ESTEE LAUDER COMPANIES INC
For the period ended Sep 30, 2025. Filed Oct 30, 2025.
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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.
Sep 30, 2025 · Filed Oct 30, 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 2025-03-31; filed 2025-05-01.
0001001250-25-000060
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-10-30.
0001001250-25-000109
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 225 previous paragraphs and 184 current paragraphs.
86 unchanged; 53 reworded; 45 added; 85 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 32 previous and 18 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 (45)
Current report
(1) The net sales and operating results from the Company’s travel retail business are included in the Asia/Pacific region.
Current report
(2) Operating results by geographic region for the fiscal 2025 first quarter have been adjusted to reflect the correction of a regional misclassification in the amounts furnished in the Form 8-K on October 2, 2025 related to a one-time charge during the fiscal 2025 first quarter. The misclassification was offset in the fiscal 2025 second quarter (quarter-to-date period) furnished amounts, and the adjusted amounts will be reflected in the fiscal 2026 second quarter Form 10-Q. No other periods were impacted and there is no impact on the consolidated financial results or results by product category.
Current report
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.
Current report
On July 4, 2025, new 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.
Current report
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. We are also monitoring certain provisions in global tax regulations that may expire during fiscal 2026, which, if not extended, could increase our effective tax rate.
Current report
Reported net sales increased for the three months ended September 30, 2025, driven by an increase in net sales in the fragrance and skin care product categories.
Current report
By geographic region, reported net sales increased across all geographic regions, with the exception of The Americas. The increase in net sales was primarily driven by higher net sales in our travel retail business, and to a lesser extent, in Mainland China.
Current report
Reported net sales were impacted by approximately $25 million of favorable foreign currency translation for the three months ended September 30, 2025.
Current report
Reported net sales increased 4% for the three months ended September 30, 2025, driven by the increase from pricing of 2% reflecting the favorable impact from strategic price actions and changes in mix, the increase from volume of 1%, and the favorable impact from foreign currency translation of 1%.
Current report
Reported net sales for our product categories for the three months ended September 30, 2025 and 2024 were as follows:
Current report
Reported skin care net sales increased $46 million, or 3%, for the three months ended September 30, 2025, reflecting higher net sales from La Mer and Estée Lauder, combined, of approximately $54 million.
Current report
Net sales from La Mer increased, primarily driven by higher net sales in our Asia travel retail business, attributable to the low prior-year period net sales base which reflected (i) the challenging retail environment, including low consumer sentiment and conversion from Chinese consumers, as well as (ii) our prior-year efforts to improve in-trade inventory levels. The increase in net sales from Estée Lauder was primarily driven by higher net sales in our Asia travel retail business, as reflected above, and higher net sales in Mainland China, primarily driven by the impacts from new product launches, and reflecting an improvement in the retail environment, including improved consumer sentiment comparatively, to the prior-year period.
Current report
Skin care net sales were impacted by approximately $7 million of favorable foreign currency translation for the three months ended September 30, 2025.
Current report
Reported makeup net sales decreased $8 million, or 1%, for the three months ended September 30, 2025, reflecting lower net sales from Bobbi Brown and Too Faced, combined, of approximately $17 million.
Current report
The decrease in net sales from Bobbi Brown was primarily driven by lower net sales in the face subcategory reflecting the unfavorable year-over-year impact of new product launch shipments and lower net sales in the eye subcategory reflecting a reduction in color palettes. Net sales from Too Faced decreased, primarily driven by North America, reflecting lower net sales in the face and eye subcategories.
Current report
Partially offsetting the makeup net sales decrease were higher net sales from Estée Lauder, primarily driven by higher net sales in our Asia travel retail business, attributable to the low prior-year period net sales base which reflected (i) the challenging retail environment, including low consumer sentiment and conversion from Chinese consumers, as well as (ii) our prior-year efforts to improve in-trade inventory levels.
Current report
Reported fragrance net sales increased $91 million, or 14% for the three months ended September 30, 2025, primarily driven by higher net sales from Le Labo, TOM FORD, and Jo Malone London, combined, of approximately $76 million. The increase in net sales for Le Labo reflected growth from targeted expanded consumer reach and the success of hero products. Net sales from TOM FORD increased, primarily driven by growth in the Private Blend and Signature franchises, reflecting the benefit from new product launches which created halo benefits on existing products. Net sales from Jo Malone London increased reflecting higher net sales in the cologne subcategory, including success from hero franchises and holiday campaigns, as well as new product launches.
Current report
Fragrance net sales were impacted by approximately $8 million of favorable foreign currency translation for the three months ended September 30, 2025.
Current report
Reported hair care net sales decreased $10 million, or 7%, for the three months ended September 30, 2025, driven by lower net sales from Aveda, reflecting the brand’s strategies to improve long-term performance, including (i) planned reductions in online promotional activity and (ii) the exit from underperforming doors, including freestanding stores. Also contributing to the decrease in Aveda net sales was continued softness in the salon channel. 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.
Current report
Reported net sales by geographic region for the three months ended September 30, 2025 and 2024 were as follows:
Current report
(1)The net sales from the Company’s travel retail business are included in the Asia/Pacific region.
Current report
(2)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Current report
Reported net sales increased for the three months ended September 30, 2025, primarily driven by higher net sales in Asia/Pacific and in Mainland China, combined, of approximately $109 million.
Current report
The increase in net sales in Asia/Pacific was primarily driven by higher net sales in our travel retail business, led by Asia travel retail, attributable to the low prior-year period net sales base which reflected (i) the challenging retail environment, including low consumer sentiment and conversion from Chinese consumers, as well as (ii) our prior-year efforts to improve in-trade inventory levels. Also contributing to the increase in net sales from our travel retail business was higher net sales from our Europe, the Middle East & Africa travel retail business, primarily driven by growth in fragrance.
Current report
The increase in net sales in Mainland China for the three months ended September 30, 2025 was primarily driven by the impact from new product launches and the expansion of The Ordinary into the region during the fiscal 2025 third quarter, and also reflected an improvement in the retail environment, including improved consumer sentiment comparatively, to the prior-year period.
Current report
Partially offsetting the reported net sales increase was lower net sales in North America, primarily reflecting continued challenges in department stores, including the impact from store closures related to a retailer bankruptcy as well as softness in certain retailers, and elevated levels of inventory for some brands that continued through the quarter. Partially offsetting the net sales decline for North America was growth from shipments in support of our Amazon Premium Beauty stores in the U.S. and Canada, including ongoing brand expansion on the platform.
Current report
Reported net sales in The Americas decreased 2% for the three months ended September 30, 2025, driven by the decrease from volume of 3%, partially offset by an increase from pricing of 2% reflecting changes in mix and the favorable impact from strategic pricing actions.
Current report
Reported net sales in EUKEM increased 4% for the three months ended September 30, 2025, driven by the favorable impact of foreign currency translation of 4% and an increase from pricing of 3% reflecting the favorable impact from strategic pricing actions and changes in mix. Partially offsetting these increases was the decrease from volume of 3%.
Current report
Reported net sales in Asia/Pacific increased 8% for the three months ended September 30, 2025, driven by an increase from pricing of 5% reflecting the favorable impact from strategic pricing actions and changes in mix, and the increase from volume of 4%.
Current report
The increase in gross margin for the three months ended September 30, 2025 reflected net benefits from the PRGP, which included favorable impacts across our mix of business, obsolescence charges and manufacturing costs and other. The favorability within mix of business was driven by reductions in promotional activity, and the favorability within obsolescence charges was driven by reductions in excess inventory. Manufacturing costs and other reflects the favorable impact of cost efficiencies within our global supply chain network, partially offset by the impact of inflation on our costs.
Current report
The favorability in our operating expense margin reflects lower expenses within non-consumer-facing areas of the business, primarily within general and administrative, marketing and product development expenses. These reductions were driven by lower employee-related costs realized through initiatives as part of the PRGP, with the general and administrative favorability partially offset by the year-over-year increase in employee incentive costs. Partially offsetting these expense reductions were increased investments in consumer-facing areas of the business to drive sales, including advertising, selling, promotion and store operating expenses.
Current report
Reported Operating income (loss) for our product categories for the three months ended September 30, 2025 and 2024 were as follows:
Current report
Reported skin care operating income increased $70 million, or 60%, for the three months ended September 30, 2025, reflecting an increase in net sales, as well as lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP.
Current report
Reported makeup operating loss decreased $170 million, or 92%, for the three months ended September 30, 2025, primarily reflecting the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million, and to a lesser extent lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP.
Current report
Reported fragrance operating income increased $26 million, or 43%, for the three months ended September 30, 2025, reflecting higher net sales, partially offset by higher cost of sales, and an increase in investments in consumer-facing areas of the business, including selling expenses to support targeted expanded consumer reach, higher promotion expenses to support new product launches, and higher store operating costs to support targeted expanded consumer reach.
Current report
(1)Operating results by geographic region for the fiscal 2025 first quarter have been adjusted to reflect the correction of a regional misclassification in the amounts furnished in the Form 8-K on October 2, 2025 related to a one-time charge during the fiscal 2025 first quarter. The misclassification was offset in the fiscal 2025 second quarter (quarter-to-date period) furnished amounts, and the adjusted amounts will be reflected in the fiscal 2026 second quarter Form 10-Q. No other periods were impacted and there is no impact on the consolidated financial results or results by product category.
Current report
(2)See“Reconciliations of Non-GAAP Financial Measures”beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Current report
(3)The operating results from the Company’s travel retail business are included in the Asia/Pacific region.
Current report
Reported operating results in The Americas increased $172 million, or over 100%, for the three months ended September 30, 2025, reflecting the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million, and to a lesser extent, lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, and lower cost of sales, partially offset by lower net sales.
Current report
Reported operating income in EUKEM decreased $4 million, or 40%, for the three months ended September 30, 2025, reflecting an increase in investments in consumer-facing areas of the business, including to support targeted expanded consumer reach and to support key campaigns and activations, offset by higher net sales.
Showing the first 40 of 45 passages. Open the source sections for the rest.
Removed paragraphs (85)
Previous report
(1) The net sales from the Company's travel retail business are included in the Europe, the Middle East & Africa region, and operating income attributable to these net sales are included in that region and in The Americas. The exception is for net sales and operating income of Dr.Jart+ in the travel retail channel in Korea that are reflected in Korea in the Asia/Pacific region. During the fiscal 2025 second quarter, the Company exited Dr.Jart+ from the travel retail channel in Korea.
Previous report
The following table presents certain consolidated earnings (loss) data as a percentage of net sales:
Previous report
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 by deploying our brands to grow sales and pursue profitable opportunities. These analytics and insights, combined with our creativity, 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. Elements of our strategy are described below, as well as in the Overview on page 31 of our Annual Report on Form 10-K for the year ended June 30, 2024.
Previous report
•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 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.
Previous report
•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 report
•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 report
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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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.
Previous report
We planned to substantially complete specific initiatives under the restructuring program through fiscal 2026. We 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, contract terminations, asset write-offs and other costs associated with implementing these initiatives.
Previous report
The expansion of the overall PRGP is focused on three key areas. First, we plan to adopt a more competitive approach to procurement, a key pillar of savings, by further consolidating spending and strategically re-evaluating key supplier relationships. Second, we plan to 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. Third, we are outsourcing select services to proven global partners.
Previous report
Talcum Litigation Settlement Agreements
Previous report
From the end of August 2024 through October 2024, we reached agreements with certain plaintiff law firms (collectively, the “talcum litigation settlement agreements”) for: (i) the resolution of pending cosmetic talcum powder matters handled by those firms as well as (ii) a process for resolving potential future cosmetic talcum powder claims expected to be brought on behalf of plaintiffs by those firms from January 1, 2025 through December 31, 2029, with annual capped amounts per year for each participating law firm. To account for the talcum litigation settlement agreements, we recorded a charge of $159 million during the fiscal 2025 first quarter for the amount agreed to settle the current claims and an estimated amount for potential future claims. Further information about the talcum litigation settlement agreements, is described in Notes to Consolidated Financial Statements, Note 8 – Commitments and Contingencies herein.
Previous report
Impairment Analysis During the Nine Months Ended March 31, 2025
Previous report
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, we made revisions to the internal forecasts relating to our 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.
Previous report
We 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, we 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. We 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. We 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 we recorded an impairment charge of $13 million, reducing the carrying value to 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% and 14%, respectively.
Previous report
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 report
(1)The date of the fair value measurement for the TOM FORD and Too Faced trademark intangible assets and Too Faced reporting unit was December 31, 2024.
Previous report
(2)The carrying values of the trademark intangible assets, immediately subsequent to the impairment charges, are equal to their fair values.
Previous report
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 report
The fair value of the TOM FORD and Too Faced trademarks were equal to their carrying values subsequent to the impairment charges taken as of December 31, 2024. 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 in which the TOM FORD brand or Too Faced reporting unit operates, resulting changes in the key assumptions could have negative impacts on the estimated fair value of the trademarks, and it is possible we could recognize additional impairment charges in the future.
Previous 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.
Previous report
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 report
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.
Previous report
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 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.
Previous 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.
Previous 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.
Previous 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%.
Previous report
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 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.
Previous report
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 report
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 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.
Previous 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.
Previous 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.
Previous report
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.
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Reworded paragraphs (53)
Previous wording
NET EARNINGS (LOSS) ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC.
Current wording
The Estée Lauder Companies Inc. 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. Our products are sold in 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.
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 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.
Current wording
The following table is a comparative summary of operating results for the three months ended September 30, 2025 and 2024, for our product categories and geographic regions and reflects the basis of presentation described in Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies and Note 13 – 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.
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 (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.
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 prior-year monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.
Previous 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.
Current wording
We have experienced challenges within our business and we expect volatility and uncertainty to continue. Although there are signs of stabilization in Mainland China, travel retail conversion continues to be weak and challenges persist in Western Europe, including subdued sentiment. Additionally, within the United States we continue to experience headwinds from challenges in department stores. 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 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 wording
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 have implemented and are continuing to implement and consider additional mitigation measures. The impact was not material to fiscal 2026 first quarter profitability and cash flows, however, even if we can minimize some of these impacts, we anticipate higher tariff rates to have an adverse effect on fiscal 2026 profitability and cash flows, and depending on actual rates and countries imposing tariffs such adverse impacts could be material.
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 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.
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 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. With the transition of leadership in the second and third quarters of fiscal 2025, we have 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, including 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. 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.
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 relating to these and other 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
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.
Current wording
As a component of the PRGP, on February 5, 2024, we announced a two-year restructuring program. We committed to this course of action on February 1, 2024.
Previous 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.
Current wording
The expanded component of the restructuring program began during our fiscal 2025 third quarter. 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. Specific initiatives under the Restructuring Program are expected to be approved by the end of fiscal 2026 and substantially completed by the end of fiscal 2027.
Previous wording
In connection with the Restructuring Program, we now estimate a net reduction in the range of approximately 5,800 to 7,000 positions globally, which is about 9-11% of our positions including temporary and part-time employees as of June 30, 2023. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.
Current wording
In connection with the Restructuring Program, as of September 30, 2025 we estimate a net reduction in the range of approximately 5,800 to 7,000 positions globally, which is about 9-11% of our positions including temporary and part-time employees as of June 30, 2023. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.
Previous wording
We now expect that the Restructuring Program will result in restructuring and other charges totaling between $1,200 million and $1,600 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.
Current wording
We expect that the Restructuring Program will result in restructuring and other charges totaling between $1,200 million and $1,600 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, are expected to result in future cash expenditures funded from cash provided by operations.
Previous wording
Once fully implemented, we now expect the Restructuring Program to yield annual target gross benefits of between $800 million and $1,000 million, before taxes, a portion of which is expected to be reinvested in consumer-facing activities. The net benefits of the PRGP, which includes the Restructuring Program, are expected to enable a return to a double-digit operating margin over the next few years.
Current wording
Once fully implemented, we expect the restructuring program to yield annual target gross benefits of between $800 million and $1,000 million, before taxes, a portion of which is expected to be reinvested in consumer-facing activities. The net benefits of the PRGP, which includes the Restructuring Program, are expected to enable a return to a double-digit operating margin over the next few years.
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 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.
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 a Company-wide initiative to redesign, resize and reorganize select areas of the business. Accordingly, the following discussions of Net sales by Product Categoriesand Geographic Regions exclude the impacts of return adjustments associated with restructuring and other activities of $1 million for the three months ended September 30, 2025. There were no returns associated with restructuring and other activities for the three months ended September 30, 2024.
Previous 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.
Current wording
Reported skin care net sales increased 3% for the three months ended September 30, 2025, driven by the increase from pricing of 3% reflecting the favorable impact from strategic pricing actions and changes in mix. The impact from volume was flat period-over-period.
Previous wording
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 wording
Makeup net sales were impacted by approximately $10 million of favorable foreign currency translation for the three months ended September 30, 2025.
Previous wording
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 wording
Reported makeup net sales decreased 1% for the three months ended September 30, 2025, driven by the decrease from pricing of 1% reflecting changes in mix partially offset by the favorable impact from strategic pricing actions. Partially offsetting the decrease was the favorable impact from foreign currency translation of 1%. The impact from volume was flat period-over-period.
Previous wording
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 wording
Reported fragrance net sales increased 14% for the three months ended September 30, 2025, driven by the increase from volume of 8%, an increase from pricing of 5% reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 1%.
Previous 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.
Current wording
Reported hair care net sales decreased 7% for the three months ended September 30, 2025, driven by the decrease from volume of 14%, partially offset by an increase from pricing of 6% reflecting changes in mix and the favorable impact from strategic pricing actions.
Previous 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.
Current wording
Reported net sales in Mainland China increased 9% for the three months ended September 30, 2025, driven by an increase from volume of 12%, partially offset by a decrease in pricing of 3%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.
Previous 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.
Current wording
Gross margin increased to 73.4% for the three months ended September 30, 2025, as compared with 72.4% in the prior-year period.
Previous 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.
Current wording
Operating expenses as a percentage of net sales was 68.5% for the three months ended September 30, 2025, as compared with 76.0% in the prior-year period.
Previous 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.
Current wording
The increase in reported operating margin for the three months ended September 30, 2025 was driven by the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million, reflected within the favorable operating expense margin, as well as the increase in net sales and 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 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.
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 a Company-wide initiative 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 September 30, 2025 and 2024 of $86 million and $106 million, respectively.
Previous wording
Reported hair care operating loss decreased for the three and nine months ended March 31, 2025, primarily reflecting a decrease in operating expenses and lower cost of sales, partially offset by a decrease in net sales.
Current wording
Reported hair care operating loss decreased $6 million, or 33%, for the three months ended September 30, 2025, primarily reflecting lower operating expenses and cost of sales, partially offset by lower net sales.
Previous wording
Interest expense decreased for the three and nine months ended March 31, 2025, primarily reflecting a lower average debt balance compared to the prior-year periods. Interest income and investment income, net decreased for the three and nine months ended March 31, 2025, primarily reflecting a lower average cash balance and lower interest rates compared to the prior-year periods.
Current wording
Interest expense decreased for the three months ended September 30, 2025, primarily reflecting a lower average debt balance compared to the prior-year period. Interest income and investment income, net decreased, primarily reflecting a lower average cash balance and lower average interest rates compared to the prior-year period.
Previous wording
The provision or benefit 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 income tax reserve adjustments, which represent changes in our net liability for unrecognized tax benefits including tax settlements and lapses of the applicable statutes of limitations. Our effective tax rate will change from quarter-to-quarter based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, tax reserve adjustments, the tax impact of stock-based compensation, the interaction of various global tax strategies and the impact from certain acquisitions. In addition, changes in judgment from the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the quarter of change.
Current wording
The provision or benefit 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 income tax reserve adjustments, which represent changes in our net liability for unrecognized tax benefits including tax settlements and lapses of the applicable statutes of limitations, 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 quarter-to-quarter based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, tax reserve adjustments, the tax impact of stock-based compensation, changes to valuation allowances, the interaction of various global tax strategies and the impact from certain acquisitions. In addition, changes in judgment from the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the quarter of change.
Previous wording
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 wording
The increase in the effective tax rate of 4,360 basis points was attributable in part to the loss before income taxes in the fiscal 2025 first quarter as well as the estimated unfavorable impact of the newly enacted U.S. tax legislation, 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 and an unfavorable impact associated with the establishment of a valuation allowance against current period foreign tax credit and research and development tax credit U.S. deferred tax assets.
Previous wording
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 and Diluted net earnings per common share adjusted to exclude the impact of charges associated with restructuring and other activities; goodwill and other intangible asset impairments; talcum litigation settlement agreements; the change in fair value of DECIEM acquisition-related stock options; and the effects of foreign currency translation.
Current wording
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) and Diluted net earnings (loss) per common share adjusted to exclude the impact of charges associated with restructuring and other activities; talcum litigation settlement agreements; and the effects of foreign currency translation.
Previous wording
The following tables provide reconciliations between these non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Current wording
The following table provides reconciliations between these non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Previous wording
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.
Current wording
As diluted net earnings (loss) 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.
Previous wording
The following tables reconcile 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:
Current wording
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:
Previous wording
The following tables reconcile the change in operating results by product category and geographic region, as reported, to the change in operating income excluding the change in fair value of DECIEM acquisition-related stock options for the three and nine months ended March 31, 2025, as well as the impact of goodwill and other intangible asset impairments and the talcum litigation settlement agreements for the nine months ended March 31, 2025:
Current wording
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 talcum litigation settlement agreements:
Previous wording
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 March 31, 2025, we had cash and cash equivalents of $2,631 million compared with $3,395 million at June 30, 2024. 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.
Current wording
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 September 30, 2025, we had cash and cash equivalents of $2,219 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.
Previous wording
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 indefinite reinvestment assertion on our applicable foreign earnings. We do not believe continuing to reinvest these 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.
Current wording
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 indefinite 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.
Previous wording
Inflation impacted our overall operating results in the fiscal 2025 third quarter and we expect it to continue. Generally, we have plans to introduce new products at higher prices, increase prices and implement other operating efficiencies which we expect to offset some of these cost increases.
Current wording
Inflation impacted our operating results in the fiscal 2026 first quarter and we expect it to continue. Generally, we have plans to introduce new products at higher prices, increase prices and implement other operating efficiencies which we expect to offset some of these cost increases.
Previous wording
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 facility. 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 April 24, 2025, our long-term debt is rated A- with a negative outlook by Standard & Poor’s and A2 with a negative outlook by Moody’s.
Current wording
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 October 23, 2025, our long-term debt is rated A- with a negative outlook by Standard & Poor’s and A3 with a negative outlook by Moody’s.
Previous wording
(3)Consists of $500 million principal, unamortized debt discount of $1 million and debt issuance costs of $5 million.
Current wording
(3)Consists of $500 million principal, unamortized debt discount of $1 million and debt issuance costs of $4 million.
Previous wording
(4)Consists of $450 million principal, net unamortized debt premium of $8 million and debt issuance costs of $4 million.
Current wording
(4)Consists of $450 million principal, net unamortized debt premium of $9 million and debt issuance costs of $4 million.
Previous wording
(7)Consists of $650 million principal, unamortized debt discount of $2 million and debt issuance costs of $4 million.
Current wording
(7)Consists of $650 million principal, unamortized debt discount of $2 million, debt issuance costs of $4 million and a $4 million loss to reflect the fair value of interest rate swaps.
Previous wording
(9)Consists of $700 million principal, unamortized debt discount of $1 million and debt issuance costs of $3 million.
Current wording
(9)Consists of $700 million principal, unamortized debt discount of $1 million and debt issuance costs of $4 million.
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Previous report — wording carried elsewhere
In connection with the restructuring program, we estimated a net reduction in the range of approximately 1,800 to 3,000 positions globally, which was about 3-5% of our positions including temporary and part-time employees as of June 30, 2023. This reduction took into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas.