ESTEE LAUDER COMPANIES INC
For the period ended Mar 31, 2025. Filed May 1, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 2025
EL$110.06+2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-04.
0001001250-25-000011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001001250-25-000060
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 215 previous paragraphs and 225 current paragraphs.
125 unchanged; 61 reworded; 37 added; 25 removed; 4 previous and 2 current paragraphs rearranged.
Tables are not compared: 32 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
•Our makeup net sales decreased 9% for the three months ended March 31, 2025, primarily reflecting lower net sales from M·A·C and Estée Lauder. The decrease in net sales from M·A·C was primarily driven by lower net sales in the face and eye subcategories and reflected softness in the brand's retail sales which led to elevated levels of inventory, resulting in retailer destocking. Net sales from Estée Lauder decreased, primarily driven by lower net sales in the face subcategory.
Current report
•Net sales in The Americas decreased 6% for the three months ended March 31, 2025, primarily driven by lower net sales in North America, reflecting ongoing retail softness for some brands and declines in consumer confidence and sentiment, which led to elevated inventory levels and destocking at certain retailers, as well as operational challenges at certain retailers and the timing of shipments, which further pressured net sales compared to the prior-year period. Partially offsetting the net sales decline for North America was the impact from the launch of nine brands to-date in Amazon's U.S. Premium Beauty store.
Current report
•Net sales in Europe, the Middle East & Africa decreased 18% for the three months ended March 31, 2025, primarily driven by lower net sales in our Asia travel retail business, reflecting the ongoing subdued sentiment and lower conversion from Chinese consumers, the difficult comparison to the prior-year period due to our resumption of replenishment orders in the fiscal 2024 third quarter 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.
Current report
•Net sales in Asia/Pacific decreased 3% for the three months ended March 31, 2025, primarily driven by lower net sales from Korea, Hong Kong SAR, Singapore, Taiwan and Australia, partially offset by higher net sales from mainland China and Japan. The decrease in net sales from Korea reflected 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. Net sales from Hong Kong SAR and Singapore decreased, reflecting our strategic decision to reduce our exposure to reseller activity. The net sales decline from Taiwan reflected the temporary closure of a key retailer during the fiscal 2025 third quarter. Net sales from Australia decreased, reflecting lower net sales across all product categories. The increase in net sales in mainland China reflected the favorable timing of key shopping moments compared to the prior-year period, which contributed to prestige beauty stabilization, the partial recapture of consumer demand in mainland China from Asia travel retail, Hong Kong SAR and Singapore, as well as online net sales growth and the success of new product launches from La Mer. Partially offsetting the increase in net sales in mainland China, were lower shipments to some retailers due to retail softness, reflecting subdued consumer sentiment, and their efforts to manage working capital. The net sales increase from Japan reflected higher net sales in fragrance, driven by Le Labo and in skin care, driven by Estée Lauder and La Mer, including growth through tourism demand.
Current report
We are continuing to monitor and assess the potential effects of new and existing tariffs 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 are implementing and considering additional mitigation measures. We do not anticipate a material impact to fiscal 2025 profitability, however, even if we can minimize some of the impacts, and unless meaningful resolution of trade negotiations is achieved, we anticipate a high rate of tariffs to have a material adverse effect on fiscal 2026 profitability and cash flows.
Current report
Reported net sales decreased for the three and nine months ended March 31, 2025, driven by a decrease across all product categories, primarily reflecting lower net sales in skin care and makeup.
Current report
The decrease in net sales from our Asia travel retail business in both periods reflected the ongoing subdued sentiment and lower conversion from Chinese consumers, the difficult comparison to the prior-year period due to our resumption of replenishment orders in the fiscal 2024 third quarter 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.
Current report
The decrease in net sales from Estée Lauder for the nine months ended March 31, 2025 also included lower net sales in mainland China, reflecting the overall challenging retail environment, including the ongoing pressure from subdued consumer sentiment.
Current report
Skin care net sales were impacted by approximately $24 million and $13 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.
Current report
Reported skin care net sales decreased 12% for the three months ended March 31, 2025, driven by the decrease from volume of 10%, a decrease from pricing of 1%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions, and the unfavorable impact from foreign currency translation of 1%.
Current report
Reported makeup net sales decreased for the three months ended March 31, 2025, primarily driven by lower net sales from M·A·C and Estée Lauder, combined, of approximately $85 million. The decrease in net sales from M·A·C was primarily driven by lower net sales in the face and eye subcategories and reflected softness in the brand's retail sales which led to elevated levels of inventory, resulting in retailer destocking. Net sales from Estée Lauder decreased, primarily driven by lower net sales in the face subcategory.
Current report
Makeup net sales were impacted by approximately $19 million and $28 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.
Current report
Reported makeup net sales decreased 9% for the three months ended March 31, 2025, driven by the decrease from volume of 10% and the unfavorable impact from foreign currency translation of 2%. Partially offsetting these decreases was an increase from pricing of 2% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Current report
Reported makeup net sales decreased 4% for the nine months ended March 31, 2025, driven by the decrease from volume of 8% and the unfavorable impact from foreign currency translation of 1%. Partially offsetting these decreases was an increase from pricing of 5% due to the favorable impact from strategic pricing actions and changes in mix.
Current report
Reported fragrance net sales decreased for the three months ended March 31, 2025, reflecting lower net sales from Jo Malone London, Clinique, TOM FORD and Estée Lauder, combined, of approximately $30 million, and decreased for the nine months ended March 31, 2025, reflecting lower net sales from TOM FORD, Estée Lauder and Clinique, combined, of approximately $71 million.
Current report
Partially offsetting the decrease in reported fragrance net sales for the three and nine months ended March 31, 2025 were higher net sales from Le Labo, primarily reflecting growth of hero products, including growth through targeted expanded consumer reach, and new product launches.
Current report
Fragrance net sales were impacted by approximately $10 million and $12 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.
Current report
Reported fragrance net sales decreased 1% for the nine months ended March 31, 2025, driven by the decrease from volume of 6% and the unfavorable impact from foreign currency translation of 1%. Partially offsetting these decreases was an increase from pricing of 6% due to the favorable impact from strategic pricing actions and changes in mix.
Current report
Reported hair care net sales decreased 9% for the nine months ended March 31, 2025, driven by the decrease from volume of 7% and a decrease from pricing of 1%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions.
Current report
Reported net sales in The Americas decreased for the three and nine months ended March 31, 2025, primarily driven by lower net sales in North America. For the three and nine months ended March 31, 2025, the lower net sales in North America reflected ongoing retail softness for some brands and declines in consumer confidence and sentiment, which led to elevated inventory levels and destocking at certain retailers, as well as operational challenges at certain retailers and the timing of shipments, which further pressured net sales compared to the prior-year periods. Partially offsetting the net sales decline for North America for the three and nine months ended March 31, 2025 was the impact from the launch of nine brands to-date in Amazon's U.S. Premium Beauty store.
Current report
Reported net sales decreased in Europe, the Middle East & Africa for the three and nine months ended March 31, 2025, primarily driven by lower net sales in our Asia travel retail business, reflecting the ongoing subdued sentiment and lower conversion from Chinese consumers, the difficult comparison to the prior-year period due to our resumption of replenishment orders in the fiscal 2024 third quarter 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.
Current report
Reported net sales in Europe, the Middle East & Africa decreased 18% for the three months ended March 31, 2025, driven by the decrease from volume of 12%, a decrease from pricing of 4%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions, and the unfavorable impact from foreign currency translation of 1%.
Current report
Reported net sales in Europe, the Middle East & Africa decreased 9% for the nine months ended March 31, 2025, driven by the decrease from volume of 8% and a decrease from pricing of 1%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions.
Current report
Reported net sales decreased in Asia/Pacific for the three months ended March 31, 2025, primarily driven by lower net sales from Korea, Hong Kong SAR, Singapore, Taiwan and Australia, combined, of approximately $69 million.
Current report
The decrease in net sales from Korea reflected 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. Net sales from Hong Kong SAR and Singapore decreased, reflecting our strategic decision to reduce our exposure to reseller activity. The net sales decline from Taiwan reflected the temporary closure of a key retailer during the fiscal 2025 third quarter. Net sales from Australia decreased, reflecting lower net sales across all product categories.
Current report
Partially offsetting the reported net sales decrease in Asia/Pacific for the three months ended March 31, 2025 were higher net sales from mainland China and Japan, combined, of approximately $37 million. The increase in net sales in mainland China reflected the favorable timing of key shopping moments compared to the prior-year period, which contributed to prestige beauty stabilization, the partial recapture of consumer demand in mainland China from Asia travel retail, Hong Kong SAR and Singapore, as well as online net sales growth and the success of new product launches from La Mer. Partially offsetting the increase in net sales in mainland China, were lower shipments to some retailers due to retail softness, reflecting subdued consumer sentiment, and their efforts to manage working capital. The net sales increase from Japan reflected higher net sales in fragrance, driven by Le Labo and in skin care, driven by Estée Lauder and La Mer, including growth through tourism demand.
Current report
Partially offsetting the reported net sales decrease in Asia/Pacific for the nine months ended March 31, 2025 were higher net sales from Japan, reflecting higher net sales in fragrance, driven by Le Labo and Jo Malone London, and in skin care, driven by La Mer, including growth through tourism demand.
Current report
Reported net sales in Asia/Pacific decreased 3% for the three months ended March 31, 2025, driven by the decrease from volume of 6% and the unfavorable impact from foreign currency translation of 2%. Partially offsetting these decreases was an increase from pricing of 4% due to the favorable impact from strategic pricing actions and changes in mix.
Current report
Reported makeup operating income decreased for the three months ended March 31, 2025, primarily driven by lower operating income from Estée Lauder and M·A·C, and to a lesser extent, an increase in operating loss from Bobbi Brown, combined, of approximately $81 million. The decrease in operating income from Estée Lauder was primarily driven by a decrease in net sales and higher advertising and promotional activities to support key campaigns and key shopping moments, partially offset by lower cost of sales. Operating income from M·A·C decreased, primarily driven by a decrease in net sales, partially offset by lower cost of sales and lower advertising and promotional activities due to disciplined advertising and promotional expense management and a favorable year-over-year impact of increased advertising and promotional activities in the prior-year period to support new product launches. The increase in operating loss from Bobbi Brown was primarily driven by a decrease in net sales, partially offset by disciplined advertising and promotional expense management. Partially offsetting the decline in makeup operating income for the product category overall was lower cost of sales.
Current report
Reported fragrance operating income increased slightly for the three months ended March 31, 2025, reflecting favorability in cost of sales for the category overall, as well as higher operating income from Le Labo. The increase in operating income from Le Labo was driven by an increase in net sales, partially offset by an increase in selling costs and store operating costs to support targeted expanded consumer reach, as well as an increase in cost of sales.
Current report
Partially offsetting the increase in reported fragrance operating income for the three months ended March 31, 2025 was lower operating income from Jo Malone London, lower operating income from TOM FORD and lower operating results from Clinique, combined, of approximately $42 million. Operating income from Jo Malone London decreased, primarily driven by a decrease in net sales and higher selling expenses, including higher staffing costs to support targeted expanded consumer reach. The decrease in operating income from TOM FORD was primarily driven by an increase in advertising and promotional activities to support new product launches, a decrease in net sales, and higher selling expenses which included increased demonstration costs, partially offset by lower cost of sales. Operating results from Clinique decreased, primarily driven by a decrease in net sales, partially offset by lower cost of sales.
Current report
Reported operating results increased in The Americas for the three months ended March 31, 2025, primarily driven by higher operating results in North America of approximately $18 million. The higher operating results were primarily driven by lower cost of sales and lower general and administrative expenses, partially offset by the unfavorable year-over-year impact relating to net intercompany activity and a decrease in net sales.
Current report
Reported operating income decreased in Europe, the Middle East & Africa for the three months ended March 31, 2025, primarily driven by lower operating income in the United Kingdom, in our travel retail business, and in Russia, as well as lower operating results in Italy, combined, of approximately $47 million. The decrease in operating income in the United Kingdom was primarily driven by a decrease in net sales and higher advertising and promotional activities to support sales, partially offset by lower cost of sales. Operating income decreased in our travel retail business, reflecting a decrease in net sales, partially offset by a favorable year-over-year impact of net intercompany activity, lower cost of sales and lower shipping costs reflecting the decrease in net sales. Operating income decreased in Russia and Italy, primarily driven by decreases in net sales.
Current report
Reported operating income decreased in Europe, the Middle East & Africa for the nine months ended March 31, 2025, primarily driven by lower operating income in our travel retail business and in the United Kingdom, combined, of approximately $144 million. Operating income decreased in our travel retail business, reflecting a decrease in net sales, partially offset by a decrease in cost of sales, a favorable year-over-year impact of net intercompany activity, disciplined advertising and promotional expense management and lower shipping costs reflecting the decrease in net sales. Operating income in the United Kingdom decreased, primarily driven by an unfavorable year-over-year impact of net intercompany activity, a decrease in net sales and an increase in advertising and promotional activities to support sales, partially offset by lower cost of sales.
Current report
Reported operating income decreased in Asia/Pacific for the three months ended March 31, 2025, primarily driven by lower operating income from mainland China, reflecting the year-over-year unfavorable impact of a change in policy related to local government subsidies in China, an increase in advertising and promotional activities to support new product launches and key shopping moments and higher cost of sales, partially offset by an increase in net sales.
Current report
For the three months ended March 31, 2025, the increase in the effective tax rate was primarily attributable to a higher effective tax rate on our foreign operations due to our full year geographical mix of earnings in the current and prior-year periods, as well as an unfavorable impact associated with previously issued stock-based compensation.
Current report
In April 2025, the Company issued commercial paper under its existing commercial paper program, and as of April 24, 2025, $242 million was outstanding. The notes have maturities ranging from 10 to 17 days with weighted average interest rates between 4.62% to 4.68%. The proceeds from the issuance are intended for general corporate purposes.
Removed paragraphs (25)
Previous report
•Our makeup net sales decreased 1% for the three months ended December 31, 2024, primarily reflecting lower net sales from M·A·C, TOM FORD, Smashbox and Bobbi Brown. The decrease in net sales from M·A·C was primarily driven by lower net sales in the eye and face subcategories. Net sales from TOM FORD decreased, primarily driven by lower net sales in mainland China and our Asia travel retail business, reflecting the overall challenging retail environments, including ongoing pressure from subdued sentiment from Chinese consumers, as well as lower net sales in Hong Kong SAR, driven by the eye subcategory. Net sales from Smashbox decreased, primarily driven by North America, reflecting lower net sales in the face subcategory. The decrease in net sales from Bobbi Brown was driven by lower net sales in the lip subcategory. Partially offsetting the decrease in makeup net sales were higher net sales from Clinique in all geographic regions, led by North America, reflecting the launch in Amazon's U.S. Premium Beauty store, as well as the success of hero products, and higher net sales from Estée Lauder, driven by growth in the face subcategory.
Previous report
•Net sales in The Americas decreased 2% for the three months ended December 31, 2024, primarily reflecting lower net sales in North America and to Latin America distributors. Net sales in North America decreased, reflecting softness in our retail sales, including challenges with our distribution mix, skewed towards slower-growing channels. These challenges were largely offset by the launch of nine brands to-date in Amazon's U.S. Premium Beauty store. Net sales to Latin America distributors decreased, due in part, to lower net sales in fragrance, driven by Estée Lauder.
Previous report
•Net sales in Europe, the Middle East & Africa decreased 6% for the three months ended December 31, 2024, primarily driven by lower net sales in our Asia travel retail business, reflecting the impacts from an overall challenging retail environment, including ongoing pressure from subdued sentiment from Chinese consumers.
Previous report
Reported net sales decreased for the three and six months ended December 31, 2024, primarily driven by a decrease in skin care and, to a lesser extent, makeup and hair care. The decrease in skin care net sales in both periods was primarily driven by lower net sales from Estée Lauder and La Mer.
Previous report
The decrease in net sales from Estée Lauder for the three and six months ended December 31, 2024 was primarily driven by declines in mainland China, as well as, to a lesser extent, declines in net sales in our Asia travel retail business and in Hong Kong SAR, reflecting the overall challenging retail environments, including ongoing pressure from subdued sentiment from Chinese consumers.
Previous report
For the three and six months ended December 31, 2024, net sales from La Mer decreased, primarily driven by the aforementioned overall challenging retail environment within our Asia travel retail business.
Previous report
Reported skin care net sales decreased 12% for the three months ended December 31, 2024, driven by the decrease from volume of 15%. Partially offsetting this decrease was an increase from pricing of 4% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Previous report
Reported makeup net sales decreased for the six months ended December 31, 2024, reflecting lower net sales from M·A·C, and to a lesser extent, Smashbox, Too Faced and TOM FORD, combined, of approximately $84 million. The decrease in net sales from M·A·C was primarily driven by lower net sales in the face and eye subcategories and reflected softness in the brand's retail sales in North America. Net sales from Smashbox decreased, primarily reflecting lower net sales in the face and eye subcategories. The decrease in net sales from Too Faced was primarily driven by North America, reflecting lower net sales in the face and lip subcategories. Net sales from TOM FORD decreased, primarily driven by lower net sales in mainland China, reflecting the overall challenging retail environment, including ongoing pressure from subdued sentiment from Chinese consumers, as well as lower net sales in Hong Kong SAR, driven by the eye subcategory.
Previous report
Makeup net sales were impacted by approximately $11 million and $9 million of unfavorable foreign currency translation for the three and six months ended December 31, 2024, respectively.
Previous report
Reported makeup net sales decreased 2% for the six months ended December 31, 2024, driven by the decrease from volume of 8%. Partially offsetting this decrease was an increase from pricing of 6% due to the favorable impact from strategic pricing actions and changes in mix.
Previous report
Reported fragrance net sales increased slightly for the three months ended December 31, 2024, reflecting higher net sales from Le Labo, and to a lesser extent, Editions de Parfums Frédéric Malle, combined, of approximately $26 million. Net sales from Le Labo increased, primarily reflecting growth of hero products, targeted expanded consumer reach and new product launches. The increase in net sales from Editions de Parfums Frédéric Malle reflected growth across the product portfolio as well as targeted expanded consumer reach.
Previous report
Reported fragrance net sales remained virtually flat for the six months ended December 31, 2024, reflecting higher net sales from Le Labo, and to a lesser extent, Kilian Paris, Editions de Parfums Frédéric Malle and incremental net sales associated with the fiscal 2025 first quarter launch of BALMAIN Beauty, combined, of approximately $50 million. Net sales from Le Labo increased, primarily reflecting targeted expanded consumer reach, growth of hero products and new product launches. The increase in net sales from Kilian Paris reflected the success of new product launches. The increase in net sales from Editions de Parfums Frédéric Malle reflected growth across the product portfolio as well as targeted expanded consumer reach.
Previous report
Fragrance net sales were impacted by approximately $5 million and $2 million of unfavorable foreign currency translation for the three and six months ended December 31, 2024, respectively.
Previous report
Reported fragrance net sales increased 1% for the three months ended December 31, 2024, driven by an increase from pricing of 7%, due to the favorable impact from strategic pricing actions and changes in mix. Partially offsetting this increase was the decrease from volume of 5% and the unfavorable impact from foreign currency translation of 1%.
Previous report
Reported fragrance net sales were virtually flat for the six months ended December 31, 2024, driven by an increase from pricing of 6%, due to the favorable impact from strategic pricing actions and changes in mix, offset by the decrease from volume of 6%.
Previous report
Reported hair care net sales decreased 7% for the six months ended December 31, 2024, driven by the decrease from volume of 6% and a decrease from pricing of 2%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions.
Previous report
Reported net sales in The Americas decreased for the three months ended December 31, 2024, primarily reflecting lower net sales in North America, and to Latin America distributors, combined, of approximately $12 million. Net sales in North America decreased, reflecting softness in our retail sales, including challenges with our distribution mix, skewed toward slower-growing channels. These challenges were largely offset by the launch of nine brands to-date in Amazon's U.S. Premium Beauty store. Net sales to Latin America distributors decreased for the three months ended December 31, 2024, due in part, to lower net sales in fragrance, driven by Estée Lauder.
Previous report
Reported net sales in The Americas decreased for the six months ended December 31, 2024, primarily reflecting lower net sales in North America, to Latin America distributors and in Mexico, combined, of approximately $31 million. The decrease in net sales from North America reflected softness in our retail sales, including challenges with our distribution mix, skewed towards slower-growing channels. These challenges were largely offset by the launch of nine brands to-date in Amazon's U.S. Premium Beauty store. Net sales to Latin America distributors decreased, due in part, to lower net sales in fragrance, driven by Estée Lauder. The decrease in net sales in Mexico was primarily driven by the unfavorable impact of foreign currency translation.
Previous report
Reported net sales decreased in Europe, the Middle East & Africa for the three and six months ended December 31, 2024, primarily driven by lower net sales in our Asia travel retail business, reflecting the impacts from an overall challenging retail environment, including ongoing pressure from subdued sentiment from Chinese consumers.
Previous report
Partially offsetting the decrease in reported net sales in Europe, the Middle East & Africa for the six months ended December 31, 2024 were higher net sales from Israel and Turkey, combined, of approximately $21 million. Net sales in Israel increased, reflecting business disruption in the prior-year period, including the closure of stores which have since reopened. Net sales from Turkey increased, primarily driven by growth in makeup, led by higher net sales from M·A·C, and growth in skin care, led by higher net sales from Estée Lauder.
Previous report
Reported net sales decreased in Asia/Pacific for the three and six months ended December 31, 2024, primarily driven by lower net sales from mainland China, Korea, and Hong Kong SAR, combined, of approximately $166 million and $285 million, respectively, reflecting the impacts from the overall challenging retail environments, including subdued consumer sentiment. The net sales decline in Korea in both periods also reflects the exit of Dr.Jart+ from the travel retail channel in Korea during the fiscal 2025 second quarter.
Previous report
Reported net sales in Asia/Pacific decreased 11% for the three months ended December 31, 2024, driven by the decrease from volume of 16%. Partially offsetting this decrease was an increase from pricing of 4% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Previous report
Reported net sales in Asia/Pacific decreased 11% for the six months ended December 31, 2024, driven by the decrease from volume of 15%. Partially offsetting this decrease was an increase from pricing of 4% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Previous report
Reported operating income decreased in Europe, the Middle East & Africa for the three and six months ended December 31, 2024, primarily driven by lower results from our travel retail business, reflecting a decrease in net sales and the unfavorable year-over-year impact of net intercompany activity, partially offset by lower cost of sales and disciplined advertising and promotional expense management.
Previous report
(13)Consists of $700 million principal, debt issuance costs of $3 million.
Reworded paragraphs (61)
Previous wording
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. The following table is a comparative summary of operating results for the three and six months ended December 31, 2024 and 2023, and reflects the basis of presentation described in Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies for all periods presented. Products and services that do not meet our definition of skin care, makeup, fragrance and hair care have been included in the “other” category.
Current wording
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. The following table is a comparative summary of operating results for the three and nine months ended March 31, 2025 and 2024, and reflects the basis of presentation described in Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies for all periods presented. Products and services that do not meet our definition of skin care, makeup, fragrance and hair care have been included in the “other” category.
Previous wording
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 affect our results of operations. Therefore, we present certain net sales, operating results and diluted net earnings 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 monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.
Current wording
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 affect our results of operations. Therefore, we present certain net sales, operating results 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 monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.
Previous wording
•Our skin care net sales decreased 12% for the three months ended December 31, 2024, primarily driven by lower net sales from Estée Lauder and La Mer. The decrease in net sales from Estée Lauder for the three months ended December 31, 2024 was primarily driven by declines in mainland China, as well as, to a lesser extent, declines in net sales in our Asia travel retail business and in Hong Kong SAR, reflecting the overall challenging retail environments, including ongoing pressure from subdued sentiment from Chinese consumers. Net sales from La Mer decreased, primarily driven by the aforementioned overall challenging retail environment within our Asia travel retail business.
Current wording
•Our skin care net sales decreased 12% for the three months ended March 31, 2025, primarily driven by lower net sales from Estée Lauder and La Mer. The decrease in net sales from Estée Lauder and La Mer was primarily driven by our Asia travel retail business, reflecting the ongoing subdued sentiment and lower conversion from Chinese consumers, the difficult comparison to the prior-year period due to our resumption of replenishment orders in the fiscal 2024 third quarter 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.
Previous wording
•Our fragrance net sales increased 1% for the three months ended December 31, 2024, reflecting higher net sales from Le Labo, and to a lesser extent, Editions de Parfums Frédéric Malle. Net sales from Le Labo increased, primarily reflecting growth of hero products, targeted expanded consumer reach and new product launches. The increase in net sales from Editions de Parfums Frédéric Malle reflected growth across the product portfolio as well as targeted expanded consumer reach. Offsetting the reported fragrance net sales increase were lower net sales from Estée Lauder, Clinique and TOM FORD. Net sales from Estée Lauder decreased, primarily driven by lower net sales across its fragrance portfolio. The decrease in net sales from Clinique was primarily due to lower net sales from the Clinique Happy franchise line of products. Net sales from TOM FORD decreased, primarily driven by lower net sales in North America, reflecting softness in the brand's retail sales, resulting in lower replenishment orders, as well as the overall challenging retail environments in mainland China and Hong Kong SAR, including ongoing pressure from subdued sentiment from Chinese consumers.
Current wording
•Our fragrance net sales decreased 3% for the three months ended March 31, 2025, reflecting lower net sales from Jo Malone London, Clinique, TOM FORD and Estée Lauder. The decrease in net sales from Jo Malone London was primarily driven by lower net sales in the cologne and home subcategories. Net sales from Clinique decreased, primarily driven by lower net sales from the Clinique Happy franchise line of products. The decrease in net sales from TOM FORD was primarily driven by lower net sales in North America, reflecting softness in the brand's retail sales which led to elevated levels of inventory, resulting in retailer destocking, and an unfavorable year-over-year impact of prior-year launches. Net sales from Estée Lauder decreased across the fragrance portfolio, led by lower net sales from the Beautiful franchise. Partially offsetting the fragrance net sales decrease were higher net sales from Le Labo, primarily reflecting growth of hero products, including growth through targeted expanded consumer reach, and new product launches.
Previous wording
•Our hair care net sales decreased 8% for the three months ended December 31, 2024, primarily attributable to lower net sales from Aveda, reflecting our softness in the North America and Europe, the Middle East & Africa salon channels, softness in our direct-to-consumer business, as well as the unfavorable impact of timing of shipments compared to the prior-year period.
Current wording
•Our hair care net sales decreased 12% for the three months ended March 31, 2025 primarily attributable to lower net sales from Aveda, reflecting our softness in the Europe, the Middle East & Africa and North America salon channels, as well as softness in our direct-to-consumer business.
Previous wording
We have experienced challenges within our business, including in our Asia travel retail business, and we expect volatility and uncertainty to continue, given the ongoing, subdued consumer sentiment in China and Korea, as well as pressures from changes in selling policies at several Korean retailers. In North America, we continue to underperform the industry. We are also monitoring evolving global geopolitical risks and tensions, including the imposition of tariffs. These challenges are collectively expected to impact net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.
Current wording
We have experienced challenges within our business and we expect volatility and uncertainty to continue, including from ongoing, subdued consumer sentiment in China and the United States and the impact of political and social unrest in Korea. In addition, in our Asia travel retail business, the pressures from changes in strategies by certain retailers have impacted, and are expected to continue to impact, our business. These challenges are collectively expected to impact net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.
Previous wording
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 geographic regions, product categories, brands, 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. With the transition of leadership announced in the second quarter of fiscal 2025, we have embarked on “Beauty Reimagined,” that aims to accelerate best-in-class consumer coverage, create transformative innovation, boost consumer-facing investments and enable growth through more efficiencies expected through the expansion of the Profit Recovery and Growth Plan ("PRGP"), as discussed below.
Current wording
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 geographic regions, product categories, brands, 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. With the transition of leadership in the second and third quarters of fiscal 2025, we have embarked on “Beauty Reimagined,” a strategic vision that aims to accelerate best-in-class consumer coverage, create transformative innovation, boost consumer-facing investments and enable growth through more efficiencies expected through the expansion of the Profit Recovery and Growth Plan ("PRGP"), as discussed below.
Previous wording
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. For example, any potential tariffs on imports into the United States and/or tariffs on imports into other countries could have a material adverse effect on our business, as could geopolitical tensions between the United States and other countries. We are also mindful of inflationary pressures on our cost base and are monitoring the impact on consumer preferences, and the impact of changes being made in the organization, including those related to the PRGP. We are also mindful of, and monitoring, the potential impact of changes 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.
Current wording
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 potential impact of changes expected to be made as part of the PRGP on suppliers, retailers and others, and challenges relating to successfully outsourcing select services. In our outlook, we have made assumptions regarding these internal and external factors and challenges. 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.
Previous wording
The expanded component of the restructuring program will begin during our fiscal 2025 third quarter with all initiatives to be approved by the end of fiscal 2026. Specific initiatives under the expanded component of the restructuring program are expected to be substantially completed by the end of fiscal 2027. The focus of the now expanded restructuring program (now, collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas and (ii) simplification and acceleration of processes, along with the newly added focus on (i) outsourcing of select services and (ii) evolution of go-to-market footprint and selling models.
Current wording
The expanded component of the restructuring program began during our fiscal 2025 third quarter with all initiatives to be approved by the end of fiscal 2026. Specific initiatives under the expanded component of the restructuring program are expected to be substantially completed by the end of fiscal 2027. The focus of the now expanded restructuring program (now, collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas and (ii) simplification and acceleration of processes, along with the newly added focus on (i) outsourcing of select services and (ii) evolution of go-to-market footprint and selling models.
Previous wording
Impairment Analysis During the Six Months Ended December 31, 2024
Current wording
Impairment Analysis During the Nine Months Ended March 31, 2025
Previous wording
A summary of the impairment charges for the three and six months ended December 31, 2024 and the remaining trademark and goodwill carrying values as of December 31, 2024, for the TOM FORD brand and Too Faced reporting unit, are as follows:
Current wording
A summary of the impairment charges for the nine months ended March 31, 2025 and the remaining trademark and goodwill carrying values as of March 31, 2025, for the TOM FORD brand and Too Faced reporting unit, are as follows:
Previous wording
(2)The carrying values of the trademark intangible assets, subsequent to the impairment charges, are equal to their fair values.
Current wording
(2)The carrying values of the trademark intangible assets, immediately subsequent to the impairment charges, are equal to their fair values.
Previous wording
The impairment charge related to the TOM FORD trademark intangible asset for the three and six months ended December 31, 2024 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.
Current wording
The impairment charge related to the TOM FORD trademark intangible asset for the nine months ended March 31, 2025 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.
Previous wording
By geographic region, reported net sales decreased for the three and six months ended December 31, 2024, reflecting lower net sales across all geographic regions, primarily driven by Asia/Pacific and Europe, the Middle East & Africa. The decrease in net sales in Asia/Pacific was primarily driven by lower net sales from mainland China, Korea and Hong Kong SAR. For the three and six months ended December 31, 2024, the decrease in net sales in Europe, the Middle East & Africa was primarily driven by lower net sales in our travel retail business.
Current wording
By geographic region, reported net sales decreased for the three and nine months ended March 31, 2025, reflecting lower net sales across all geographic regions, primarily driven by Europe, the Middle East & Africa for the three-month period, reflecting lower net sales in our Asia travel retail business, and for the nine months ended March 31, 2025, primarily driven by Europe, the Middle East & Africa, reflecting lower net sales in our Asia travel retail business, and Asia/Pacific, reflecting lower net sales in mainland China, Hong Kong SAR and Korea.
Previous wording
Reported net sales decreased 6% for the six months ended December 31, 2024, driven by the decrease from volume of 9%. Partially offsetting this decrease was an increase from pricing of 4% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Current wording
Reported net sales decreased 7% for the nine months ended March 31, 2025, driven by the decrease from volume of 9%. Partially offsetting this decrease was an increase from pricing of 3% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Previous wording
Returns 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. For the three and six months ended December 31, 2024, there were no returns associated with restructuring and other activities, and for each of the three and six months ended December 31, 2023, there were $1 million in returns associated with restructuring and other activities.
Current wording
Returns 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. For the three and nine months ended March 31, 2025, and for the three months ended March 31, 2024, there were no returns associated with restructuring and other activities. For the nine months ended March 31, 2024, there were $1 million in returns associated with restructuring and other activities.
Previous wording
Reported skin care net sales decreased for the three and six months ended December 31, 2024, reflecting lower net sales from Estée Lauder and La Mer, combined, of approximately $201 million and $318 million, respectively.
Current wording
Reported skin care net sales decreased for the three and nine months ended March 31, 2025, reflecting lower net sales from Estée Lauder and La Mer, combined, of approximately $215 million and $533 million, respectively, primarily driven by declines in our Asia travel retail business.
Previous wording
Reported skin care net sales decreased 10% for the six months ended December 31, 2024, driven by the decrease from volume of 12%. Partially offsetting this decrease was an increase from pricing of 2% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Current wording
Reported skin care net sales decreased 10% for the nine months ended March 31, 2025, driven by the decrease from volume of 11%. Partially offsetting this decrease was an increase from pricing of 1% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Previous wording
Reported makeup net sales decreased slightly for the three months ended December 31, 2024, primarily driven by lower net sales from M·A·C, TOM FORD, Smashbox and Bobbi Brown, combined, of approximately $30 million. The decrease in net sales from M·A·C was primarily driven by lower net sales in the eye and face subcategories. Net sales from TOM FORD decreased, primarily driven by lower net sales in mainland China and our Asia travel retail business, reflecting the overall challenging retail environments, including ongoing pressure from subdued sentiment from Chinese consumers, as well as lower net sales in Hong Kong SAR, driven by the eye subcategory. Net sales from Smashbox decreased, primarily driven by North America, reflecting lower net sales in the face subcategory. The decrease in net sales from Bobbi Brown was driven by lower net sales in the lip subcategory.
Current wording
Reported makeup net sales decreased for the nine months ended March 31, 2025, reflecting lower net sales from M·A·C, and to a lesser extent, Estée Lauder, Smashbox and Bobbi Brown, combined, of approximately $158 million. The decrease in net sales from M·A·C was primarily driven by lower net sales in the face and eye subcategories and reflected softness in the brand's retail sales which led to elevated levels of inventory, resulting in retailer destocking. The decrease in net sales from Estée Lauder was primarily driven by lower net sales in the face subcategory. Net sales from Smashbox decreased, primarily reflecting lower net sales in the face and, to a lesser extent, eye subcategories. The decrease in net sales from Bobbi Brown was driven by lower net sales in the face subcategory.
Previous wording
Partially offsetting the makeup net sales decreases for the three and six months ended December 31, 2024 were higher net sales from Clinique and Estée Lauder, combined, of approximately $18 million and $52 million, respectively. Net sales from Clinique increased across all geographic regions, led by North America, reflecting the launch in Amazon's U.S. Premium Beauty store, as well as the success of hero products. Net sales from Estée Lauder increased, primarily driven by growth in the face subcategory.
Current wording
Partially offsetting the makeup net sales decrease for the nine months ended March 31, 2025 were higher net sales from Clinique across all geographic regions, led by North America, reflecting higher net sales associated with the fiscal 2024 third quarter launch in Amazon's U.S. Premium Beauty store, as well as the success of hero products and new product launches.
Previous wording
Offsetting the reported fragrance net sales increase for the three and six months ended December 31, 2024 were lower net sales from Estée Lauder, Clinique and TOM FORD, combined, of approximately $25 million and $54 million, respectively. Net sales from Estée Lauder decreased in both periods, primarily driven by lower net sales across its fragrance portfolio. The decrease in net sales from Clinique in both periods was primarily due to lower net sales from the Clinique Happy franchise line of products. Net sales from TOM FORD decreased in both periods, primarily driven by lower net sales in North America, reflecting softness in the brand's retail sales, resulting in lower replenishment orders, as well as the overall challenging retail environments in mainland China and Hong Kong SAR, including ongoing pressure from subdued sentiment from Chinese consumers.
Current wording
The decrease in net sales from Jo Malone London for the three months ended March 31, 2025 was primarily driven by lower net sales in the cologne and home subcategories. Net sales from Clinique decreased in both periods, primarily driven by lower net sales from the Clinique Happy franchise line of products. The decrease in net sales from TOM FORD in both periods was primarily driven by lower net sales in North America, reflecting softness in the brand's retail sales which led to elevated levels of inventory, resulting in retailer destocking, and an unfavorable year-over-year impact of prior-year launches. In both periods, net sales from Estée Lauder decreased across the fragrance portfolio, led by lower net sales from the Beautiful franchise.
Previous wording
Reported makeup net sales decreased 1% for the three months ended December 31, 2024, driven by the decrease from volume of 7% and the unfavorable impact from foreign currency translation of 1%. Partially offsetting these decreases was an increase from pricing of 6% due to the favorable impact from strategic pricing actions and changes in mix.
Current wording
Reported fragrance net sales decreased 3% for the three months ended March 31, 2025, driven by the decrease from volume of 7% and the unfavorable impact from foreign currency translation of 2%. Partially offsetting these decreases was an increase from pricing of 6% due to the favorable impact from strategic pricing actions and changes in mix.
Previous wording
Reported hair care net sales decreased for the three and six months ended December 31, 2024, driven by lower net sales from Aveda, primarily driven by our softness in the North America and Europe, the Middle East & Africa salon channels, softness in our direct-to-consumer business, as well as the unfavorable impact of timing of shipments compared to the prior-year periods.
Current wording
Reported hair care net sales decreased for the three and nine months ended March 31, 2025, driven by lower net sales from Aveda, primarily reflecting our softness in the Europe, the Middle East & Africa and North America salon channels, as well as softness in our direct-to-consumer business. Also contributing to the decrease in net sales for Aveda for the nine months ended March 31, 2025 was the unfavorable impact of timing of shipments compared to the prior-year period.
Previous wording
Skin care net sales were impacted by approximately $2 million of unfavorable and $11 million of favorable foreign currency translation for the three and six months ended December 31, 2024, respectively.
Current wording
Hair care net sales were impacted by approximately $2 million of unfavorable foreign currency translation in each of the three and nine months ended March 31, 2025.
Previous wording
Reported net sales in Europe, the Middle East & Africa decreased 4% for the six months ended December 31, 2024, driven by the decrease from volume of 5%, partially offset by the favorable impact from foreign currency translation of 1%. The impact of pricing was flat period-over-period.
Current wording
Reported hair care net sales decreased 12% for the three months ended March 31, 2025, driven by the decrease from volume of 10% and the unfavorable impact from foreign currency translation of 1%. The impact of pricing was flat period-over-period.
Previous wording
Net sales in The Americas were impacted by approximately $13 million and $24 million of unfavorable foreign currency translation for the three and six months ended December 31, 2024, respectively.
Current wording
Net sales in The Americas were impacted by approximately $12 million and $36 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.
Previous wording
Reported net sales in The Americas decreased 2% for the three months ended December 31, 2024, driven by the decrease from volume of 11% and the unfavorable impact from foreign currency translation of 1%. These decreases were partially offset by an increase from pricing of 11%, due to the favorable impact of strategic pricing actions and changes in mix.
Current wording
Reported net sales in The Americas decreased 6% for the three months ended March 31, 2025, driven by the decrease from volume of 9% and the unfavorable impact from foreign currency translation of 1%. These decreases were partially offset by an increase from pricing of 4%, due to the favorable impact of strategic pricing actions and changes in mix.
Previous wording
Reported net sales in The Americas decreased 2% for the six months ended December 31, 2024, driven by the decrease from volume of 9% and the unfavorable impact from foreign currency translation of 1%. These decreases were partially offset by an increase from pricing of 8%, due to the favorable impact of strategic pricing actions and changes in mix.
Current wording
Reported net sales in The Americas decreased 3% for the nine months ended March 31, 2025, driven by the decrease from volume of 9% and the unfavorable impact from foreign currency translation of 1%. These decreases were partially offset by an increase from pricing of 7%, due to the favorable impact of strategic pricing actions and changes in mix.
Previous wording
Net sales in Europe, the Middle East & Africa were impacted by approximately $4 million of unfavorable and $19 million of favorable foreign currency translation for the three and six months ended December 31, 2024, respectively.
Current wording
Net sales in Europe, the Middle East & Africa were impacted by approximately $22 million and $3 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.
Previous wording
•Net sales in Asia/Pacific decreased 11% for the three months ended December 31, 2024, primarily driven by lower net sales from mainland China, Korea, and Hong Kong SAR, reflecting the impacts from the overall challenging retail environments, including subdued consumer sentiment. The net sales decline in Korea also reflects the exit of Dr.Jart+ from the travel retail channel in Korea during the fiscal 2025 second quarter.
Current wording
Reported net sales decreased in Asia/Pacific for the nine months ended March 31, 2025, primarily driven by lower net sales from mainland China, Hong Kong SAR, Korea and Singapore, combined, of approximately $332 million. The decrease in net sales from mainland China and Hong Kong SAR both reflected the overall challenging retail environments, including the ongoing pressure from subdued consumer sentiment. Additionally, the decline in net sales in Hong Kong SAR, as well as the decrease in net sales in Singapore reflected our strategic decision to reduce our exposure to reseller activity. 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.
Previous wording
Net sales in Asia/Pacific were impacted by approximately $1 million of unfavorable and $5 million of favorable foreign currency translation for the three and six months ended December 31, 2024, respectively.
Current wording
Net sales in Asia/Pacific were impacted by approximately $21 million and $16 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.
Previous wording
Reported hair care net sales decreased 8% for the three months ended December 31, 2024, driven by the decrease from volume of 6% and a decrease from pricing of 2%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions.
Current wording
Reported net sales in Asia/Pacific decreased 8% for the nine months ended March 31, 2025, driven by the decrease from volume of 12%. Partially offsetting this decrease was an increase from pricing of 4% due to the favorable impact from strategic pricing actions and changes in mix.
Previous wording
Gross margin increased to 76.1% and 74.4% for the three and six months ended December 31, 2024, as compared with 73.0% and 71.5% in the prior-year periods.
Current wording
Gross margin increased to 75.0% and 74.6% for the three and nine months ended March 31, 2025, as compared with 71.9% and 71.6% in the prior-year periods.
Previous wording
The increase in gross margin for the three and six months ended December 31, 2024 was driven by lower obsolescence charges, due to a reduction in excess inventory. Also contributing to the increase in gross margin was the favorable impact from manufacturing costs and other, reflecting favorability in cost efficiencies within our global supply chain network, the impact in both periods of the recognition of manufacturing variances associated with reduced manufacturing volumes on our standard cost within cost of sales in the second half of fiscal 2024, partially offset by the impact of inflation on our costs. Additionally, there was a favorable impact from our mix of business, reflecting the benefit of net strategic pricing actions, partially offset by the impact of lower net sales.
Current wording
The increase in gross margin for the three and nine months ended March 31, 2025 was driven by the impact from manufacturing costs and other, reflecting the favorable impact of the recognition of manufacturing variances associated with reduced manufacturing volumes on our standard cost within cost of sales in the fiscal 2024 third quarter, partially offset by the impact of a similar charge recorded in the fiscal 2025 third quarter, as well as the favorable impact of cost efficiencies within our global supply chain network. Also contributing to the increase in gross margin in both periods was lower obsolescence charges, due to a reduction in excess inventory. Partially offsetting the increase in gross margin for the three months ended March 31, 2025 was the unfavorable impact from our mix of business, reflecting the impact of lower net sales, partially offset by the benefit of net strategic pricing.
Previous wording
Operating expenses as a percentage of net sales were 90.6% and 83.9% for the three and six months ended December 31, 2024, as compared with 59.6% and 62.9% in the prior-year periods.
Current wording
Operating expenses as a percentage of net sales were 66.3% and 78.2% for the three and nine months ended March 31, 2025, as compared with 58.4% and 61.4% in the prior-year periods.
Previous wording
The unfavorable change in operating expense margin for the three and six months ended December 31, 2024 reflects the impact of the decrease in net sales, as well as higher general and administrative and selling expenses, and for the three months ended December 31, 2024, also reflects higher advertising, merchandising, sampling and product development expenses. The increase in general and administrative expenses in both periods primarily reflected the year-over-year unfavorable impact of a change in policy related to local government subsidies in China. Selling expenses increased in both periods as we continue to invest in our business, reflecting higher staffing costs to support sales, targeted expanded consumer reach and key campaigns.
Current wording
The unfavorable change in operating expense margin for the three and nine months ended March 31, 2025 reflects the impact of the decrease in net sales. Also contributing to the unfavorable change in operating expense margin for the three months ended March 31, 2025 was higher advertising, merchandising, sampling and product development expenses, reflecting investments to support sales, including through key shopping moments, campaigns and launches, and higher store operating costs, to support targeted expanded consumer reach. General and administrative expenses increased for the three and nine months ended March 31, 2025, reflecting the year-over-year unfavorable impact of a change in policy related to local government subsidies in China. Also contributing to the unfavorable change in operating expense margin for the nine-month period was higher selling expenses, reflecting higher staffing costs to support sales, targeted expanded consumer reach and key campaigns. As a result of our net sales performance, we were disciplined in our overall expense strategy across the business to manage profitability, which partially offset the unfavorable change in operating expense margin for the three and nine months ended March 31, 2025.
Previous wording
The decrease in reported operating margin for the three and six months ended December 31, 2024 primarily reflects an increase in operating expense margin, driven by goodwill and other intangible asset impairments relating to TOM FORD and Too Faced, combined, of $861 million, included in the makeup, fragrance and other product categories, and a decrease in net sales, partially offset by an increase in gross margin, as discussed above.
Current wording
The decrease in reported operating margin for the three and nine months ended March 31, 2025 primarily reflects a decrease in net sales and an increase in operating expense margin, which for the nine months ended March 31, 2025 was driven by goodwill and other intangible asset impairments relating to TOM FORD and Too Faced, combined, of $861 million, included in the makeup, fragrance and other product categories, partially offset by an increase in gross margin, as discussed above.
Previous wording
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 following discussions of Operating income (loss) by Product Categories and Geographic Regions exclude the impact of charges associated with restructuring and other activities for the three months ended December 31, 2024 and 2023 of $181 million and $8 million, respectively, and for the six months ended December 31, 2024 and 2023 of $287 million and $10 million, respectively.
Current wording
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 following discussions of Operating income (loss) by Product Categories and Geographic Regions exclude the impact of charges associated with restructuring and other activities for the three months ended March 31, 2025 and 2024 of $97 million and $18 million, respectively, and for the nine months ended March 31, 2025 and 2024 of $384 million and $28 million, respectively.
Previous wording
Reported skin care operating income decreased for the three and six months ended December 31, 2024, primarily driven by lower operating results from La Mer, and to a lesser extent, The Ordinary and Estée Lauder, combined, of approximately $132 million and $192 million, respectively. Operating results from La Mer decreased in both periods, primarily driven by a decrease in net sales and an increase in advertising and promotional activities to support key shopping moments and new product launches, partially offset by lower cost of sales. The decrease in operating results from The Ordinary in both periods was primarily driven by higher advertising and promotional expenses due to the timing of advertising and promotional activities compared to the prior-year period and higher cost of sales due to changes in product mix. Operating results from Estée Lauder decreased in both periods, primarily driven by a decrease in net sales, partially offset by lower cost of sales and reflecting disciplined advertising and promotional expense management. Partially offsetting the decline in skin care operating income for the product category overall was lower cost of sales.
Current wording
Reported skin care operating income decreased for the three and nine months ended March 31, 2025, primarily driven by lower operating income from Estée Lauder and La Mer, combined, of approximately $210 million and $368 million, respectively. Operating income from Estée Lauder decreased in both periods, primarily driven by a decrease in net sales, partially offset by lower cost of sales. Also partially offsetting the lower operating income from Estée Lauder for the nine months ended March 31, 2025 was disciplined advertising and promotional expense management. Operating income from La Mer decreased in both periods, primarily driven by decreases in net sales and increases in advertising and promotional activities to support key shopping moments and new product launches, partially offset by lower cost of sales. Partially offsetting the decline in skin care operating income for the product category overall in both periods was lower cost of sales.
Previous wording
Reported makeup operating results decreased for the three and six months ended December 31, 2024, primarily driven by the unfavorable year-over-year impacts of other intangible asset impairment charges relating to TOM FORD and Too Faced, combined, of $245 million and a goodwill impairment charge relating to Too Faced of $13 million, as well as lower net sales, partially offset by lower cost of sales. Also contributing to the decrease in makeup operating results for the six months ended December 31, 2024 was the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million.
Current wording
Reported makeup operating results decreased for the nine months ended March 31, 2025, primarily driven by the unfavorable year-over-year impacts of other intangible asset impairment charges relating to TOM FORD and Too Faced, combined, of $245 million and a goodwill impairment charge relating to Too Faced of $13 million, as well as the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million. Also contributing to the reported makeup operating results decrease for the nine months ended March 31, 2025 was a decrease in operating income from M·A·C, primarily driven by a decrease in net sales, partially offset by lower cost of sales. Partially offsetting the decline in makeup operating results for the product category overall was lower cost of sales.
Showing the first 40 of 61 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Reported net sales decreased 10% for the three months ended March 31, 2025, driven by the decrease from volume of 9% and the unfavorable impact from foreign currency translation of 1%. Partially offsetting these decreases was an increase from pricing of 1% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Current report — wording carried from elsewhere
(13)Consists of $700 million principal and debt issuance costs of $3 million.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Reported net sales decreased 6% for the three months ended December 31, 2024, driven by the decrease from volume of 11%. Partially offsetting this decrease was an increase from pricing of 4% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Previous report — wording carried elsewhere
Reported net sales in Europe, the Middle East & Africa decreased 6% for the three months ended December 31, 2024, driven by the decrease from volume of 5%. The impact of pricing was flat period-over-period.
Previous report — wording carried elsewhere
The increase in advertising, merchandising, sampling and product development expenses for the three months ended December 31, 2024 reflected investments to support sales, including through key campaigns and launches, as well as the year-over-year timing of expenses.
Previous report — wording carried elsewhere
For the three months ended December 31, 2024, the decrease in the effective tax rate was primarily attributable to the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, as well as an unfavorable impact associated with previously issued stock-based compensation.