | — | ( | April 15/October 15 | |||||||||||||||||||||||||||||||||||||||||||||
May 2033 Senior Notes(8) | May 2023 | ( | — | ( | May 15/November 15 | |||||||||||||||||||||||||||||||||||||||||||||
2031 Senior Notes(6),(9) | March 2021 | ( | ( | ( | March 15/September 15 | |||||||||||||||||||||||||||||||||||||||||||||
2030 Senior Notes(6) | April 2020 | ( | ( | ( | April 15/October 15 | |||||||||||||||||||||||||||||||||||||||||||||
2029 Senior Notes(10) | November 2019 | ( | — | ( | June 1/December 1 | |||||||||||||||||||||||||||||||||||||||||||||
| 2028 Senior Notes | May 2023 | — | ( | May 15/November 15 | ||||||||||||||||||||||||||||||||||||||||||||||
2027 Senior Notes(11) | February 2017 | — | March 15/September 15 | |||||||||||||||||||||||||||||||||||||||||||||||
(1)The Senior Notes contain certain customary covenants, including limitations on indebtedness secured by liens.
(2)In November 2016, in anticipation of the issuance of the 2047 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $350 million at a weighted-average all-in rate of 3.01 %. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $3 million that is being amortized against interest expense over the life of the 2047 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2047 Senior Notes will be 4.17 % over the life of the debt.
(3)In April and May 2015, in anticipation of the issuance of the 2045 Senior Notes in June 2015, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $300 million at a weighted-average all-in rate of 2.38 %. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a gain in OCI of $18 million that will be amortized against interest expense over the life of the 2045 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2045 Senior Notes will be 4.216 % over the life of the debt. In May 2016, the Company reopened this offering with the same terms and issued an additional $150 million for an aggregate amount outstanding of $450 million of 2045 Senior Notes.
(4)In April 2007, in anticipation of the issuance of the 2037 Senior Notes, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $210 million at a weighted-average all-in rate of 5.45 %. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a loss in OCI of $1 million that is being amortized to interest expense over the life of the 2037 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2037 Senior Notes will be 6.181 % over the life of the debt.
(5)In March 2022, in anticipation of the issuance of the 2034 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $300 million at a weighted average all-in rate of 2.02 %. The treasury lock agreements were terminated in September 2022, and the Company recognized a gain in OCI of $31 million that is being amortized to interest expense over the life of the 2034 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2034 Senior Notes will be 4.53 % over the life of the debt.
(6)The Company entered into interest rate swap agreements with a notional amount totaling $700 million, $300 million and $600 million to effectively convert the fixed rate interest on its outstanding 2030 Senior Notes, 2031 Senior Notes and 2034 Senior Notes to variable interest rates based on the Secured Overnight Financing Rate ("SOFR") plus a margin.
(7)In May 2003, in anticipation of the issuance of the October 2033 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $195 million at a weighted-average all-in rate of 4.53 %. The treasury lock agreements were settled upon the issuance of the new debt and the Company received a payment of $15 million that is being amortized against interest expense over the life of the October 2033 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the October 2033 Senior Notes will be 5.395 % over the life of the debt.
(8)In December 2022 and March 2023, in anticipation of the issuance of the May 2033 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $575 million at a weighted-average all-in rate of 3.57 %. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a loss in OCI of $5 million that is being amortized to interest expense over the life of the May 2033 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the May 2033 Senior Notes will be 4.83 % over the life of the debt.
(9)In March 2020, in anticipation of the issuance of the 2031 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $200 million at a weighted-average all-in rate of 0.84 %. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $11 million that is being amortized to interest expense over the life of the 2031 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2031 Senior Notes will be 1.89 % over the life of the debt.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10)In April and May 2019, in anticipation of the issuance of the 2029 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $500 million at a weighted-average all-in rate of 2.50 %. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a loss in OCI of $33 million that is being amortized to interest expense over the life of the 2029 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2029 Senior Notes will be 3.15 % over the life of the debt.
(11)In November 2016, in anticipation of the issuance of the 2027 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $450 million at a weighted-average all-in rate of 2.37 %. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $2 million that is being amortized against interest expense over the life of the 2027 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2027 Senior Notes will be 3.18 % over the life of the debt.
In May 2026, the Company renewed its $1,000 million senior unsecured revolving credit facility (the "364-Day Facility") that was initially entered into in May 2025 and expired on May 22, 2026. The renewed 364-Day Facility expires on May 21, 2027. Up to the equivalent of $1,000 million of the 364-Day Facility is available for multi-currency loans. Interest rates on borrowings under the 364-Day Facility will be based on prevailing market interest rates in accordance with the agreement. The costs incurred to establish the 364-Day Facility were not material. The 364-Day Facility has an annual fee of $0.6 million, payable quarterly, which can fluctuate based on the Company’s current credit ratings each period. The 364-Day Facility contains a cross-default provision whereby a failure to pay other material financial obligations in excess of $175 million (after grace periods and absent a waiver from the lenders) would result in an event of default and the acceleration of the maturity of any outstanding debt under this facility. At June 30, 2026 and 2025, no
In December 2024, the Company repaid the outstanding principal balance of its $500 million, 2024 Senior Notes at maturity with cash from operations.
The Company maintains a $2,500 million senior unsecured revolving credit facility (the "revolving credit facility") that expires on June 7, 2029 unless extended for up to additional years in accordance with the terms set forth in the agreement. Up to the equivalent of $750 million of the revolving credit facility is available for multi-currency loans. Interest rates on borrowings under the revolving credit facility will be based on prevailing market interest rates in accordance with the agreement. In fiscal 2026, the revolving credit facility's annual fee was $2.2 million, payable quarterly, which can fluctuate based on the Company’s credit ratings each period. The revolving credit facility contains a cross-default provision whereby a failure to pay other material financial obligations in excess of $175 million (after grace periods and absent a waiver from the lenders) would result in an event of default and the acceleration of the maturity of any outstanding debt under this facility. The revolving credit facility may be increased, at the election of the Company, by up to $500 million in accordance with the terms set forth in the agreement. At June 30, 2026 and 2025, no
The Company maintains uncommitted credit facilities in various regions throughout the world. Interest rate terms for these facilities vary by region and reflect prevailing market rates for companies with strong credit ratings. During fiscal 2026 and fiscal 2025, there were no
Refer to Note 16 – Commitments and Contingencies for the Company’s projected debt service payments over the next five years as of June 30, 2026.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 – DERIVATIVE FINANCIAL INSTRUMENTS
The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. The Company does not utilize derivative financial instruments for trading or speculative purposes. At June 30, 2026, the notional amount of derivatives not designated as hedging instruments was $3,401 million.
Fair Value Hedges
The Company enters into interest rate contracts to manage the exposure to interest rate fluctuations on its funded indebtedness. At June 30, 2026, the Company has interest rate swap contracts, with notional amounts totaling $700 million, $300 million and $600 million to effectively convert the fixed rate interest on its 2030 Senior Notes, 2031 Senior Notes and 2034 Senior Notes, respectively, to variable interest rates based on the Secured Overnight Financing Rate ("SOFR") plus a margin. These interest rate swap contracts are designated as fair value hedges of the related long-term debt, and the changes in the fair value of the interest rate swap contracts are exactly offset by the change in the fair value of the underlying long-term debt.
The Company enters into cross-currency swap contracts to manage the exposure of foreign exchange rate fluctuations on its intercompany foreign currency denominated debt. At June 30, 2026, the Company has cross-currency swap contracts with notional amounts totaling $406 million, to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. The cross-currency swap contracts are designated as fair value hedges of the related intercompany debt, and the gains and losses representing hedge components included in the assessment of effectiveness are presented in the same income statement line item as the earnings effect of the hedged transaction in the consolidated statements of earnings (loss). Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction in the consolidated statements of earnings (loss). Any difference between the changes in the fair value of the excluded components and amounts recognized in earnings (loss) will be recognized in AOCI.
The estimated net gain on the Company’s derivative instruments designated as fair value hedges as of June 30, 2026 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $11 million. The accumulated net gain on derivative instruments designated as fair value hedges in AOCI was $6 million and $7 million as of June 30, 2026 and 2025, respectively.
Cash Flow Hedges
The Company enters into foreign currency forward contracts to hedge anticipated transactions denominated in foreign currencies, for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries. The foreign currency forward contracts entered into to hedge anticipated transactions denominated in foreign currencies have been designated as cash flow hedges and have varying maturities through the end of June 2027. Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes forward points in the effectiveness assessment. At June 30, 2026, the Company had cash flow hedges outstanding with a notional amount totaling $1,367 million.
For foreign currency forward contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses in AOCI are reclassified to Net sales when the underlying forecasted transaction occurs. If it is probable that the forecasted transaction will no longer occur, then any gains or losses in AOCI are reclassified to current-period Net sales. As of June 30, 2026, the Company’s foreign currency cash flow hedges were highly effective.
The Company may enter into interest rate forward contracts to hedge anticipated issuance of debt for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of interest rate movements on the cost of debt issuance.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of June 30, 2026 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $5 million. The accumulated net gain (loss) on derivative instruments designated as cash flow hedges in AOCI was $25 million and $(13 ) million as of June 30, 2026 and 2025, respectively.
Net Investment Hedges
The Company enters into foreign currency forward contracts and cross-currency swap contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations. Forward points and cross-currency basis spreads, respectively, are excluded from the effectiveness assessment and are recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the Company’s net investment in these foreign operations. The net investment hedge contracts have varying maturities through the end of November 2029. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At June 30, 2026, the Company had net investment hedges outstanding with notional amounts totaling $1,118 million.
Credit Risk
As a matter of policy, the Company only enters into derivative contracts with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $74 million at June 30, 2026. To manage this risk, the Company has strict counterparty credit guidelines that are continually monitored. Accordingly, management believes risk of loss under these hedging contracts is remote.
The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows:
| Asset Derivatives | Liability Derivatives | |||||||||||||||||||||||||||||||||||||
Fair Value (1) | Fair Value (1) | |||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
| (In millions) | Balance Sheet Location | 2026 | 2025 | Balance Sheet Location | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Cross-currency swap contracts(2) | Prepaid expenses and other current assets; Other assets | Other accrued liabilities | ||||||||||||||||||||||||||||||||||||
Interest rate contracts | Other accrued liabilities | |||||||||||||||||||||||||||||||||||||
| Total Derivatives Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | Prepaid expenses and other current assets | Other accrued liabilities | ||||||||||||||||||||||||||||||||||||
| Total derivatives | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
(1)See Note 13 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.
(2)Included in the asset derivatives for the cross-currency swap contracts at June 30, 2026 and June 30, 2025 is approximately $17 million and $40 million, respectively, classified within Other assets in the accompanying consolidated balance sheets.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows:
| Amount of Gain (Loss) Recognized in OCI on Derivatives | Location of Gain (Loss) Reclassified | Amount of Gain (Loss) Reclassified from AOCI into Earnings (Loss)(1) | ||||||||||||||||||||||||||||||
June 30, | from AOCI into | June 30, | ||||||||||||||||||||||||||||||
| (In millions) | 2026 | 2025 | Earnings (Loss) | 2026 | 2025 | |||||||||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships: | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | ( | Net sales | $ | ( | $ | |||||||||||||||||||||||||
Interest rate contracts | Interest expense | |||||||||||||||||||||||||||||||
Total cash flow hedges | ( | ( | ||||||||||||||||||||||||||||||
Derivatives in Net Investment Hedging Relationships(2): | ||||||||||||||||||||||||||||||||
Foreign currency forward contracts(3) | ( | |||||||||||||||||||||||||||||||
Cross-currency swap contracts(4) | ( | |||||||||||||||||||||||||||||||
| Total net investment hedges | ( | |||||||||||||||||||||||||||||||
| Total derivatives | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||
(1)The amount reclassified into the accompanying consolidated statements of earnings (loss) as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material.
(2)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.
(3)During fiscal 2026 and 2025 the gain recognized in the accompanying consolidated statements of earnings (loss) from foreign currency forward contracts related to the amount excluded from effectiveness testing was $12 million and $21 million, respectively.
(4)During fiscal 2026 and 2025 the gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing was $12 million and $7 million, respectively.
| Amount of Gain (Loss) Recognized in Earnings (Loss) on Derivatives | ||||||||||||||||||||
| Location of Gain (Loss) | June 30, | |||||||||||||||||||
| (In millions) | Recognized in Earnings (Loss) on Derivatives | 2026 | 2025 | |||||||||||||||||
| Derivatives in Fair Value Hedging Relationships: | ||||||||||||||||||||
Cross-currency swap contracts(1) | Selling, general and administrative | $ | $ | ( | ||||||||||||||||
Interest rate contracts(2) | Interest expense | $ | ( | $ | ||||||||||||||||
(1)Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing in each of fiscal 2026 and 2025 was $19
(2)Changes in the fair value of the interest rate contracts are exactly offset by the change in the fair value of the underlying long-term debt.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in the accompanying consolidated statements of earnings (loss) for items designated and qualifying as hedged items in fair value hedges is as follows:
| (In millions) | ||||||||||||||
| Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included | Carrying Amount of the Hedged Liability | Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability | ||||||||||||
| June 30, 2026 | June 30, 2026 | |||||||||||||
| Long-term debt | $ | $ | ( | |||||||||||
| Intercompany debt | $ | $ | ||||||||||||
Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:
| June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
Total amounts of income and expense line items presented in the consolidated statements of earnings (loss) in which the effects of fair value and cash flow hedges are recorded | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| The effects of fair value and cash flow hedging relationships: | ||||||||||||||||||||||||||||||||||||||
| Gain (loss) on fair value hedge relationships – interest rate contracts: | ||||||||||||||||||||||||||||||||||||||
| Hedged item | N/A | N/A | N/A | N/A | ( | |||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | N/A | N/A | ( | N/A | N/A | |||||||||||||||||||||||||||||||||
| Gain (loss) on fair value hedge relationships – cross-currency swap contracts: | ||||||||||||||||||||||||||||||||||||||
| Hedged item | N/A | ( | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | N/A | N/A | N/A | ( | N/A | |||||||||||||||||||||||||||||||||
| Gain on cash flow hedge relationships – interest rate contracts: | ||||||||||||||||||||||||||||||||||||||
| Amount of gain reclassified from AOCI | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||
| Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: | ||||||||||||||||||||||||||||||||||||||
| Amount of (loss) gain reclassified from AOCI | ( | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||
N/A (Not applicable)
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| June 30, | |||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
Total amounts of income and expense line items presented in the consolidated statements of earnings (loss) in which the effects of fair value and cash flow hedges are recorded | $ | $ | $ | ||||||||||||||||||||
| The effects of fair value and cash flow hedging relationships: | |||||||||||||||||||||||
| Gain (loss) on fair value hedge relationships – interest rate contracts: | |||||||||||||||||||||||
| Hedged item | N/A | N/A | ( | ||||||||||||||||||||
| Derivatives designated as hedging instruments | N/A | N/A | |||||||||||||||||||||
| Gain (loss) on fair value hedge relationships – cross-currency swap contracts: | |||||||||||||||||||||||
| Hedged item | N/A | ( | N/A | ||||||||||||||||||||
| Derivatives designated as hedging instruments | N/A | N/A | |||||||||||||||||||||
| Gain on cash flow hedge relationships – interest rate contracts: | |||||||||||||||||||||||
| Amount of gain reclassified from AOCI | N/A | N/A | |||||||||||||||||||||
| Gain on cash flow hedge relationships – foreign currency forward contracts: | |||||||||||||||||||||||
Amount of gain reclassified from AOCI | N/A | N/A | |||||||||||||||||||||
N/A (Not applicable)
The amount of the gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows:
| Amount of Gain (Loss) Recognized in Earnings (Loss) on Derivatives | ||||||||||||||||||||
| Location of Gain (Loss) | June 30, | |||||||||||||||||||
| (In millions) | Recognized in Earnings (Loss) on Derivatives | 2026 | 2025 | |||||||||||||||||
| Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||||
| Foreign currency forward contracts | Selling, general and administrative | $ | ( | $ | ( | |||||||||||||||
F-46
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company's derivative instruments are subject to enforceable master netting agreements. These agreements permit the net settlement of these contracts on a per-institution basis; however, the Company records the fair value on a gross basis on its consolidated balance sheets based on maturity dates, including those subject to master netting arrangements. The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties:
As of June 30, 2026 | As of June 30, 2025 | |||||||||||||||||||||||||||||||||||||
| (In millions) | Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | Contracts Subject to Netting | Net Amounts of Assets / (Liabilities) | Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | Contracts Subject to Netting | Net Amounts of Assets / (Liabilities) | ||||||||||||||||||||||||||||||||
Derivative Financial Instruments | ||||||||||||||||||||||||||||||||||||||
| Derivative assets | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Derivative liabilities | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Total derivatives | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
NOTE 13 – FAIR VALUE MEASUREMENTS
The Company records certain of its financial assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The accounting for fair value measurements must be applied to nonfinancial assets and nonfinancial liabilities that require initial measurement or remeasurement at fair value, which principally consist of assets and liabilities acquired through business combinations and goodwill, indefinite-lived intangible assets and long-lived assets for the purposes of calculating potential impairment. The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:
Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date.
Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.
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Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026:
| (In millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreign currency forward contracts | ||||||||||||||||||||||||||
| Cross-currency swap contracts | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||
| Cross-currency swap contracts | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025:
| (In millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreign currency forward contracts | ||||||||||||||||||||||||||
Cross-currency swap contracts | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||
| Cross-currency swap contracts | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
F-48
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The estimated fair values of the Company’s financial instruments not measured at fair value on a recurring basis are as follows:
June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||
| Current and long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
| Notes payable and deferred consideration | $ | $ | $ | $ | ||||||||||||||||||||||
The following methods and assumptions were used to estimate the fair value of the Company’s financial instruments for which it is practicable to estimate that value:
Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy). Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of these cash equivalent instruments.
Foreign currency forward contracts – The fair values of the Company’s foreign currency forward contracts were determined using an industry-standard valuation model, which is based on an income approach. The significant observable inputs to the model, such as swap yield curves, SOFR forward curves and currency spot and forward rates, were obtained from an independent pricing service.
Cross-currency swap contracts – The fair values of the Company’s cross-currency swap contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from independent pricing services.
Interest rate contracts – The fair values of the Company’s interest rate contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as treasury yield curves, swap yield curves and SOFR forward curves, were obtained from independent pricing services.
Current and long-term debt – The fair value of the Company’s debt was estimated based on the current rates offered to the Company for debt with the same remaining maturities. To a lesser extent, debt also includes finance lease obligations for which the carrying amount approximates the fair value. The Company’s debt is classified within Level 2 of the valuation hierarchy.
Notes payable and deferred consideration – Notes payable and deferred consideration as of June 30, 2026 consist primarily of obligations to a vendor related to deferred service payments, and as of June 30, 2025 consist primarily of deferred payments associated with the fiscal 2023 acquisition of TOM FORD, which was paid during the fiscal 2026 first and third quarters. The fair value of notes payable and deferred consideration are calculated based on the net present value of cash payments using an estimated borrowing rate based on quoted prices for a similar liability. The Company’s notes payable and deferred consideration are classified within Level 2 of the valuation hierarchy.
Nonfinancial assets measured at fair value on a nonrecurring basis
In fiscal 2025, in connection with its interim and annual impairment assessment of goodwill and other indefinite-lived intangible assets and the Dr.Jart+ other intangible asset impairment, the Company measured certain nonfinancial assets at fair value on a nonrecurring basis, classified as Level 3 of the fair value hierarchy. Refer to Note 5 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs.
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Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 – REVENUE RECOGNITION
Disaggregation of net sales by the Company's geographic regions(1) are as follows:
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| The Americas | $ | $ | $ | |||||||||||||||||
| Europe, the United Kingdom and Ireland and Emerging Markets ("EUKEM") | ||||||||||||||||||||
Asia/Pacific(2) | ||||||||||||||||||||
| Mainland China | ||||||||||||||||||||
| Returns associated with restructuring and other activities | ( | ( | ||||||||||||||||||
| Net sales | $ | $ | $ | |||||||||||||||||
(1)The Company has reorganized its geographic regions, effective July 1, 2025 and has presented the information for each fiscal year under this new basis.
Accounts Receivable
Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $44 million and $38 million as of June 30, 2026 and 2025, respectively. Payment terms are short-term in nature and are generally less than one year.
Changes in the allowance for credit losses are as follows:
June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
Allowance for credit losses, beginning of year | $ | $ | ||||||||||||
| Provision for expected credit losses | ||||||||||||||
| Write-offs, net & other | ( | |||||||||||||
Allowance for credit losses, end of year | $ | $ | ||||||||||||
The remaining balance of the allowance for doubtful accounts and customer deductions of $14 million and $12 million as of June 30, 2026 and June 30, 2025, respectively, relates to non-credit losses, which are primarily due to customer deductions.
Deferred Revenue
Changes in deferred revenue are as follows:
June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
Deferred revenue, beginning of year | $ | $ | ||||||||||||
| Revenue recognized that was included in the deferred revenue balance at the beginning of the period | ( | ( | ||||||||||||
| Revenue deferred during the period | ||||||||||||||
| Other | ||||||||||||||
Deferred revenue, end of year | $ | $ | ||||||||||||
F-50
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Transaction Price Allocated to the Remaining Performance Obligations
The aggregate transaction price allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2026 was $756 million, of which approximately $313 million is expected to be recognized within the next 12 months, with the remainder thereafter. These amounts are comprised of deferred revenue and future royalty revenue from the Company’s license arrangements.
As of June 30, 2026, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations included in deferred revenue for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions, gift card liabilities and the Marcolin license arrangement related to TOM FORD is $282 million. The remaining balance of deferred revenue as of June 30, 2026 will be recognized as revenue beyond the next twelve months, of which, $198 million relates to the non-refundable upfront payment received as part of the Marcolin licensing arrangement that is being recognized on a straight-line basis over the estimated economic life of the license, which is 20 years ending in fiscal 2043.
As of June 30, 2026, the remaining contractually guaranteed minimum royalty amounts due to the Company in connection with its license arrangements during future periods are as follows:
| (In millions) | Minimum Remaining Royalties | |||||||
| Fiscal 2027 | $ | |||||||
| Fiscal 2028 | ||||||||
| Fiscal 2029 | ||||||||
| Fiscal 2030 | ||||||||
| Fiscal 2031 | ||||||||
| Thereafter | ||||||||
The royalty revenue associated with TOM FORD is included within the other category and within The Americas region.
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Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 – PENSION AND POST-RETIREMENT BENEFIT PLANS
The Company maintains pension plans covering substantially all of its full-time employees for its U.S. operations and a majority of its international operations. Several plans provide pension benefits based primarily on years of service and employees’ earnings. In certain instances, the Company adjusts benefits in connection with international employee transfers. The Company also maintains post-retirement benefit plans that provide certain medical and dental benefits to eligible employees.
Retirement Growth Account Plan (U.S.)
The Retirement Growth Account Plan is a trust-based, noncontributory qualified defined benefit pension plan. The Company seeks to maintain appropriate funded percentages. For contributions, the Company seeks to contribute amounts that would not be less than the minimum required by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and subsequent pension legislation, and would not be more than the maximum amount deductible for income tax purposes.
Restoration Plan (U.S.)
The Company also has an unfunded, non-qualified domestic noncontributory pension Restoration Plan to provide benefits in excess of Internal Revenue Code limitations.
International Pension Plans
The Company maintains international pension plans, the most significant of which are defined benefit pension plans. The Company’s funding policies for these plans are determined by local laws and regulations. The Company’s most significant defined benefit pension obligations are included in the plan summaries below.
Post-retirement Benefit Plans
The Company maintains a domestic post-retirement benefit plan which provides certain medical and dental benefits to eligible employees. Employees hired after January 1, 2002 are not eligible for retiree medical benefits when they retire. Certain retired employees who are receiving monthly pension benefits are eligible for participation in the plan. Contributions required and benefits received by retirees and eligible family members are dependent on the age of the retiree. It is the Company’s practice to fund a portion of these benefits as incurred and may provide discretionary funding for future liabilities up to the maximum amount deductible for income tax purposes.
Certain of the Company’s international subsidiaries and affiliates have post-retirement plans, although most participants are covered by government-sponsored or administered programs.
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Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Plan Summaries
The components of the above-mentioned plans as of and for the years ended June 30, 2026 and 2025 are summarized as follows:
| Pension Plans | Other than Pension Plans | |||||||||||||||||||||||||||||||||||||
| U.S. | International | Post-retirement | ||||||||||||||||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Change in benefit obligation: | ||||||||||||||||||||||||||||||||||||||
Benefit obligation, beginning of year | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Service cost | ||||||||||||||||||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||||||||||||||
| Plan participant contributions | ||||||||||||||||||||||||||||||||||||||
| Actuarial loss (gain) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Foreign currency exchange rate impact | ( | |||||||||||||||||||||||||||||||||||||
| Benefits, expenses, taxes and premiums paid | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Plan amendments | ||||||||||||||||||||||||||||||||||||||
Settlements and curtailments | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Special termination benefits | ||||||||||||||||||||||||||||||||||||||
Benefit obligation, end of year | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Change in plan assets: | ||||||||||||||||||||||||||||||||||||||
Fair value of plan assets, beginning of year | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Actual return on plan assets | ||||||||||||||||||||||||||||||||||||||
| Foreign currency exchange rate impact | ||||||||||||||||||||||||||||||||||||||
| Employer contributions | ||||||||||||||||||||||||||||||||||||||
| Plan participant contributions | ||||||||||||||||||||||||||||||||||||||
| Settlements | ( | ( | ||||||||||||||||||||||||||||||||||||
| Benefits, expenses, taxes and premiums paid from plan assets | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
Fair value of plan assets, end of year | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Funded status | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| Amounts recognized in the Balance Sheet consist of: | ||||||||||||||||||||||||||||||||||||||
| Other assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Other accrued liabilities | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Other noncurrent liabilities | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Funded status | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Accumulated other comprehensive loss (income) | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Net amount recognized | $ | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||
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Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| Pension Plans | Other than Pension Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | International | Post-retirement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2024 | 2026 | 2025 | 2024 | 2026 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Components of net periodic benefit cost: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on assets | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actuarial loss (gain) | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prior service cost | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Settlements and curtailments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special termination benefits | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net periodic benefit cost | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Assumptions used to determine benefit obligations at June 30: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discount rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rate of compensation increase | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Weighted-average assumptions used to determine benefit obligations at June 30: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discount rate | % | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Rate of compensation increase | % | % | % | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Assumptions used to determine net periodic benefit cost for the year ended June 30: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discount rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on assets | % | % | % | N/A | N/A | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Rate of compensation increase | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Weighted-average assumptions used to determine net periodic benefit cost for the year ended June 30: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discount rate | % | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||
Expected return on assets | % | % | % | % | % | % | N/A | N/A | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Rate of compensation increase | % | % | % | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-54
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The discount rate for each plan used for determining future net periodic benefit cost is based on a review of highly rated long-term bonds. The discount rate for the Company’s domestic plans is based on a bond portfolio that includes only long-term bonds with an Aa rating, or equivalent, from a major rating agency. The Company used an above-mean yield curve which represents an estimate of the effective settlement rate of the obligation, and the timing and amount of cash flows related to the bonds included in this portfolio are expected to match the estimated defined benefit payment streams of the Company’s domestic plans. For the Company’s international plans, the discount rate in a particular country was principally determined based on a yield curve constructed from high quality corporate bonds in that respective country, with the resulting portfolio having a duration matching that particular plan. In determining the long-term rate of return for a plan, the Company considers the historical rates of return, the nature of the plan’s investments and an expectation for the plan’s investment strategies.
The weighted-average interest crediting rate used to determine the benefit obligation and net periodic benefit cost relating to the Company’s U.S. Pension Plans was 4.00 % and 4.24 % as of and for the years ended June 30, 2026 and 2025, respectively.
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The assumed weighted-average health care cost trend rate for the coming year is 7.59 % while the weighted-average ultimate trend rate of 4.01 % is expected to be reached in approximately 14 years to 24 years.
Amounts recognized in AOCI (before tax) as of June 30, 2026 and 2025 are as follows:
| Pension Plans | Other than Pension Plans | |||||||||||||||||||||||||
| (In millions) | U.S. | International | Post-retirement | Total | ||||||||||||||||||||||
| Net actuarial losses (gains) as of June 30, 2024 | $ | $ | ( | $ | $ | |||||||||||||||||||||
| Actuarial losses recognized | ||||||||||||||||||||||||||
| Amortization and settlements included in net periodic benefit cost | ( | ( | ||||||||||||||||||||||||
| Translation adjustments | ||||||||||||||||||||||||||
| Net actuarial losses as of June 30, 2025 | ||||||||||||||||||||||||||
| Net prior service cost as of June 30, 2024 | ( | ( | ( | |||||||||||||||||||||||
| Amortization included in net periodic benefit cost | ||||||||||||||||||||||||||
Curtailments included in net periodic benefit cost | ||||||||||||||||||||||||||
| Net prior service cost as of June 30, 2025 | ( | ( | ( | |||||||||||||||||||||||
| Total amounts recognized in AOCI as of June 30, 2025 | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Net actuarial losses as of June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||
| Actuarial (gains) losses recognized | ( | ( | ( | |||||||||||||||||||||||
| Amortization and settlements included in net periodic benefit cost | ( | ( | ||||||||||||||||||||||||
| Translation adjustments | ( | ( | ||||||||||||||||||||||||
| Net actuarial losses (gains) as of June 30, 2026 | ( | |||||||||||||||||||||||||
| Net prior service cost as of June 30, 2026 | ( | ( | ( | |||||||||||||||||||||||
| Amortization included in net periodic benefit cost | ( | |||||||||||||||||||||||||
| Net prior service cost as of June 30, 2026 | ( | ( | ||||||||||||||||||||||||
| Total amounts recognized in AOCI as of June 30, 2026 | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
F-55
Table of Contents
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Company’s pension plans at June 30, 2026 and 2025 are as follows:
| Pension Plans | Other than Pension Plans | |||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Growth Account | Restoration | International | Post-retirement | |||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||
| Projected benefit obligation | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Accumulated benefit obligation | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Fair value of plan assets | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
International pension plans with projected benefit obligations in excess of the plans’ assets had aggregate projected benefit obligations of $97 million and $326 million and aggregate fair value of plan assets of $4 million and $214 million at June 30, 2026 and 2025, respectively. International pension plans with accumulated benefit obligations in excess of the plans’ assets had aggregate accumulated benefit obligations of $87 million and $91 million and aggregate fair value of plan assets of $4
The expected cash flows for the Company’s pension and post-retirement plans are as follows:
| Pension Plans | Other than Pension Plans | |||||||||||||||||||
| (In millions) | U.S. | International | Post-retirement | |||||||||||||||||
| Expected employer contributions for year ending June 30, 2027 | $ | $ | $ | |||||||||||||||||
| Expected benefit payments for year ending June 30, | ||||||||||||||||||||
| 2027 | ||||||||||||||||||||
| 2028 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| 2030 | ||||||||||||||||||||
| 2031 | ||||||||||||||||||||
| Years 2032 – 2036 | ||||||||||||||||||||
Plan Assets
The Company’s investment strategy for its pension plan assets is to maintain a diversified portfolio of asset classes with the primary goal of meeting long-term cash requirements as they become due. Assets are primarily invested in diversified funds that hold equity or debt securities to maintain the security of the funds while maximizing the returns within each plan’s investment policy. The investment policy for each plan specifies the type of investment vehicles appropriate for the plan, asset allocation guidelines, criteria for selection of investment managers and procedures to monitor overall investment performance, as well as investment manager performance.
The Company’s target asset allocation at June 30, 2026 is as follows:
| Pension Plans | ||||||||||||||
| U.S. | International | |||||||||||||
| Equity | % | % | ||||||||||||
| Debt securities | % | % | ||||||||||||
| Other | % | % | ||||||||||||
| % | % | |||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the fair values of the Company’s pension and post-retirement plan assets by asset category as of June 30, 2026:
| (In millions) | Level 1 | Level 2 | Level 3 | Assets Measured at Net Asset Value as a Practical Expedient | Total | |||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Short-term investment funds | ||||||||||||||||||||||||||||||||
| Government and agency securities | ||||||||||||||||||||||||||||||||
| Commingled funds | ||||||||||||||||||||||||||||||||
| Insurance contracts | ||||||||||||||||||||||||||||||||
| Interests in limited partnerships and hedge fund investments | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table presents the fair values of the Company’s pension and post-retirement plan assets by asset category as of June 30, 2025:
| (In millions) | Level 1 | Level 2 | Level 3 | Assets Measured at Net Asset Value as a Practical Expedient | Total | |||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Short-term investment funds | ||||||||||||||||||||||||||||||||
| Government and agency securities | ||||||||||||||||||||||||||||||||
| Commingled funds | ||||||||||||||||||||||||||||||||
| Insurance contracts | ||||||||||||||||||||||||||||||||
| Interests in limited partnerships and hedge fund investments | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table presents the changes in Level 3 plan assets:
June 30, | ||||||||||||||
| (In millions) | 2026 | 2025 | ||||||||||||
| Insurance Contracts | ||||||||||||||
| Balance at beginning of year | $ | $ | ||||||||||||
| Actual return on plan assets: | ||||||||||||||
| Relating to assets still held at the reporting date | ||||||||||||||
| Purchases, sales, issuances and settlements, net | ||||||||||||||
| Foreign exchange impact | ||||||||||||||
| Balance at end of year | $ | $ | ||||||||||||
The following is a description of the valuation methodologies used for plan assets measured at fair value:
Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds. These assets are classified within Level 1 of the valuation hierarchy.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Short-term investment funds – The fair values are determined using the Net Asset Value (“NAV”) provided by the administrator of the fund when the Company has the ability to redeem the assets at the measurement date. These assets are classified within Level 2 of the valuation hierarchy. For some assets the Company is utilizing the NAV as a practical expedient and those investments are not included in the valuation hierarchy.
Government and agency securities – The fair values are determined using third-party pricing services using market prices or prices derived from observable market inputs such as benchmark curves, broker/dealer quotes, and other industry and economic factors. These investments are classified within Level 1 of the valuation hierarchy.
Commingled funds – The fair values of publicly traded funds are based upon market quotes and are classified within Level 1 of the valuation hierarchy. The fair values for non-publicly traded funds are determined using the NAV provided by the administrator of the fund when the Company has the ability to redeem the assets at the measurement date. These assets are classified within Level 2 of the valuation hierarchy. When the Company is utilizing the NAV as a practical expedient those investments are not included in the valuation hierarchy. These investments have monthly redemption frequencies with redemption notice periods ranging from 10 to 14 days. There are no unfunded commitments related to these investments.
Insurance contracts – The fair values are based on negotiated value and the underlying investments held in separate account portfolios, as well as the consideration of the creditworthiness of the issuer. The underlying investments are primarily government, asset-backed and fixed income securities. Insurance contracts are generally classified as Level 3 as there are no quoted prices or other observable inputs for pricing.
Interests in limited partnerships and hedge fund investments – The fair values are determined using the NAV provided by the administrator as a practical expedient, and therefore these investments are not included in the valuation hierarchy. These investments have monthly and quarterly redemption frequencies with redemption notice periods ranging from 45 to 90 days. Unfunded commitments related to these investments are not material.
401(k) Savings Plan (U.S.)
The Company’s 401(k) Savings Plan (“Savings Plan”) is a contributory defined contribution plan covering substantially all regular full-time U.S. employees who have completed the hours and service requirements, as defined by the plan document. Regular full-time employees are eligible to participate in the Savings Plan thirty days following their date of hire. The Savings Plan is subject to the applicable provisions of ERISA. The Company matches a portion of the participant’s contributions after one year of service under a predetermined formula based on the participant’s contribution level. The Company’s contributions were $44 million, $51 million and $51 million for fiscal 2026, 2025 and 2024, respectively. Shares of the Company’s Class A Common Stock are not an investment option in the Savings Plan and the Company does not use such shares to match participants’ contributions.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 – COMMITMENTS AND CONTINGENCIES
Contractual Obligations
The following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are fixed and determinable as of June 30, 2026:
| Payments Due in Fiscal | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Total | 2027 | 2028 | 2029 | 2030 | 2031 | Thereafter | |||||||||||||||||||||||||||||||||||||
Debt service (1) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Unconditional purchase obligations (2) | ||||||||||||||||||||||||||||||||||||||||||||
Gross unrecognized tax benefits and interest – current (3) | ||||||||||||||||||||||||||||||||||||||||||||
Total contractual obligations(4) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
(1)Includes long-term and current debt and the related projected interest costs. Refer to Note 6 – Leases for information regarding future minimum lease payments relating to the Company’s finance leases. Interest costs on long-term and current debt in fiscal 2027, 2028, 2029, 2030, 2031 and thereafter are projected to be $290 million, $274 million, $243 million, $233 million, $807 million and $1,469 million, respectively. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2026.
(2)Unconditional purchase obligations primarily include: service provider contract commitments, inventory commitments, accrued restructuring, advertising commitments, information technology contract commitments and royalty payments pursuant to license agreements. Amounts under service provider contract commitments were estimated based on the current expectations of service and performance levels under the contract. Future royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2026, without consideration for potential renewal periods.
(3)Refer to Note 8 – Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2026, the noncurrent portion of the Company’s unrecognized tax benefits, including related accrued interest and penalties, was $194 million. At this time, the settlement period for the noncurrent portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included.
(4)Refer to Note 6 – Leases for information regarding future minimum lease payments relating to the Company’s operating leases.
Legal Proceedings
The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, securities, tax, and privacy matters.
The Company records accruals for loss contingencies when a loss is probable and reasonably estimable, and estimates reasonably possible losses or ranges of losses in excess of accrued amounts, when such estimates can be made. Such estimates involve significant judgment regarding future events and uncertainties, including timing of related payments, and are adjusted as appropriate. Legal defense costs are expensed as incurred.
See below for the assessment of loss contingencies related to the Company's Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters.
Management believes that the outcome of all other pending litigation and legal proceedings will not have a material adverse effect on the Company’s operations or consolidated financial statements. Reasonably possible losses in excess of accrued amounts are not expected to be material.
Management’s assessments of the Company’s pending litigation and other legal proceedings, including the Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters, are subject to inherent uncertainties and may change based on future developments.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Securities Class Action and Derivative Matters
On December 7, 2023 and January 22, 2024, purported securities class action complaints were filed in the United States District Court for the Southern District of New York against the Company and its then Chief Executive Officer and Chief Financial Officer. The actions were consolidated on February 20, 2024. On March 22, 2024, plaintiffs filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged materially false and misleading statements between February 3, 2022 and October 31, 2023. On March 31, 2025, the Court denied defendants' motion to dismiss. On April 2, 2026, the parties reached an agreement in principle to settle the securities class action litigation. In light of these discussions, the Company recorded a loss contingency of $210 million relating to a potential settlement of the securities class action in Other accrued liabilities in the accompanying consolidated balance sheet during the fiscal 2026 third quarter, as well as recorded a receivable for the estimated probable amounts expected to be paid by insurance carriers. As of June 30, 2026, the total settlement of $210 million has been funded, which includes the amounts paid by the insurance carriers, and as such there are no amounts related to this matter reflected in the accompanying consolidated balance sheet. This matter is subject to final approval from the Court.
Stockholder derivative complaints were filed on February 1, 2024 and March 15, 2024 in the same court against certain current and former officers and directors of the Company and were voluntarily dismissed without prejudice in April 2024. The Company subsequently received stockholder litigation demands requesting that the Board investigate similar allegations. A committee of the Board has been formed to review these demands and make recommendations, as appropriate.
The Company believes that it is not possible at this time to reasonably assess the outcome of these derivative matters or to estimate the loss or range of losses, if any.
Cosmetic Talcum Powder Matters
The Company has been named as a defendant in civil actions alleging that certain cosmetic talcum powder products were contaminated with asbestos. These matters generally involve multiple co-defendants. The Company stands behind the safety of its products for intended use, and the Company and its legal counsel believe that the Company has strong legal grounds to contest these cases and is challenging them vigorously. The Company cannot predict the outcome of each individual case pending against it.
In fiscal 2025, in view of the number of cases pending against the Company as well as the evolution of the litigation landscape and expectations regarding future claims at that time, the Company took action from the end of August 2024 through October 2024 to mitigate a portion of its future exposure. During that period, the Company entered into agreements with certain plaintiff law firms to resolve over 200 pending matters, which was a portion of the pending matters that existed at that time, and establish a framework for resolving potential future claims brought by these plaintiff law firms from January 1, 2025 through December 31, 2029, subject to annual caps (the "Talcum litigation settlement agreements").
In connection with the Talcum litigation settlement agreements, the Company recorded a charge of $159 million in the fiscal 2025 first quarter, representing its best estimate of probable losses for current and potential future claims under these agreements, and as of June 30, 2026, $24 million and $67 million are recorded in Other accrued liabilities and Other noncurrent liabilities, respectively, in the accompanying consolidated balance sheet for these liabilities. Additional charges and reasonably possible losses related to these Talcum litigation settlement agreements, in excess of the initial charge have not been and are not expected to be material.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Outside of the Talcum litigation settlement agreements, other claims are brought and may be brought by plaintiff firms not party to those agreements. As of June 30, 2026, there were 118 cases pending against the Company in U.S. state courts, as compared to 84 cases as of June 30, 2025. During the year ended June 30, 2026, 100 cases were filed and 66 cases were resolved. For certain claims brought against the Company that have advanced to later stages, specific accruals are recorded as appropriate, and for the remaining pending claims, the Company estimates losses on an aggregate basis based on historical experience.
While amounts recorded (outside the Talcum litigation settlement agreements) for the years ended June 30, 2026, 2025 and 2024, respectively, to either settle cases, or accrue for probable losses, are not material, adverse outcomes on pending or future claims could be material. The Company cannot reasonably estimate the range of possible losses in excess of accrued amounts for these or future matters. The assessment of the Company’s current cases is ongoing and could change in light of the discovery of additional facts with respect to these cases not presently known to the Company, further legal analysis, or determinations by courts, juries or other finders of fact or deciders of law that vary from the Company’s evaluation of the probable liability or outcome of such cases. The number of new cases filed against the Company has increased in recent periods, consistent with broader trends in litigation involving talcum products generally, and the Company expects that the number of new cases filed against it, and the number of cases pending against it, may continue to increase in future periods.
For the cosmetic talcum powder matters, the Company maintains insurance policies with limited coverage that may offset a portion of defense and settlement costs, subject to policy terms. Historical recoveries have not been material.
NOTE 17 – COMMON STOCK
As of June 30, 2026, the Company’s authorized common stock consists of 1,300 million shares of Class A Common Stock, par value $.01 per share, and 304 million shares of Class B Common Stock, par value $.01 per share. Class B Common Stock is convertible into Class A Common Stock, in whole or in part, at any time and from time to time at the option of the holder, on the basis of one share of Class A Common Stock for each share of Class B Common Stock converted. Holders of the Company’s Class A Common Stock are entitled to one vote per share and holders of the Company’s Class B Common Stock are entitled to ten votes per share.
Information about the Company’s common stock outstanding is as follows:
| (Shares in thousands) | Class A | Class B | ||||||||||||
| Balance at June 30, 2023 | ||||||||||||||
Acquisition of treasury stock(1) | ( | |||||||||||||
| Stock-based compensation | ||||||||||||||
| Balance at June 30, 2024 | ||||||||||||||
Acquisition of treasury stock(1) | ( | |||||||||||||
| Stock-based compensation | ||||||||||||||
| Balance at June 30, 2025 | ||||||||||||||
Acquisition of treasury stock(1) | ( | |||||||||||||
| Conversion of Class B to Class A | ( | |||||||||||||
| Stock-based compensation | ||||||||||||||
| Balance at June 30, 2026 | ||||||||||||||
(1)These amounts represent shares that were repurchased by the Company to satisfy tax withholding obligations upon the payout of certain stock-based compensation arrangements.
The Company is authorized by the Board of Directors to repurchase Class A Common Stock in the open market or in privately negotiated transactions, depending on market conditions and other factors. As of June 30, 2026, the remaining authorized share repurchase balance was 25.1 million shares.
Beginning in December 2022, the Company suspended the repurchase of shares of its Class A Common Stock under its publicly announced program. The Company may resume repurchases in the future.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of cash dividends declared per share on the Company’s Class A and Class B Common Stock during the year ended June 30, 2026:
| Date Declared | Record Date | Payable Date | Amount per Share | |||||||||||||||||
| August 19, 2025 | September 2, 2025 | September 16, 2025 | $ | |||||||||||||||||
| October 29, 2025 | November 28, 2025 | December 15, 2025 | $ | |||||||||||||||||
| February 4, 2026 | February 27, 2026 | March 16, 2026 | $ | |||||||||||||||||
| April 30, 2026 | May 29, 2026 | June 15, 2026 | $ | |||||||||||||||||
On August 18, 2026, a dividend was declared in the amount of $.35
NOTE 18 – STOCK PROGRAMS
As of June 30, 2026, the Company has two active equity compensation plans which include the Amended and Restated Fiscal 2002 Share Incentive Plan (the “Fiscal 2002 Plan”) and the Amended and Restated Non-Employee Director Share Incentive Plan (collectively, the “Plans”). These Plans currently provide for the issuance of approximately 100.8 million shares of Class A Common Stock, which consist of shares cumulatively provided for and shares transferred to the Fiscal 2002 Plan from other inactive plans and employment agreements, to be granted in the form of stock-based awards to key employees and non-employee directors of the Company. As of June 30, 2026, approximately 11.8 million shares of Class A Common Stock were reserved and available to be granted pursuant to these Plans. The Company may satisfy the obligation of its stock-based compensation awards with either new or treasury shares. The Company’s equity compensation awards include stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, including long-term price-vested units (“PVUs”), and share units.
Total net stock-based compensation expense is attributable to the granting of and the remaining requisite service periods of stock options, RSUs, PSUs, long-term PSUs and share units. Compensation expense attributable to net stock-based compensation is as follows:
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
Compensation expense(1) | $ | $ | $ | |||||||||||||||||
| Income tax benefit | $ | $ | $ | |||||||||||||||||
(1)Excludes compensation expense relating to liability-classified awards.
As of June 30, 2026, the total unrecognized compensation cost related to unvested stock-based awards was $172 million and the related weighted-average period over which it is expected to be recognized is approximately one year .
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock Options
The following is a summary of the status of the Company’s stock options as of June 30, 2026 and activity during the fiscal year then ended:
| (Shares in thousands) | Shares | Weighted- Average Exercise Price Per Share | Aggregate Intrinsic Value(1) (in millions) | Weighted-Average Contractual Life Remaining in Years | ||||||||||||||||||||||
Outstanding at June 30, 2025 | $ | |||||||||||||||||||||||||
| Granted at fair value | ||||||||||||||||||||||||||
| Exercised | ( | |||||||||||||||||||||||||
| Expired | ( | |||||||||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||||||||
Outstanding at June 30, 2026 | $ | |||||||||||||||||||||||||
Vested and expected to vest at June 30, 2026 | $ | |||||||||||||||||||||||||
Exercisable at June 30, 2026 | $ | |||||||||||||||||||||||||
(1)The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.
The exercise period for all stock options generally may not exceed ten years from the date of grant. Stock option grants to individuals generally become exercisable in three substantively equal tranches over a service period of up to four years . The Company attributes the value of option awards on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.
The following is a summary of the per-share weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised:
Year Ended June 30, | ||||||||||||||||||||
| (In millions, except per share data) | 2026 | 2025 | 2024 | |||||||||||||||||
| Per-share weighted-average grant date fair value of stock options granted | $ | $ | $ | |||||||||||||||||
| Intrinsic value of stock options exercised | $ | $ | $ | |||||||||||||||||
The fair value of each of the Company's option grants were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Year Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| Weighted-average expected stock-price volatility | ||||||||||||||||||||
| Weighted-average expected option life | ||||||||||||||||||||
| Average risk-free interest rate | ||||||||||||||||||||
| Average dividend yield | ||||||||||||||||||||
The Company uses a weighted-average expected stock-price volatility assumption that is a combination of both current and historical implied volatilities of the underlying stock. The implied volatilities were obtained from publicly available data sources. For the weighted-average expected option life assumption, the Company considers the exercise behavior for past grants and models the pattern of aggregate exercises. The average risk-free interest rate is based on the U.S. Treasury strip rate for the expected term of the options and the average dividend yield is based on historical experience.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted Stock Units
The Company granted RSUs in respect of approximately 3.6 million shares of Class A Common Stock during fiscal 2026 with a weighted-average grant date fair value per share of $91.59 that, at the time of grant, are scheduled to vest as follows: 1.2 million in fiscal 2027, 1.6 million in fiscal 2028 and 0.8 million in fiscal 2029. Vesting of RSUs is generally subject to the continued employment or the retirement of the grantees. The RSUs are generally accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were generally valued at the closing market price of the Company’s Class A Common Stock on the date of grant.
Included in the above are one-time awards granted in the first quarter of fiscal 2026, in respect of approximately 0.5 million shares of Class A Common Stock scheduled to cliff vest in fiscal 2028 with a weighted average grant-date fair value per share of $91.77 , made under the PRGP Incentive Program which was implemented in an effort to incentivize and retain leaders who are critical to the success of the PRGP.
The following is a summary of the status of the Company’s RSUs as of June 30, 2026 and activity during the fiscal year then ended:
| (Shares in thousands) | Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||||
Nonvested at June 30, 2025 | $ | |||||||||||||
| Granted | ||||||||||||||
| Dividend equivalents | ||||||||||||||
Vested(1) | ( | |||||||||||||
| Forfeited | ( | |||||||||||||
Nonvested at June 30, 2026 | ||||||||||||||
1) The total fair value of RSUs vested during fiscal 2026, 2025 and 2024 was $184 million, $78 million, and $92 million, respectively.
Performance Share Units
The Company has PSU awards outstanding, which will be settled in stock subject to the achievement of the Company’s net sales, diluted net earnings per common share and return on invested capital goals, respectively for the outstanding awards all subject to continued employment or the retirement of the grantees. For PSUs, no settlement will occur for results below the applicable minimum threshold. PSUs are accompanied by dividend equivalent rights that will be payable in cash upon settlement of the PSUs and, as such, were valued at the closing market value of the Company’s Class A Common Stock on the date of grant.
The following is a summary of the status of the Company’s PSUs as of June 30, 2026 and activity during the fiscal year then ended:
(1) The total fair value of PSUs vested and issued during fiscal 2026 and 2024 was $1 million and $7 million, respectively. No PSUs vested and were issued during fiscal 2025.
| (Shares in thousands) | Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||||
Nonvested at June 30, 2025 | $ | |||||||||||||
| Granted | ||||||||||||||
Vested and issued(1) | ( | |||||||||||||
| Forfeited | ( | |||||||||||||
Nonvested at June 30, 2026 | ||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term Performance Share Units
In February 2018, the Company granted to its then Chief Executive Officer ("CEO") PSUs with an aggregate payout of 195,940 shares (in two tranches of 97,970 shares each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of the respective performance periods, which ended June 30, 2021 and 2022. No portion of the award would generally vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period. Settlement, if any, with respect to both tranches would be made on September 3, 2024. The PSUs are accompanied by dividend equivalent rights that were payable in cash at the same time as any payment of shares of Class A Common Stock. The grant date fair value of these PSUs of $27 million was estimated using the closing stock price of the Company’s Class A Common Stock as of the date of grant. On September 3, 2024, since the Company achieved positive Cumulative Operating Income, as defined in the PSU award agreement, and since the then CEO completed the requisite service, the Company issued 195,940 shares of the Company’s Class A Common Stock to its then CEO in accordance with the terms of these PSUs. At the time of issuance, the total fair value of shares granted was $18 million.
In March 2021, the Company granted to the its then CEO PSUs with an aggregate payout of 68,578 shares of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024. Generally, no portion of this award would vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period. The PSUs are accompanied by dividend equivalent rights that were payable in cash at the same time as any delivery of shares of the Company's Class A Common Stock. The aggregate grant date fair value of the PSUs of approximately $20 million was estimated using the closing stock price of the Company's Class A Common Stock on the date of grant. On September 2, 2025, since the Company achieved positive Cumulative Operating Income, as defined in the PSU award agreement, and since the then CEO completed the requisite service, the Company issued 68,578 shares of the Company’s Class A Common Stock to its former CEO, in accordance with the terms of the PSUs. At the time of issuance, the total fair value of shares granted was $6 million.
Long-term Price-Vested Units
In March 2021, the Company granted to its then CEO PVUs with an aggregate payout of 85,927 shares, divided into three tranches, of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024. Generally, no portion of this award would vest unless the Company has achieved positive Cumulative Operating Income, as defined in the price-vested unit award agreement, during the relevant performance period. In addition, the vesting of each tranche was contingent upon the Company’s achievement of the respective stock price goal, which means that the average closing price per share of the Company’s Class A Common Stock traded on the New York Stock Exchange be at or above the applicable stock price goal (noted in the table below) for 20 consecutive trading days during the applicable performance period. The PVUs are accompanied by dividend equivalent rights that were payable in cash at the same time as any delivery of shares of the Company's Class A Common Stock.
The number of shares subject to each tranche of the price-vested unit award, as well as the stock price goals, service periods, performance periods and share delivery dates for each tranche are as follows:
| Number of Shares per Tranche | Stock Price Goal (per Share) | Service Period | Performance Period for Stock Price Goal | Performance Period for Cumulative Operating Income Goal | Share Delivery Date | |||||||||||||||||||||||||||||||||
| First tranche | $ | March 11, 2021 - June 30, 2024 | March 11, 2021 - June 30, 2024 | July 1, 2021 - June 30, 2025 | September 2, 2025 | |||||||||||||||||||||||||||||||||
| Second tranche | $ | March 11, 2021 - June 30, 2024 | March 11, 2021 - June 30, 2024 | July 1, 2021 - June 30, 2025 | September 2, 2025 | |||||||||||||||||||||||||||||||||
| Third tranche | $ | March 11, 2021 - June 30, 2024 | March 11, 2021 - June 30, 2024 | July 1, 2021 - June 30, 2025 | September 2, 2025 | |||||||||||||||||||||||||||||||||
| Total shares | ||||||||||||||||||||||||||||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The aggregate grant date fair value of the PVUs of approximately $20 million was estimated using the Monte Carlo Method, which requires certain assumptions. The significant assumptions used for this award were as follows:
| Expected volatility | % | |||||||
| Dividend yield | % | |||||||
| Risk-free interest rate | % | |||||||
| Expected term | ||||||||
The Stock Price Goals (per Share) were all achieved during fiscal 2022 and on September 2, 2025, since the Company achieved positive Cumulative Operating Income as of June 30, 2025, as defined in the award agreement, and since the then CEO completed the requisite service, the Company issued 85,927 shares of the Company’s Class A Common Stock to its former CEO in accordance with the terms of the PVUs. At the time of issuance, the total fair value of shares granted was $8 million.
Share Units
The Company grants share units to certain non-employee directors under the Amended and Restated Non-Employee Director Share Incentive Plan. The share units are convertible into shares of the Company’s Class A Common Stock as provided for in that plan. Share units are accompanied by dividend equivalent rights that are converted to additional share units when such dividends are declared.
The following is a summary of the status of the Company’s share units as of June 30, 2026 and activity during the fiscal year then ended:
| (Shares in thousands) | Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||||
| Outstanding at June 30, 2025 | $ | |||||||||||||
| Granted | ||||||||||||||
| Dividend equivalents | ||||||||||||||
Converted (1) | ( | |||||||||||||
| Outstanding at June 30, 2026 | ||||||||||||||
Cash Units
Certain non-employee directors defer cash compensation in the form of cash payout share units, which are not subject to the Plans. These share units are classified as liabilities and, as such, their fair value is adjusted to reflect the current market value of the Company’s Class A Common Stock. The Company recorded $2 million as compensation expense, net for fiscal 2026, and recorded $3 million and $13 million as compensation income, net for fiscal 2025 and 2024, respectively, to reflect additional deferrals and the change in the market value.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 – CHANGES IN OWNERSHIP INTEREST ON NET EARNINGS (LOSS) ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC.
The following table summarizes the effects of changes in ownership of redeemable noncontrolling interest on the Company's equity:
Year Ended June 30, | ||||||||||||||||||||
(In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| Net earnings (loss) attributable to The Estée Lauder Companies Inc. | $ | $ | ( | $ | ||||||||||||||||
| Transfers from redeemable noncontrolling interest: | ||||||||||||||||||||
| Increase in paid-in capital as a result of the purchase of shares from redeemable noncontrolling interest | ||||||||||||||||||||
Total effect of changes in ownership interest on equity attributable to The Estée Lauder Companies Inc. | $ | $ | ( | $ | ||||||||||||||||
NOTE 20 – NET EARNINGS (LOSS) ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC. PER COMMON SHARE
Net earnings (loss) attributable to The Estée Lauder Companies Inc. per common share (“basic EPS”) is computed by dividing net earnings (loss) attributable to The Estée Lauder Companies Inc. by the weighted-average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. Net earnings (loss) attributable to The Estée Lauder Companies Inc. per common share assuming dilution (“diluted EPS”) is computed by reflecting potential dilution from stock-based awards using the treasury stock method. For the year ended June 30, 2025, the effects of potentially dilutive stock options, PSUs and RSUs were excluded from the computation of diluted EPS as they were anti-dilutive due to the net loss incurred during the period.
A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows:
Year Ended June 30, | ||||||||||||||||||||
| (In millions, except per share data) | 2026 | 2025 | 2024 | |||||||||||||||||
| Numerator: | ||||||||||||||||||||
Net earnings (loss) attributable to The Estée Lauder Companies Inc. | $ | $ | ( | $ | ||||||||||||||||
| Denominator: | ||||||||||||||||||||
| Weighted-average common shares outstanding – Basic | ||||||||||||||||||||
| Effect of dilutive stock options | ||||||||||||||||||||
| Effect of PSUs | ||||||||||||||||||||
| Effect of RSUs | ||||||||||||||||||||
| Weighted-average common shares outstanding – Diluted | ||||||||||||||||||||
Net earnings (loss) attributable to The Estée Lauder Companies Inc. per common share: | ||||||||||||||||||||
| Basic | $ | $ | ( | $ | ||||||||||||||||
| Diluted | $ | $ | ( | $ | ||||||||||||||||
The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows:
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| Stock options | ||||||||||||||||||||
| RSUs and PSUs | ||||||||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2026, 2025 and 2024, 0.5 million shares, 0.6 million shares and 0.4 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the computation of diluted EPS as the number of shares ultimately issued is contingent on the achievement of applicable performance targets of the Company, as discussed in Note 18 – Stock Programs.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 – ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of AOCI included in the accompanying consolidated balance sheets consist of the following:
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| Net derivative instruments, beginning of year | $ | ( | $ | $ | ||||||||||||||||
Gain (loss) on derivative instruments (1) | ( | |||||||||||||||||||
| (Provision) benefit for income taxes | ( | ( | ||||||||||||||||||
| Reclassification to earnings (loss) during the year: | ||||||||||||||||||||
Foreign currency forward contracts (2) | ( | ( | ||||||||||||||||||
Interest rate contracts (3) | ( | ( | ||||||||||||||||||
Cross-currency swap contracts (1)(4) | ( | ( | ( | |||||||||||||||||
Income tax impact of reclassification (5) | ( | |||||||||||||||||||
| Net derivative instruments, end of year | ( | |||||||||||||||||||
| Net pension and post-retirement adjustments, beginning of year | ( | ( | ( | |||||||||||||||||
| Changes in plan assets and benefit obligations: | ||||||||||||||||||||
| Net actuarial gains (losses) recognized | ( | ( | ||||||||||||||||||
| Prior service credit recognized | ||||||||||||||||||||
| Translation adjustments | ( | |||||||||||||||||||
| (Provision) benefit for income taxes | ( | |||||||||||||||||||
Amortization and settlements included in net periodic benefit cost (6): | ||||||||||||||||||||
| Net actuarial gains and losses | ( | |||||||||||||||||||
| Net prior service cost | ( | ( | ( | |||||||||||||||||
Curtailments | ( | |||||||||||||||||||
| Settlements | ||||||||||||||||||||
Income tax impact of reclassification (5) | ( | ( | ||||||||||||||||||
| Net pension and post-retirement adjustments, end of year | ( | ( | ( | |||||||||||||||||
| Cumulative translation adjustments, beginning of year | ( | ( | ( | |||||||||||||||||
Translation adjustments (7) | ( | ( | ||||||||||||||||||
Purchase of shares from redeemable noncontrolling interest (8) | ( | |||||||||||||||||||
| Provision for income taxes | ( | ( | ( | |||||||||||||||||
| Cumulative translation adjustments, end of year | ( | ( | ( | |||||||||||||||||
Accumulated other comprehensive loss | $ | ( | $ | ( | $ | ( | ||||||||||||||
(1)Includes the gain recognized in AOCI from cross-currency swap contracts which represents the amount excluded from effectiveness testing.
(2)Amounts recorded in Net Sales in the accompanying consolidated statements of earnings (loss).
(3)Amounts recorded in Interest expense in the accompanying consolidated statements of earnings (loss).
(4)Amounts recorded in Selling, general and administrative in the accompanying consolidated statements of earnings (loss).
(5)Amounts recorded in Provision for income taxes in the accompanying consolidated statements of earnings (loss).
(6)Reclassification adjustments for pension and post-retirement plans are recorded in Other components of net periodic benefit cost in the accompanying consolidated statements of earnings (loss).
(7)See Note 12 – Derivative Financial Instruments for gains (losses) relating to net investment hedges.
(8)Upon purchase of the remaining interest in DECIEM during the fourth quarter of fiscal 2024, the cumulative amount of translation adjustments were reallocated from redeemable noncontrolling interest back to the Company.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22 – STATEMENT OF CASH FLOWS
Supplemental cash flow information is as follows:
Year Ended June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
| Cash: | ||||||||||||||||||||
| Cash paid during the year for interest | $ | $ | $ | |||||||||||||||||
| Cash paid during the year for income taxes, net of refunds received | ||||||||||||||||||||
| Federal | $ | $ | $ | |||||||||||||||||
| State and Local | ||||||||||||||||||||
| Foreign | ||||||||||||||||||||
| Belgium | ||||||||||||||||||||
| Canada | ||||||||||||||||||||
| China | ||||||||||||||||||||
| Switzerland | ||||||||||||||||||||
| UK | ||||||||||||||||||||
| All Other Foreign Jurisdictions | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
| Non-cash investing and financing activities: | ||||||||||||||||||||
| Property, plant and equipment accrued but unpaid | $ | $ | $ | |||||||||||||||||
NOTE 23 – SEGMENT DATA AND RELATED INFORMATION
Operating segments include components of an enterprise for which separate financial information is available that are regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer (the “CEO”). As a result of the similarities in the manufacturing, marketing and distribution processes for the Company’s products, much of the information provided in the consolidated financial statements is similar to, or the same as, that reviewed on a regular basis by the CEO. While the Company’s results of operations are reviewed on a consolidated basis, the CEO also reviews data segmented on a basis that facilitates comparison to industry statistics. Although the Company operates in one business segment, beauty products, the CEO evaluates performance based on its four major product categories: skin care, makeup, fragrance and hair care. These product categories meet the definition of operating and reportable segments and, accordingly, additional financial data is provided below. Skin care products include moisturizers, serums, cleansers, toners, eye care, body care, exfoliators, acne and oil corrections, facial masks and sun care products. Makeup products include foundations, powders, concealers, and setting sprays, lipsticks, lip liners and lip glosses, and mascaras, eyeshadows and eye liners. Fragrance products include parfum, eau de parfum, eau de toilette, eau de cologne and body spray, as well as lotions, creams, powders, candles and soaps that are based on a particular fragrance. Hair care products include shampoos, conditioners, styling products, treatment, finishing sprays and hair color products. Royalty revenue associated with the license of the TOM FORD trademark as discussed in Note 14 - Revenue Recognition, as well as sales and related results of ancillary products and services that do not fit within the Company's definitions of skin care, makeup, fragrance and hair care are included in the other category.
The CEO assesses each reportable segment’s performance using their respective operating income. Segment operating income is used in developing the overall strategy and during the annual budget process, as well as considered in budget-to-actual variances on a monthly basis when making decisions about the allocation of operating and capital resources to each reportable segment. Segment net sales and operating income (loss) is before the impacts of restructuring and other activities and the impacts from the other category described above. Returns and charges associated with restructuring and other activities are not allocated to the Company's segments because they are centrally directed and controlled, are not included in internal measures of segment performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accounting policies for the Company’s reportable segments are the same as those described in the summary of significant accounting policies, with the exception that the impacts of restructuring and other activities are not allocated to the reportable segments. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; thus, no additional information is produced for the CEO or included herein.
Information about the Company's four operating segments is as follows:
| (In millions) | Year Ended June 30, 2026 | |||||||||||||||||||||||||||||||
| Skin Care | Makeup | Fragrance | Hair Care | Total | ||||||||||||||||||||||||||||
Net sales | $ | |||||||||||||||||||||||||||||||
Less: Other category net sales | ||||||||||||||||||||||||||||||||
Less: Returns associated with restructuring and other activities | ( | |||||||||||||||||||||||||||||||
Segment net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
Other segment items(1) | ||||||||||||||||||||||||||||||||
Segment operating income (loss) | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||
| Other category operating income | ||||||||||||||||||||||||||||||||
Charges associated with restructuring and other activities | ( | |||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Reconciliation to earnings before income taxes: | ||||||||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Interest income and investment income, net | ||||||||||||||||||||||||||||||||
| Other components of net periodic benefit cost | ( | |||||||||||||||||||||||||||||||
| Earnings before income taxes | $ | |||||||||||||||||||||||||||||||
Segment depreciation and amortization | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Other category | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | |||||||||||||||||||||||||||||||
(1) Other segment items reflect the securities class action litigation settlement. | ||||||||||||||||||||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| (In millions) | Year Ended June 30, 2025 | |||||||||||||||||||||||||||||||
| Skin Care | Makeup | Fragrance | Hair Care | Total | ||||||||||||||||||||||||||||
Net sales | $ | |||||||||||||||||||||||||||||||
Less: Other category net sales | ||||||||||||||||||||||||||||||||
Less: Returns associated with restructuring and other activities | ||||||||||||||||||||||||||||||||
Segment net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
Impairment of goodwill and other intangible assets | ||||||||||||||||||||||||||||||||
Other segment items(1) | ||||||||||||||||||||||||||||||||
Segment operating income (loss) | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
| Other category operating loss | ( | |||||||||||||||||||||||||||||||
Charges associated with restructuring and other activities | ( | |||||||||||||||||||||||||||||||
| Operating loss | ( | |||||||||||||||||||||||||||||||
| Reconciliation to loss before income taxes: | ||||||||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Interest income and investment income, net | ||||||||||||||||||||||||||||||||
| Other components of net periodic benefit cost | ( | |||||||||||||||||||||||||||||||
| Loss before income taxes | $ | ( | ||||||||||||||||||||||||||||||
Segment depreciation and amortization | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Other category | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | |||||||||||||||||||||||||||||||
(1) Other segment items reflect the Talcum litigation settlement agreements. | ||||||||||||||||||||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| (In millions) | Year Ended June 30, 2024 | |||||||||||||||||||||||||||||||
| Skin Care | Makeup | Fragrance | Hair Care | Total | ||||||||||||||||||||||||||||
Net sales | $ | |||||||||||||||||||||||||||||||
Less: Other category net sales | ||||||||||||||||||||||||||||||||
Less: Returns associated with restructuring and other activities | ( | |||||||||||||||||||||||||||||||
Segment net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
| Impairment of goodwill and other intangible assets | ||||||||||||||||||||||||||||||||
Segment operating income (loss) | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Other category operating income | ||||||||||||||||||||||||||||||||
Charges associated with restructuring and other activities | ( | |||||||||||||||||||||||||||||||
Operating income | ||||||||||||||||||||||||||||||||
Reconciliation to earnings before income taxes: | ||||||||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Interest income and investment income, net | ||||||||||||||||||||||||||||||||
| Other components of net periodic benefit cost | ||||||||||||||||||||||||||||||||
| Earnings before income taxes | $ | |||||||||||||||||||||||||||||||
Segment depreciation and amortization | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Other category | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | |||||||||||||||||||||||||||||||
For the Company’s geographic region presentation, as disclosed in Note 14 – Revenue Recognition, net sales are attributed to a country based on the legal entity sale location, and this predominantly aligns with the location of the customer, with the primary exception related to the Company’s net sales from its global travel retail business. The net sales from the Company’s global travel retail business are included in the Asia/Pacific geographic region. For the presentation of net sales by country below, the Company has presented this based on the location of the customer (e.g., the customer is the retailer in the wholesale business and the consumer in the direct-to-consumer business), and as such has attributed net sales from its global travel retail business to the country to which the product is shipped, and not the Company’s country of legal sale.
The Company is domiciled in the United States. Net sales in the United States, including net sales from travel retail locations in the United States, as well as net sales in foreign countries, including net sales from travel retail locations in that country, that contribute 10% or more of net sales of the Company in fiscal 2026, 2025 and 2024 were as follows:
June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
United States | $ | $ | $ | |||||||||||||||||
Mainland China | ||||||||||||||||||||
All other countries | ||||||||||||||||||||
Net sales | $ | $ | $ | |||||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company’s long-lived assets, consisting of property, plant and equipment, net and operating lease ROU assets, in the United States, and in foreign countries that are 10% or greater of the Company’s consolidated long-lived assets at June 30, 2026, 2025 and 2024 were as follows:
June 30, | ||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2024 | |||||||||||||||||
United States | $ | $ | $ | |||||||||||||||||
Japan | ||||||||||||||||||||
All other countries | ||||||||||||||||||||
Long-lived assets | $ | $ | $ | |||||||||||||||||
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THE ESTÉE LAUDER COMPANIES INC.
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
Three Years Ended June 30, 2026
(In millions)
| Additions | ||||||||||||||||||||||||||||||||
| Description | Balance at Beginning of Period | (1) Charged to Costs and Expenses | (2) Charged to Other Accounts | Deductions | Balance at End of Period | |||||||||||||||||||||||||||
Reserves deducted in the balance sheet from the assets to which they apply: | ||||||||||||||||||||||||||||||||
Allowance for doubtful accounts and customer deductions: | ||||||||||||||||||||||||||||||||
| Year ended June 30, 2026 | $ | $ | $ | $ | (a) | $ | ||||||||||||||||||||||||||
| Year ended June 30, 2025 | $ | $ | $ | $ | (a) | $ | ||||||||||||||||||||||||||
| Year ended June 30, 2024 | $ | $ | $ | $ | (a) | $ | ||||||||||||||||||||||||||
| Deferred tax valuation allowance: | ||||||||||||||||||||||||||||||||
| Year ended June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Year ended June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Year ended June 30, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(a) Includes amounts written-off, net of recoveries.
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THE ESTÉE LAUDER COMPANIES INC.
INDEX TO EXHIBITS
| Exhibit Number | Description | |||||||
| 3.1 | Restated Certificate of Incorporation of The Estée Lauder Companies Inc. (filed as Exhibit 3.1 to our Form 8-K filed on November 18, 2025).* | |||||||
| 3.2 | Amended and Restated Bylaws (filed as Exhibit 3.2 to our Form 8-K filed on May 23, 2025)* | |||||||
| 4.1 | Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed as Exhibit 4.1 to our Form 10-K filed on August 20, 2025).* | |||||||
| 4.2 | Indenture, dated November 5, 1999, between the Company and State Street Bank and Trust Company, N.A. (filed as Exhibit 4 to Amendment No. 1 to our Form S-3 (No. 333-85947) filed on November 5, 1999).* | |||||||
| 4.3 | Officers’ Certificate, dated September 29, 2003, defining certain terms of the 5.75% Senior Notes due 2033 (filed as Exhibit 4.2 to our Form 8-K filed on September 29, 2003).* | |||||||
| 4.4 | Global Note for 5.75% Senior Notes due 2033 (filed as Exhibit 4.3 to our Form 8-K filed on September 29, 2003).* | |||||||
| 4.5 | Officers’ Certificate, dated May 1, 2007, defining certain terms of the 6.000% Senior Notes due 2037 (filed as Exhibit 4.2 to our Form 8-K filed on May 1, 2007).* | |||||||
| 4.6 | Global Note for 6.000% Senior Notes due 2037 (filed as Exhibit 4.4 to our Form 8-K filed on May 1, 2007).* | |||||||
4.7 | Officers’ Certificate, dated August 2, 2012, defining certain terms of the 3.700% Senior Notes due 2042 (filed as Exhibit 4.2 to our Form 8-K filed on August 2, 2012).* | |||||||
4.8 | Global Note for the 3.700% Senior Notes due 2042 (filed as Exhibit 4.4 to our Form 8-K filed on August 2, 2012).* | |||||||
4.9 | Officers’ Certificate, dated June 4, 2015, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.1 to our Form 8-K filed on June 4, 2015).* | |||||||
4.10 | Global Note for the 4.375% Senior Notes due 2045 (filed as Exhibit 4.2 to our Form 8-K filed on June 4, 2015).* | |||||||
4.11 | Officers’ Certificate, dated May 10, 2016, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.3 to our Form 8-K filed on May 10, 2016).* | |||||||
4.12 | Global Note for the 4.375% Senior Notes due 2045 (filed as Exhibit B in Exhibit 4.3 to our Form 8-K filed on May 10, 2016).* | |||||||
4.13 | Officers’ Certificate, dated February 9, 2017, defining certain terms of the 3.150% Senior Notes due 2027 (filed as Exhibit 4.3 to our Form 8-K filed on February 9, 2017).* | |||||||
4.14 | Form of Global Note for the 3.150% Senior Notes due 2027 (included as Exhibit A in Exhibit 4.3 to our Form 8-K filed on February 9, 2017).* | |||||||
4.15 | Officers’ Certificate, dated February 9, 2017, defining certain terms of the 4.150% Senior Notes due 2047 (filed as Exhibit 4.5 to our Form 8-K filed on February 9, 2017).* | |||||||
4.16 | Form of Global Note for the 4.150% Senior Notes due 2047 (included as Exhibit A in Exhibit 4.5 to our Form 8-K filed on February 9, 2017).* | |||||||
| 4.17 | Officers’ Certificate, dated November 21, 2019, defining certain terms of the 2.375% Senior Notes due 2029 (filed as Exhibit 4.3 to our Form 8-K filed on November 21, 2019).* | |||||||
| 4.18 | Form of Global Note for the 2.375% Senior Notes due 2029 (included as Exhibit A in Exhibit 4.3 to our Form 8-K filed on November 21, 2019).* | |||||||
| 4.19 | Officers’ Certificate, dated November 21, 2019, defining certain terms of the 3.125% Senior Notes due 2049 (filed as Exhibit 4.5 to our Form 8-K filed on November 21, 2019).* | |||||||
| 4.20 | Form of Global Note for the 3.125% Senior Notes due 2049 (included as Exhibit A in Exhibit 4.5 to our Form 8-K filed on November 21, 2019).* | |||||||
| 4.21 | Officers’ Certificate, dated April 13, 2020, defining certain terms of the 2.600% Senior Notes due 2030 (filed as Exhibit 4.1 to our Form 8-K filed on April 13, 2020).* | |||||||
Table of Contents
| Exhibit Number | Description | |||||||
| 4.22 | Form of Global Note for the 2.600% Senior Notes due 2030 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on April 13, 2020).* | |||||||
| 4.23 | Officers’ Certificate, dated March 4, 2021, defining certain terms of the 1.950% Senior Notes due 2031 (filed as Exhibit 4.1 to our Form 8-K filed on March 4, 2021).* | |||||||
| 4.24 | Form of Global Note for the 1.950% Senior Notes due 2031 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on March 4, 2021).* | |||||||
| 4.25 | Officers’ Certificate, dated May 12, 2023, defining certain terms of the 4.375% Senior Notes due 2028 (filed as Exhibit 4.1 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.26 | Form of Global Note for the 4.375% Senior Notes due 2028 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.27 | Officers’ Certificate, dated May 12, 2023, defining certain terms of the 4.650% Senior Notes due 2033 (filed as Exhibit 4.3 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.28 | Form of Global Note for the 4.650% Senior Notes due 2033 (included as Exhibit A in Exhibit 4.3 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.29 | Officers’ Certificate, dated May 12, 2023, defining certain terms of the 5.150% Senior Notes due 2053 (filed as Exhibit 4.5 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.30 | Form of Global Note for the 5.150% Senior Notes due 2053 (included as Exhibit A in Exhibit 4.5 to our Form 8-K filed on May 12, 2023).* | |||||||
| 4.31 | Officers’ Certificate, dated February 14, 2024, defining certain terms of the 5.000% Senior Notes due 2034 (filed as Exhibit 4.1 to our Form 8-K filed on February 14, 2024).* | |||||||
| 4.32 | Form of Global Note for the 5.000% Senior Notes due 2034 (included as Exhibit A in Exhibit 4.1 to our Form 8-K filed on February 14, 2024).* | |||||||
| 10.1 | Stockholders’ Agreement, dated November 22, 1995 (filed as Exhibit 10.1 to our Form 10-K filed on September 15, 2003).* | |||||||
| 10.1a | Amendment No. 1 to Stockholders’ Agreement (filed as Exhibit 10.1 to our Form 10-Q filed on October 30, 1996).* | |||||||
| 10.1b | Amendment No. 2 to Stockholders’ Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on January 28, 1997).* | |||||||
| 10.1c | Amendment No. 3 to Stockholders’ Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on April 29, 1997).* | |||||||
| 10.1d | Amendment No. 4 to Stockholders’ Agreement (filed as Exhibit 10.1d to our Form 10-K filed on September 18, 2000).* | |||||||
| 10.1e | Amendment No. 5 to Stockholders’ Agreement (filed as Exhibit 10.1e to our Form 10-K filed on September 17, 2002).* | |||||||
| 10.1f | Amendment No. 6 to Stockholders’ Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on January 27, 2005).* | |||||||
| 10.1g | Amendment No. 7 to Stockholders’ Agreement (filed as Exhibit 10.7 to our Form 10-Q filed on October 30, 2009).* | |||||||
| 10.2 | Registration Rights Agreement, dated November 22, 1995 (filed as Exhibit 10.2 to our Form 10-K filed on September 15, 2003).* | |||||||
| 10.2a | First Amendment to Registration Rights Agreement (originally filed as Exhibit 10.3 to our Form 10-K filed on September 10, 1996) (re-filed as Exhibit 10.2a to our Form 10-K filed on August 25, 2017).* | |||||||
| 10.2b | Second Amendment to Registration Rights Agreement (filed as Exhibit 10.1 to our Form 10-Q filed on April 29, 1997).* | |||||||
| 10.2c | Third Amendment to Registration Rights Agreement (filed as Exhibit 10.2c to our Form 10-K filed on September 17, 2001).* | |||||||
| 10.2d | Fourth Amendment to Registration Rights Agreement (filed as Exhibit 10.2 to our Form 10-Q filed on January 29, 2004).* | |||||||
Table of Contents
| Exhibit Number | Description | |||||||
| 10.3 | The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2019, as further amended through January 1, 2022 (filed as Exhibit 10.2 to our Form 10-Q filed on February 3, 2022).*† | |||||||
| 10.3a | Amendment to amended and restated The Estee Lauder Companies Retirement Growth Account Plan, effective as of May 31, 2022 (filed as Exhibit 10.1 to our Form 10-Q filed on May 3, 2022).*† | |||||||
| 10.3b | The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2023 (filed as Exhibit 10.1 to our Form 10-Q filed on February 2, 2023).*† | |||||||
10.3c | Amendments to The Estée Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2023, as further amended effective January 1, 2025 (filed as Exhibit 10.5 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.4 | The Estee Lauder Inc. Retirement Benefits Restoration Plan (filed as Exhibit 10.5 to our Form 10-K filed on August 20, 2010).*† | |||||||
| 10.5 | Executive Annual Incentive Plan (filed as Exhibit 10.5a to our Form 10-K filed on August 18, 2023).*† | |||||||
| 10.5a | Executive Annual Incentive Plan (filed as Exhibit 10.5b to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.6 | Employment Agreement with William P. Lauder (filed as Exhibit 10.1 to our Form 8-K filed on September 17, 2010).*† | |||||||
| 10.6a | Amendment to Employment Agreement with William P. Lauder (filed as Exhibit 10.1 to our Form 8-K filed on February 27, 2013).*† | |||||||
| 10.7 | Employment Agreement with Jane Hertzmark Hudis (filed as Exhibit 10.13 to our Form 10-K filed on August 24, 2022).*† | |||||||
| 10.8 | Employment Agreement with Jane Lauder (filed as Exhibit 10.1 to our Form 10-Q filed on May 3, 2023).*† | |||||||
| 10.9 | Employment Agreement with Stéphane de La Faverie (filed as Exhibit 10.13 to our Form 10-K filed on August 19, 2024).*† | |||||||
| 10.9a | Amended and Restated Employment Agreement with Stéphane de La Faverie (filed as Exhibit 10.2 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.10 | Employment Agreement with Akhil Shrivastava (filed as Exhibit 10.1 to our Form 8-K filed on July 23, 2024).*† | |||||||
| 10.11 | Employment Agreement with Rashida La Lande (filed as Exhibit 10.15 to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.12 | Employment Agreement with Roberto Canevari.† | |||||||
| 10.13 | Form of Deferred Compensation Agreement (interest-based) with Outside Directors (filed as Exhibit 10.14 to our Form 10-K filed on September 17, 2001).*† | |||||||
| 10.13a | Form of Deferred Compensation Agreement (interest-based) with Outside Directors (including Election Form) (filed as Exhibit 10.12a to our Form 10-K filed on August 24, 2018).*† | |||||||
| 10.14 | Form of Deferred Compensation Agreement (stock-based) with Outside Directors (filed as Exhibit 10.15 to our Form 10-K filed on September 17, 2001).*† | |||||||
| 10.14a | Form of Deferred Compensation Agreement (stock-based) with Outside Directors (including Election Form) (filed as Exhibit 10.13a to our Form 10-K filed on August 24, 2018).*† | |||||||
| 10.15 | The Estee Lauder Companies Inc. Non-Employee Director Share Incentive Plan (as amended and restated on November 9, 2007) (filed as Exhibit 99.1 to our Form S-8 filed on November 9, 2007).*† | |||||||
| 10.15a | The Estee Lauder Companies Inc. Non-Employee Director Share Incentive Plan (as amended on July 14, 2011) (filed as Exhibit 10.15a to our Form 10-K filed on August 22, 2011).*† | |||||||
| 10.15b | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (filed as Exhibit 10.2 to our Form 8-K filed on November 16, 2015).*† | |||||||
| 10.15c | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (as of November 1, 2017) (filed as Exhibit 10.1 to our Form 10-Q filed on November 1, 2017).*† | |||||||
| 10.15d | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (as of August 22, 2019) (filed as Exhibit 10.1 to our Form 10-Q filed on October 31, 2019).*† | |||||||
Table of Contents
| Exhibit Number | Description | |||||||
| 10.15e | The Estée Lauder Companies Inc. Amended and Restated Non-Employee Director Share Incentive Plan (as of July 13, 2021) (filed as Exhibit 10.15e to our Form 10-K filed on August 27, 2021).*† | |||||||
| 10.16 | Summary of Compensation for Non-Employee Directors of the Company (filed as Exhibit 10.4 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.17 | Form of Stock Option Agreement for Annual Stock Option Grants under Non-Employee Director Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 99.2 to our Form S-8 filed on November 9, 2007).*† | |||||||
| 10.17a | Form of Stock Option Agreement for Annual Stock Option Grants under the Amended and Restated Non-Employee Director Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.2 to our Form 10-Q filed on October 31, 2019).*† | |||||||
| 10.18 | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.17 to our Form 10-K filed on August 17, 2012).*† | |||||||
| 10.18a | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Form 8-K filed on November 16, 2015).*† | |||||||
| 10.18b | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.16b to our Form 10-K filed on August 25, 2017).*† | |||||||
| 10.18c | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Form 8-K filed on November 19, 2019).*† | |||||||
| 10.18d | The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Form 8-K filed on November 13, 2024).*† | |||||||
| 10.18e | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16y to our Form 10-K filed on August 20, 2014).*† | |||||||
| 10.18f | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16m to our Form 10-K filed on August 25, 2017).*† | |||||||
| 10.18g | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17l to our Form 10-K filed on August 23, 2019).*† | |||||||
| 10.18h | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Form 8-K filed on August 21, 2025).*† | |||||||
| 10.18i | Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant).† | |||||||
| 10.18j | Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18t to our Form 10-K filed on August 27, 2021).*† | |||||||
| 10.18k | Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.3 to our Form 10-Q filed on February 4, 2025).*† | |||||||
| 10.18l | Form of Non-annual Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant).† | |||||||
| 10.18m | Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18bb to our Form 10-K filed on August 28, 2020).*† | |||||||
| 10.18n | Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18cc to our Form 10-K filed on August 28, 2020).*† | |||||||
Table of Contents
| Exhibit Number | Description | |||||||
| 10.18o | Form of Non-annual Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18dd to our Form 10-K filed on August 28, 2020).*† | |||||||
| 10.18p | Form of Restricted Stock Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.21r to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.18q | Form of Non-annual Restricted Stock Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.21s to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.18r | Form of PRGP Non-annual Restricted Stock Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.21t to our Form 10-K filed on August 20, 2025).*† | |||||||
| 10.19 | $2.5 Billion Credit Facility, dated as of June 7, 2024 among The Estée Lauder Companies Inc., the Eligible Subsidiaries of the Company, as defined therein, the lenders listed therein, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to our Form 8-K filed on June 7, 2024).* | |||||||
| 10.20 | Services Agreement, dated January 1, 2003, among Estee Lauder Inc., Melville Management Corp., Leonard A. Lauder, and William P. Lauder (filed as Exhibit 10.2 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.20a | Amended and Restated Services Agreement, dated as of August 18, 2026, by and among Estee Lauder Inc. and Melville Management Corporation. | |||||||
| 10.20b | Agreement of Sublease, dated May 18, 2022, between Editions de Parfums LLC, Sublandlord and Melville Management Corporation, Subtenant (filed as Exhibit 10.21a to our Form 10-K filed on August 24, 2022).* | |||||||
| 10.21 | Services Agreement, dated November 22, 1995, between Estee Lauder Inc. and RSL Investment Corp. (filed as Exhibit 10.3 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22 | Agreement of Sublease and Guarantee of Sublease, dated April 1, 2005, among Aramis Inc., RSL Management Corp., and Ronald S. Lauder (filed as Exhibit 10.4 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22a | First Amendment to Sublease, dated February 28, 2007, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.5 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22b | Second Amendment to Sublease, dated January 27, 2010, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.6 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.22c | Third Amendment to Sublease, dated November 3, 2010, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.1 to our Form 10-Q filed on February 4, 2011).* | |||||||
| 10.22d | Fourth Amendment to Sublease, dated March 4, 2020, between Aramis Inc. and RSL Management Corp. (filed as Exhibit 10.1 to our Form 10-Q filed on May 1, 2020).* | |||||||
| 10.23 | Form of Art Loan Agreement between Lender and Estee Lauder Inc. (filed as Exhibit 10.7 to our Form 10-Q filed on January 28, 2010).* | |||||||
| 10.24 | Creative Consultant Agreement, dated April 6, 2011, between Estee Lauder Inc. and Aerin Lauder Zinterhofer (filed as Exhibit 10.1 to our Form 8-K filed on April 8, 2011).*† | |||||||
| 10.24a | First Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer dated October 28, 2014 (filed as Exhibit 10.23a to our Form 10-K filed on August 20, 2015).*† | |||||||
| 10.24b | Second Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer effective July 1, 2016 (filed as Exhibit 10.23b to our Form 10-K filed on August 24, 2016).*† | |||||||
| 10.24c | Third Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer effective July 1, 2021 (filed as Exhibit 10.24c to our Form 10-K filed on August 27, 2021).*† | |||||||
| 10.24d | Fourth Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer effective July 1, 2024 (filed as Exhibit 10.25d to our Form 10-K filed on August 19, 2024).*† | |||||||
| 10.25 | License Agreement, dated April 6, 2011, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc. (filed as Exhibit 10.2 to our Form 8-K filed on April 8, 2011).* | |||||||
| 10.25a | First Amendment to the April 6, 2011 License Agreement, dated January 22, 2019, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc. (filed as Exhibit 10.1 to our Form 10-Q filed on May 1, 2019).* | |||||||
Table of Contents
| Exhibit Number | Description | |||||||
| 10.25b | Second Amendment to the April 6, 2011 License Agreement, dated February 22, 2019, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc. (filed as Exhibit 10.2 to our Form 10-Q filed on May 1, 2019).* | |||||||
19.1 | The Estée Lauder Companies Inc. Insider Trading Policies (filed as Exhibit 19.1 to our Form 10-K filed on August 19, 2024).* | |||||||
| 21.1 | List of subsidiaries. | |||||||
| 23.1 | Consent of PricewaterhouseCoopers LLP. | |||||||
| 24.1 | Power of Attorney. | |||||||
| 31.1 | Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO). | |||||||
| 31.2 | Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO). | |||||||
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO). (furnished) | |||||||
| 32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO). (furnished) | |||||||
97.1 | The Estée Lauder Companies Inc. Incentive-Based Compensation Recovery Policy (2023 Clawback Policy) (filed as Exhibit 97.1 to our Form 10-K filed on August 19, 2024).* | |||||||
| 101.1 | The following materials from The Estée Lauder Companies Inc.’s Form 10-K for the year ended June 30, 2026 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Earnings (Loss), (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements. | |||||||
| 104 | The cover page from The Estée Lauder Companies Inc.’s Form 10-K for the year ended June 30, 2026 is formatted in iXBRL. | |||||||
____________________
* Incorporated herein by reference.
† Exhibit is a management contract or compensatory plan or arrangement.