ESTEE LAUDER COMPANIES INC
For the period ended Sep 30, 2026. Filed Nov 2, 2026.
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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, 2026 · Filed Nov 2, 2026
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 2026-03-31; filed 2026-05-01.
0001001250-26-000019
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-02.
0001001250-26-000060
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 197 previous paragraphs and 173 current paragraphs.
90 unchanged; 50 reworded; 33 added; 53 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 23 previous and 17 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 (33)
Current report
Reported net sales were impacted by approximately $20 million of favorable foreign currency translation for the three months ended September 30, 2026.
Current report
Reported skin care net sales increased $76 million, or 5%, for the three months ended September 30, 2026, primarily driven by higher net sales from La Mer and The Ordinary, combined, of approximately $97 million.
Current report
Net sales from La Mer increased, reflecting the benefit from new product innovation, including the launch of The Concentrate reformulation, as well as growth from The Treatment Lotion franchise. The increase in net sales from The Ordinary reflected growth from targeted expanded consumer reach as well as the benefit from key campaigns to drive sales growth.
Current report
Reported makeup net sales increased $18 million, or 2%, for the three months ended September 30, 2026, reflecting higher net sales from M·A·C and TOM FORD, combined, of approximately $59 million. Net sales from M·A·C increased, reflecting higher net sales in the lip subcategory, including the benefit from the launch of Lustreglass Sheer-Shine Lipstick and Lustreglass Stainglass Lip Tint, as well as the benefit from targeted expanded consumer reach. The increase in net sales from TOM FORD was primarily driven by higher net sales in the lip and face subcategories, reflecting the benefit from new product innovation.
Current report
Partially offsetting the makeup net sales increase were lower net sales, primarily from Estée Lauder, Too Faced and Bobbi Brown Cosmetics, combined, of approximately $20 million. Estée Lauder net sales decreased, reflecting lower net sales in the face subcategory, including the impact from the timing of new product innovation, partially offset by incremental sales from the next-generation of Double Wear Stay-in-Place Longwear Matte Foundation that launched in the second half of fiscal 2026. The decrease in net sales from Too Faced reflected the impact of closures of certain specialty-multi retailer-operated shop-in-shop doors. Bobbi Brown Cosmetics net sales decreased, driven by lower net sales within the department store channel, which included the impact from the strategic exit from certain retailers.
Current report
Makeup net sales were impacted by approximately $4 million of favorable foreign currency translation for the three months ended September 30, 2026.
Current report
Reported fragrance net sales increased $140 million, or 19%, for the three months ended September 30, 2026, primarily driven by higher net sales from Le Labo, TOM FORD, Jo Malone London and Estée Lauder, combined, of approximately $117 million. The increase in net sales from Le Labo was led by the Classic Collection and City Exclusives Collection, which reflected the benefit from new product innovation, targeted expanded consumer reach and the success of hero products. Net sales from TOM FORD increased, within both the Private Blend and Signature franchises, reflecting the benefit from new product innovation which created halo benefits on existing products. Net sales from Jo Malone London increased, reflecting the benefit from new product innovation and growth within hero franchises, supported by targeted expanded consumer reach. The increase in net sales from Estée Lauder was driven by higher net sales from the launch of Glimmer Eau de Parfum Spray.
Current report
Fragrance net sales were impacted by approximately $1 million of unfavorable foreign currency translation for the three months ended September 30, 2026.
Current report
Reported fragrance net sales increased 19% for the three months ended September 30, 2026, driven by an increase from volume of 20%, partially offset by a decrease from pricing of 1%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.
Current report
Reported hair care net sales decreased $1 million, or 1%, for the three months ended September 30, 2026, including the unfavorable impact of foreign currency translation of 1%. Including the unfavorable impact of foreign currency translation, the decrease in hair care net sales primarily reflected lower net sales from Aveda and higher net sales from The Ordinary.
Current report
The decrease in net sales from Aveda reflected lower shipments primarily due to brand-specific supply chain logistical challenges.
Current report
The increase in net sales from The Ordinary benefitted from the Multi-Peptide Serum for Hair Density, as well as targeted expanded consumer reach.
Current report
Hair care net sales were impacted by approximately $1 million of unfavorable foreign currency translation for the three months ended September 30, 2026.
Current report
Reported hair care net sales decreased 1% for the three months ended September 30, 2026, driven by a decrease from pricing of 7%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions, and the unfavorable impact of foreign currency translation of 1%. These decreases were largely offset by an increase from volume of 7%.
Current report
Reported net sales increased for the three months ended September 30, 2026, primarily driven by higher net sales in our travel retail business and Mainland China, combined, of approximately $169 million.
Current report
The increase in net sales in our travel retail business was led by Asia travel retail, primarily driven by (i) net sales growth from the Beijing and Shanghai airports, reflecting an increase in replenishment orders amid continued stabilization following changes in duty-free retailers, including the related online businesses, that began in the fiscal 2026 second quarter and (ii) Hainan travel retail, driven by the improvement in online retail sales.
Current report
The increase in net sales in Mainland China for the three months ended September 30, 2026 reflected growth from existing products as well as new product innovation, benefiting from success during key shopping moments and key campaigns to drive sales growth.
Current report
Reported net sales in EUKEM increased 2% for the three months ended September 30, 2026, driven by an increase from volume of 6%. This increase was partially offset by a decrease from pricing of 2%, reflecting 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 Asia/Pacific increased 9% for the three months ended September 30, 2026, driven by an increase from volume of 9% and an increase from pricing of 1%, reflecting the favorable impact from strategic pricing actions partially offset by changes in mix. Partially offsetting these increases was the unfavorable impact from foreign currency translation of 1%.
Current report
Reported net sales in Mainland China increased 15% for the three months ended September 30, 2026, driven by the favorable impact from foreign currency translation of 7%, an increase from volume of 6% and an increase from pricing of 2%, reflecting changes in mix and the favorable impact from strategic pricing actions.
Current report
(1)Consumer-facing operating expenses in this table and within the operating expense margin discussion below do not include the impact of co-operative advertising expenses that are recorded as a reduction of revenue, however, our references to consumer-facing investments throughout the remainder of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations include the consumer-facing operating expenses noted above as well as the impact of co-operative advertising expenses that are recorded as a reduction of revenue.
Current report
The favorability in our operating expense margin for the three months ended September 30, 2026 primarily reflected the impact of the increase in net sales which largely offset the impact from the overall increase in investments in consumer-facing areas of the business to drive sales, primarily in advertising expenses, including through new product innovation, key campaigns, and targeted expanded consumer reach. The favorability in the impact from non-consumer-facing expenses was also largely driven by the impact of the increase in net sales, and also reflected overall lower expenses collectively, driven by a reduction in employee-related costs enabled through the PRGP.
Current report
Reported makeup operating results increased $18 million, or over 100%, for the three months ended September 30, 2026, primarily driven by an increase in net sales, as well as lower non-consumer-facing expenses, including a reduction in employee-related costs, partially offset by an increase in consumer-facing investments to drive sales growth, including to support new product innovation, key campaigns and targeted expanded consumer reach. The overall increase in consumer-facing expenses was partially offset by the strategic reduction in selling expenses.
Current report
Reported operating income for our geographic regions for the three months ended September 30, 2026 and 2025 were as follows:
Current report
Reported operating income in The Americas increased $27 million, or 31%, for the three months ended September 30, 2026, primarily driven by higher net sales and lower cost of sales, partially offset by an increase in consumer-facing investments to drive sales growth, primarily in advertising expenses, including to support new product innovation, key campaigns and targeted expanded consumer reach.
Current report
Reported operating income in EUKEM increased $38 million, or over 100%, for the three months ended September 30, 2026, primarily driven by higher net sales, as well as a decrease in non-consumer-facing expenses, including a reduction in employee-related costs, partially offset by an increase in consumer-facing investments to drive sales growth, including to support new product innovation, key campaigns and targeted expanded consumer reach. The increase in overall consumer-facing investments was partially offset by the strategic reduction in selling expenses.
Current report
Reported operating income in Asia/Pacific increased $109 million, or 73%, for the three months ended September 30, 2026, primarily driven by higher net sales and, to a lesser extent, lower cost of sales.
Current report
Reported operating income in Mainland China increased $20 million, or over 100%, for the three months ended September 30, 2026, primarily driven by higher net sales, partially offset by an increase in consumer-facing investments to drive sales growth, including to support new product innovation, key shopping moments and key campaigns.
Current report
Interest expense decreased for the three months ended September 30, 2026, primarily reflecting lower average interest rates compared to the prior-year period. Interest income and investment income, net decreased, primarily driven by the unfavorable year-over-year impact related to our cost method minority investments, reflecting an impairment in the current-year period as compared to investment gains in the prior-year period.
Current report
The effective rate for income taxes was 32.5% and 56.9% for the three months ended September 30, 2026 and 2025, respectively, a 2,440 basis point decrease period over period. The extent of the period-over-period change was broadly impacted by the lower earnings before income taxes for the three months ended September 30, 2025. The decrease in the effective tax rate was primarily attributable to a more favorable estimated full year geographical mix of earnings partially offset by the estimated increase in unrecognized tax benefits primarily related to transfer pricing matters impacting multiple tax jurisdictions.
Current report
NET EARNINGS
Current report
On October 5, 2026, we completed the acquisition of the remaining equity interest in Mountain Valley Springs India Private Limited, the owner of the Forest Essentials brand, an India-based beauty brand grounded in the science of modern Luxurious Ayurveda, and paid $160 million for the purchase of the remaining 51% equity interest and $37 million related to a one-time inducement payment which is excluded from the consideration transferred, using cash on hand. For further information related to the acquisition, refer to Note 14 - Subsequent Events.
Current report
(11)Consists of $700 million principal, debt issuance costs of $2 million and a $83 million loss to reflect the fair value of interest rate swaps.
Removed paragraphs (53)
Previous report
On February 20, 2026, the U.S. Supreme Court ruled that the U.S. tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the U.S. were unauthorized. The ruling did not address potential refunds, however on March 4, 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to begin refunding all tariffs imposed under IEEPA. As of March 31, 2026, despite the ruling by the U.S. Court of International Trade, there continues to be uncertainty as to the ultimate recovery of any funds as a result of a potential appeal of this ruling, as well as uncertainty associated with the process, timing and amount of any potential refunds. As such, we have determined that the totality of uncertainties prevents us from reasonably asserting the probability of refund recovery at this time.
Previous 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.
Previous 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.
Previous report
As announced on November 1, 2023, we launched the PRGP to help progressively rebuild our profit margins in fiscal years 2025 and 2026.
Previous report
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 report
After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, we committed to the expansion of the PRGP, including an expansion of the restructuring program.
Previous report
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, all to help rebuild operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth. 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 report
In connection with the Restructuring Program, we now estimate a final net reduction in the range of approximately 9,000 to 10,000 positions globally, an increase from the previous range of 5,800 to 7,000. Over 70% of the increase is attributable to the reduction in point-of-sale demonstration roles at select unproductive doors in our department store and freestanding store channels, as we continue to evolve our focus towards high-growth channels. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.
Previous report
We now expect that the Restructuring Program will result in restructuring and other charges totaling between $1,500 million and $1,700 million, before taxes, an increase from the previous range of $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 report
Once fully implemented, we now expect the Restructuring Program to yield annual target gross benefits of between $1,000 million and $1,200 million, before taxes, an increase from the previous range of $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 report
Securities Class Action Litigation Settlement
Previous report
On December 7, 2023 and January 22, 2024, purported securities class action complaints were filed in the United States District Court for the Southern District of New York against the Company and its then Chief Executive Officer and Chief Financial Officer. The actions were consolidated on February 20, 2024. On March 22, 2024, plaintiffs filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged materially false and misleading statements between February 3, 2022 and October 31, 2023. On March 31, 2025, the Court denied defendants’ motion to dismiss. On April 2, 2026, the parties reached an agreement in principle to settle the securities class action litigation. In light of these discussions, we recorded a loss contingency of $84 million, net of the estimated probable insurance recoveries, in the consolidated statements of earnings (loss) relating to a potential settlement of the securities class action.
Previous report
Reported net sales were impacted by approximately $101 million and $200 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.
Previous report
Reported skin care net sales increased $49 million, or 3% for the three months ended March 31, 2026, including the favorable impact of foreign currency translation of 3%. Including the favorable impact of foreign currency translation, the increase in skin care net sales was primarily driven by higher net sales from La Mer, reflecting the benefit from new product launches and growth from The Treatment Lotion franchise.
Previous report
Reported skin care net sales increased $228 million, or 4% for the nine months ended March 31, 2026, reflecting higher net sales from La Mer, Estée Lauder and The Ordinary, combined, of approximately $301 million. Net sales from La Mer increased, reflecting growth in hero product franchises, as well as the benefit from new product launches. The increase in net sales from Estée Lauder reflected growth attributable to new product launches and key campaigns, benefitting from key shopping moments and holiday. Net sales from The Ordinary increased, primarily reflecting targeted expanded consumer reach.
Previous report
Partially offsetting the increase in net sales for the nine months ended March 31, 2026 were lower net sales from Origins, reflecting our retail softness, including the impact of door and market closures.
Previous report
Skin care net sales were impacted by approximately $46 million and $80 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.
Previous report
Reported skin care net sales increased 3% for the three months ended March 31, 2026, driven by the increase from pricing of 4%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 3%, partially offset by the decrease from volume of 4%.
Previous report
Reported makeup net sales increased $37 million, or 4% for the three months ended March 31, 2026, including the favorable impact of foreign currency translation of 3%. Including the favorable impact of foreign currency translation, the increase in makeup net sales was primarily driven by higher net sales from Estée Lauder, reflecting the launch of its next-generation of Double Wear Stay-in-Place Longwear Matte Foundation during the fiscal 2026 third quarter.
Previous report
Reported makeup net sales increased $43 million, or 1% for the nine months ended March 31, 2026, including the favorable impact of foreign currency translation of 2%. Including the favorable impact of foreign currency translation, the increase in makeup net sales was primarily driven by an increase in net sales from M·A·C, reflecting higher net sales in the lip subcategory, driven by the success of Lipglass Air, Lip Pencil and Powder Kiss Lipstick. Also contributing to the increase in M·A·C net sales were higher net sales from shipments to support the launch of the brand in select U.S. Sephora locations as well as online and in Sephora at Kohl's.
Previous report
Makeup net sales were impacted by approximately $35 million and $71 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.
Previous report
Reported makeup net sales increased 4% for the three months ended March 31, 2026, driven by the increase from volume of 5% and the favorable impact from foreign currency translation of 3%. Partially offsetting these increases was the decrease from pricing of 5%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.
Previous report
Reported makeup net sales increased 1% for the nine months ended March 31, 2026, driven by the increase from volume of 3% and the favorable impact from foreign currency translation of 2%. Partially offsetting these increases was the decrease from pricing of 4%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.
Previous report
Reported fragrance net sales increased $71 million, or 13%, and $230 million, or 12%, for the three and nine months ended March 31, 2026, respectively, reflecting higher net sales from Le Labo, TOM FORD and Kilian Paris, combined, of approximately $51 million and $185 million, for the respective periods.
Previous report
Le Labo net sales increased in both periods, led by the Classic Collection, reflecting growth from targeted expanded consumer reach and the benefit from new product launches. The net sales increase from TOM FORD in both periods reflected the benefit from new product launches which created halo benefits on existing products, with overall growth in both the Private Blend and Signature franchises. Net sales from Kilian Paris increased in both periods, driven by the Angels' Share and Love, don't be shy franchises including growth attributable to new product launches and key campaigns, as well as growth from targeted expanded consumer reach.
Previous report
Reported fragrance net sales increased 13% for the three months ended March 31, 2026, driven by the increase from volume of 7%, the favorable impact from foreign currency translation of 3%, and the increase from pricing of 2%, reflecting the favorable impact from strategic pricing actions, partially offset by changes in mix.
Previous report
Reported fragrance net sales increased 12% for the nine months ended March 31, 2026, driven by the increase from volume of 5%, the increase from pricing of 4%, reflecting the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 2%.
Previous report
Reported hair care net sales increased $2 million, or 2%, including the impact of foreign currency translation of 2%, for the three months ended March 31, 2026, and increased $1 million, or less than 1%, including the impact of foreign currency translation of 1%, for the nine months ended March 31, 2026. Including the favorable impact of foreign currency translation, the increase in hair care net sales in both periods was primarily driven by higher net sales from The Ordinary, reflecting the growth of the Multi-Peptide Serum for Hair Density and impacts from targeted expanded consumer reach.
Previous report
Partially offsetting the hair care net sales increase for the nine months ended March 31, 2026 were 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. 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.
Previous report
Hair care net sales were impacted by approximately $2 million and $3 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.
Previous report
Reported hair care net sales were virtually flat for the nine months ended March 31, 2026, driven by the increase from pricing of 6%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 1%. These increases were offset by the decrease from volume of 6%.
Previous report
Reported net sales increased for the three months ended March 31, 2026, primarily driven by higher net sales in Mainland China and our Priority Emerging Markets, combined, of approximately $121 million. The increase in net sales in Mainland China reflected growth attributable to key shopping moments, including the benefits from key campaigns to drive sales and new product launches. Net sales in our Priority Emerging Markets within EUKEM and The Americas increased collectively, reflecting growth in all product categories, supported by targeted expanded consumer reach, successful campaigns and new product launches.
Previous report
Reported net sales increased for the nine months ended March 31, 2026, primarily driven by higher net sales in Mainland China and our Priority Emerging Markets, reflecting the aforementioned growth as discussed above, and higher net sales in our travel retail business, combined, of approximately $443 million. The increase in net sales in our travel retail business was driven by Asia travel retail, reflecting favorability 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 growth in Asia travel retail was the favorable impact of higher traffic in certain areas of the business, including during key shopping moments, supported by key campaigns to drive growth. These increases were partially offset by impacts associated with the transitory headwind from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses.
Previous report
Reported net sales in The Americas increased 1% for the three months ended March 31, 2026, driven by the increase from volume of 4% and the favorable impact from foreign currency translation of 1%. These increases were partially offset by the decrease from pricing of 3%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. Reported net sales in EUKEM increased 9% for the three months ended March 31, 2026, driven by the increase from volume of 7% and the favorable impact of foreign currency translation of 7%. These increases were partially offset by the decrease from pricing of 5%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. Reported net sales in Asia/Pacific were virtually flat for the three months ended March 31, 2026, driven by the decrease from volume of 4%, offset by the increase from pricing of 3%, reflecting the favorable impact from strategic pricing actions and changes in mix. Reported net sales in Mainland China increased 11% for the three months ended March 31, 2026, driven by an increase from pricing of 10%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 5%. These increases were partially offset by the decrease from volume of 4%.
Previous report
Reported net sales in The Americas were virtually flat for the nine months ended March 31, 2026, driven by the decrease from pricing of 2%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. This decrease was offset by the increase from volume of 2%. Reported net sales in EUKEM increased 7% for the nine months ended March 31, 2026, driven by the favorable impact of foreign currency translation of 6% and the increase from volume of 4%. These increases were partially offset by the decrease from pricing of 2%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. Reported net sales in Asia/Pacific increased 3% for the nine months ended March 31, 2026, driven by an increase from pricing of 6%, reflecting changes in mix and the favorable impact from strategic pricing actions, partially offset by the decrease from volume of 3%. Reported net sales in Mainland China increased 11% for the nine months ended March 31, 2026, driven by the increase from pricing of 6%, reflecting changes in mix and the favorable impact from strategic pricing actions, the increase from volume of 3% and the favorable impact from foreign currency translation of 2%.
Previous report
The increase in our operating expense margin for the three months ended March 31, 2026 reflected the year-over-year unfavorable impact of restructuring and other activities and the securities class action litigation settlement. Partially offsetting these increases was favorability reflecting the impact of the increase in net sales, as well as the favorable year-over-year impact within general and administrative expenses associated with the timing of recognition of local government subsidies in China in the fiscal 2026 third quarter. Additionally, we increased investments in consumer-facing areas of the business to drive sales, including selling, advertising, store operating costs and promotion expenses, offsetting a portion of the favorability from the increase in net sales.
Previous report
The favorability in our operating expense margin for the nine months ended March 31, 2026 reflected the impact of the increase in net sales, as well as the favorable year-over-year impact within general and administrative expenses associated with the timing of recognition of local government subsidies in China in the fiscal 2026 third quarter, with additional favorability associated with the impact of the change in policy related to local government subsidies in China that impacted the fiscal 2025 second quarter. Also contributing to the overall favorability were lower expenses within non-consumer facing areas of the business collectively, including lower employee-related costs realized through initiatives as part of the PRGP, with these benefits partially offset by higher employee incentive costs. Partially offsetting the overall favorability in our operating expense margin, including the benefit from the increase in net sales, were increased investments in consumer-facing areas of the business to drive sales, including advertising, selling, store operating costs and promotion expenses.
Previous report
The decrease in reported operating margin for the three months ended March 31, 2026 reflected the unfavorable operating expense margin, which includes the unfavorable impacts from restructuring and other activities and the securities class action litigation settlement. Partially offsetting the increased operating expense margin was the increase in net sales and increase in gross margin, as discussed above.
Previous report
Reported makeup operating results decreased $17 million, or over 100%, for the three months ended March 31, 2026, reflecting an increase in investments in consumer-facing areas of the business, including to support new product launches and key campaigns, as well as the unfavorable allocated impact of the securities class action litigation settlement. Largely offsetting the decrease in operating results was an increase in net sales and lower cost of sales.
Previous report
Reported makeup operating results increased $382 million, or 100%, for the nine months ended March 31, 2026, reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior-year period 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 favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million. Partially offsetting the increase in operating results was an increase in investments in consumer-facing areas of the business, including to support new product launches and key campaigns.
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Reworded paragraphs (50)
Previous wording
Percentages not adjusted for differences caused by rounding
Current wording
Not adjusted for differences caused by rounding
Previous wording
The following table is a comparative summary of operating results for the three and nine months ended March 31, 2026 and 2025, 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.
Current wording
The following table is a comparative summary of operating results for the three months ended September 30, 2026 and 2025, 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
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 March 31, 2026 and 2025 of $224 million and $97 million, respectively, and for the nine months ended March 31, 2026 and 2025 of $517 million and $384 million, respectively.
Current wording
(1) Returns and charges associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. Accordingly, the discussions of Net sales and Operating results by Product Categories and Geographic Regions below exclude the impacts of returns and charges associated with restructuring and other activities.
Previous wording
Period-over-period changes in our net sales are generally attributable to the impacts from (i) pricing on our base portfolio, including changes in mix and those due to strategic pricing actions, (ii) volume, including changes driven by the impact of new product innovation, (iii) acquisitions and/or divestitures, and/or (iv) foreign currency translation. The percentages disclosed for these impacts are calculated on an individual basis.
Current wording
Period-over-period changes in our net sales are generally attributable to the impacts from (i) pricing on our base portfolio, including changes in mix and those due to strategic pricing actions, (ii) volume on our base portfolio, combined with changes driven by the impact of new product innovation, (iii) acquisitions and/or divestitures, and/or (iv) foreign currency translation. The percentages disclosed for these impacts are calculated on an individual basis.
Previous wording
New product innovation includes the introduction of new products, as well as changes related to existing products or where they are sold, including reformulations, regional expansion, repackaging and sets. A product is considered "new innovation" for the twelve-month period following the initial shipment date. Our innovation is launched at different price points than existing products and value derived from innovation may vary from year to year. We continually introduce new products, support new and established products through advertising, merchandising and sampling and phase out existing products that no longer meet the needs of our consumers or our objectives. The economics of developing, producing, launching, supporting and discontinuing products impact our sales and operating performance each period. The introduction of new products often has some cannibalizing effect on sales of existing products, inclusive of potential sales returns, which we take into account in our business planning. The impact of new product introductions, including timing compared to introductions in prior periods, also affects our results.
Current wording
New product innovation includes the introduction of new products, as well as changes related to existing products or where they are sold, including reformulations, regional expansion, repackaging and sets. A product is considered "new innovation" for the twelve-month period following the initial shipment date. Our innovation is launched at different price points than existing products and value derived from innovation may vary from year to year. We continually introduce new products, support new and established products through advertising, merchandising and sampling and phase out existing products that no longer meet the needs of our consumers or our objectives. The economics of developing, producing, launching, supporting and discontinuing products impact our sales and operating performance each period. The introduction of new products often has some cannibalizing effect on sales of existing products, inclusive of potential sales returns, which we take into account in our business planning. The impact of new product introductions, including timing compared to introductions in prior periods, also affects our results. For DECIEM brands, the impact of regional expansion into new markets following the initial twelve-month period continues to be excluded from the base portfolio pricing and volume calculations until the market is on a like for like basis in the base portfolio.
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 prior-year 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 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
While we have seen improvements within our business, we are mindful of areas of volatility and uncertainty that may impact our results. We continue to face challenges in key markets in the West, including in some markets in Western Europe and the United States. Within our Asia travel retail business, we continue to experience a transitory headwind from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses. We are also monitoring the conflict in the Middle East as it relates to our business in the domestic markets and travel retail locations in the region. Net sales from locations impacted by the conflict in the Middle East accounted for approximately 2% of consolidated net sales in fiscal 2025. We continue to monitor and assess the impact that these challenges may have on net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.
Current wording
While we have seen improvements within our business, we are mindful of areas of volatility and uncertainty globally that may impact our results. We continue to face challenges in key markets in the West, including markets in Western Europe and the United States. Within our Asia travel retail business, we continue to monitor the impacts of the change in duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses. We are also monitoring the conflict in the Middle East as it relates to our business in the domestic markets and travel retail locations in the region. Net sales from locations impacted by the conflict in the Middle East accounted for approximately 2% of consolidated net sales in fiscal 2026 and 2025. We continue to monitor and assess the impact that these areas of volatility and uncertainty may have on net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.
Previous wording
We are continuing to monitor and assess the potential effects of changing tariff conditions in the United States as well as in other markets in which we operate. These tariffs have led to significant volatility and uncertainty in global markets and difficulty in forecasting demand. We have implemented and are continuing to implement and consider additional mitigation measures. Our strategy remains optimizing our global supply chain network, by sourcing and manufacturing in the geography of sale where feasible. We also continue to leverage trade programs where available and monitor for additional opportunities as countries continue to update their trade programs. We continue to 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.
Current wording
We are continuing to monitor and assess the potential effects of changing tariff conditions in the United States as well as in other markets in which we operate. These tariffs have led to significant volatility and uncertainty in global markets and difficulty in forecasting demand. We have implemented and are continuing to implement and consider additional mitigation measures. Our strategy remains optimizing our global supply chain network, by sourcing and manufacturing in the geography of sale where feasible. We also continue to leverage trade programs where available and monitor for additional opportunities as countries continue to update their trade programs. We anticipate tariffs to have an adverse effect on fiscal 2027 profitability and cash flows, and depending on actual rates and countries imposing tariffs such adverse impacts could be material.
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 product categories, brands, geographic regions, channels of distribution and functions designed to grow our sales, provide cost efficiencies, leverage our strengths, such as our history of outstanding creativity and innovation, high quality products and services, and engaging communications, and make us more productive and profitable. Following the transition of leadership in the second and third quarters of fiscal 2025, we are executing against "Beauty Reimagined," our previously announced strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work, including through the expansion of the Profit Recovery and Growth Plan ("PRGP") during the fiscal 2025 third quarter, as discussed below.
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, to make us more productive and profitable. We continue to execute against "Beauty Reimagined," our previously announced strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work, including through the execution of the Profit Recovery and Growth Plan ("PRGP").
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. 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 actual and potential impact of changes that have been made and are expected to be made as part of the PRGP on suppliers, retailers and others, and challenges relating to successfully outsourcing select services. Declines in net sales and profitability have, and may continue to, adversely impact the goodwill and other intangible assets associated with our brands, as well as long-lived assets, potentially resulting in impairments.
Previous wording
Further information about the Restructuring Program Component of the Profit Recovery and Growth Plan, is described in Notes to Consolidated Financial Statements, Note 3 – Charges Associated with Restructuring and Other Activities herein.
Current wording
For information about the Restructuring Program Component of the Profit Recovery and Growth Plan, refer to Notes to Consolidated Financial Statements, Note 3 – Charges Associated with Restructuring and Other Activities herein and Notes to Consolidated Financial Statements, Note 7 - Charges Associated with Restructuring and Other Activities in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026.
Previous wording
Reported net sales increased across all product categories for the three and nine months ended March 31, 2026. The increase in net sales was primarily driven by fragrance, skin care and makeup for the three months ended March 31, 2026, and primarily driven by fragrance and skin care for the nine months ended March 31, 2026.
Current wording
Reported net sales increased for the three months ended September 30, 2026, driven by an increase in net sales in the fragrance and skin care product categories, and to a lesser extent, in the makeup product category.
Previous wording
By geographic region, reported net sales increased across all geographic regions for the three and nine months ended March 31, 2026, with the exception of Asia/Pacific for the three months ended March 31, 2026, and The Americas for the nine months ended March 31, 2026, with each remaining virtually flat. The increase in net sales for the three and nine months ended March 31, 2026 was primarily driven by Mainland China and EUKEM.
Current wording
By geographic region, reported net sales increased across all geographic regions for the three months ended September 30, 2026, led by Mainland China and Asia/Pacific.
Previous wording
Reported net sales increased 5% for the nine months ended March 31, 2026, driven by the favorable impact from foreign currency translation of 2%, the increase from volume of 2% and the increase from pricing of 1%, reflecting the favorable impact from strategic price actions, partially offset by changes in mix.
Current wording
Reported net sales increased 7% for the three months ended September 30, 2026, driven by the increase from volume of 7% and the favorable impact from foreign currency translation of 1%. These increases were partially offset by a decrease from pricing of 1%, reflecting changes in mix partially offset by the favorable impact from strategic price actions.
Previous wording
Reported net sales for our product categories for the three and nine months ended March 31, 2026 and 2025 were as follows:
Current wording
Reported net sales for our product categories for the three months ended September 30, 2026 and 2025 were as follows:
Previous wording
Fragrance net sales were impacted by approximately $18 million and $46 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.
Current wording
Skin care net sales were impacted by approximately $18 million of favorable foreign currency translation for the three months ended September 30, 2026.
Previous wording
Reported net sales increased 5% for the three months ended March 31, 2026, driven by the favorable impact from foreign currency translation of 3%, the increase from volume of 1% and the increase from pricing of 1%, reflecting the favorable impact from strategic price actions, partially offset by changes in mix.
Current wording
Reported skin care net sales increased 5% for the three months ended September 30, 2026, driven by an increase from volume of 3%, an increase from pricing of 1%, reflecting the favorable impact from strategic pricing actions partially offset by changes in mix, and the favorable impact from foreign currency translation of 1%.
Previous wording
Reported hair care net sales increased 2% for the three months ended March 31, 2026, driven by the increase from pricing of 2%, reflecting the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 2%. These increases were partially offset by the decrease from volume of 2%.
Current wording
Reported makeup net sales increased 2% for the three months ended September 30, 2026, driven by an increase from volume of 5%, partially offset by a decrease from pricing of 3%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.
Previous wording
Reported net sales by geographic region for the three and nine months ended March 31, 2026 and 2025 were as follows:
Current wording
Reported net sales by geographic region for the three months ended September 30, 2026 and 2025 were as follows:
Previous wording
Reported skin care net sales increased 4% for the nine months ended March 31, 2026, driven by the increase from pricing of 3%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 2%. The impact from volume was flat period-over-period.
Current wording
Reported net sales in The Americas increased 5% for the three months ended September 30, 2026, driven by an increase from volume of 7%, partially offset by a decrease from pricing of 3%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.
Previous wording
Gross margin increased to 76.4% and 75.5% for the three and nine months ended March 31, 2026, as compared with 75.0% and 74.6% in the prior-year periods.
Current wording
Gross margin increased to 75.7% for the three months ended September 30, 2026, as compared with 73.4% in the prior-year period.
Previous wording
The increase in gross margin for the three and nine months ended March 31, 2026 reflected net benefits from the PRGP, including reductions in excess inventory, accretive new product launches and lower promotional activity in both periods, as well as the favorable impact of cost efficiencies within our global supply chain network, primarily in the nine months ended March 31, 2026. Additionally, in both periods, favorability in manufacturing costs and other benefited from the year-over-year favorable impact of the recognition of manufacturing variances associated with reduced manufacturing volumes on our standard cost within cost of sales in the fiscal 2025 third quarter, with offsets to overall favorability driven by the impact of tariffs and inflation on our costs.
Current wording
The increase in gross margin for the three months ended September 30, 2026 reflected favorability across our mix of business, including the benefit from the increase in net sales, net strategic pricing, product mix, as well as net benefits enabled through the PRGP. Within manufacturing costs and other, net benefits enabled through the PRGP, related to the favorable impact of cost efficiencies within our global supply chain network, and the favorable impact from shifts within our manufacturing network, were partially offset by the impact from inflation on our costs.
Previous wording
Operating expenses as a percentage of net sales were 69.7% and 68.3% for the three and nine months ended March 31, 2026, as compared with 66.3% and 78.2% in the prior-year periods.
Current wording
Operating expenses as a percentage of net sales were 64.7% for the three months ended September 30, 2026, as compared with 68.5% in the prior-year period.
Previous wording
The increase in reported operating margin for the nine months ended March 31, 2026 was driven by the favorable operating expense margin, which includes the favorable year-over-year impact of the goodwill and other intangible asset impairment charges in the fiscal 2025 second quarter of $861 million, as well as the increase in net sales and increase in gross margin, as discussed above.
Current wording
The increase in reported operating margin for the three months ended September 30, 2026 was primarily driven by the increase in net sales and the increase in gross margin, as discussed above.
Previous wording
Reported Operating income (loss) for our product categories for the three and nine months ended March 31, 2026 and 2025 were as follows:
Current wording
Reported operating income (loss) for our product categories for the three months ended September 30, 2026 and 2025 were as follows:
Previous wording
Reported skin care operating income increased $83 million, or 23%, and $301 million, or 38%, for the three and nine months ended March 31, 2026, respectively, reflecting an increase in net sales. Also contributing to the increase for the nine months ended March 31, 2026 was lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, partially offset by higher employee incentive costs. In both periods, the increase in operating income was partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.
Current wording
Reported skin care operating income increased $75 million, or 40%, for the three months ended September 30, 2026, primarily driven by an increase in net sales, as well as lower non-consumer-facing expenses, including a reduction in employee-related costs, partially offset by an increase in consumer-facing investments to drive sales growth, primarily in advertising expenses, including to support new product innovation, key campaigns and targeted expanded consumer reach.
Previous wording
Reported fragrance operating income decreased $11 million, or 34%, for the three months ended March 31, 2026, reflecting an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach, an increase in cost of sales, as well as the unfavorable allocated impact of the securities class action litigation settlement, partially offset by an increase in net sales.
Current wording
Reported fragrance operating income increased $80 million, or 93%, for the three months ended September 30, 2026, primarily driven by higher net sales, partially offset by an increase in consumer-facing investments to drive sales growth, primarily in advertising expenses, including to support new product innovation, key campaigns and targeted expanded consumer reach.
Previous wording
Reported hair care operating results increased $35 million, or over 100%, for the nine months ended March 31, 2026, reflecting lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, lower consumer-facing investments and lower cost of sales. These increases to operating results were partially offset by the unfavorable allocated impact of the securities class action litigation settlement.
Current wording
Reported hair care operating results increased $17 million, or over 100%, for the three months ended September 30, 2026, primarily driven by lower non-consumer-facing expenses, including a reduction in employee-related costs, and lower cost of sales.
Previous wording
(2)The operating results from our travel retail business are included in the Asia/Pacific region.
Current wording
(1)The operating results from our travel retail business are included in the Asia/Pacific region.
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 (loss) and Diluted net earnings (loss) per common share adjusted to exclude the impact of charges associated with restructuring and other activities; the securities class action litigation settlement; impairment of goodwill and other intangible assets; talcum litigation settlement agreements; 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 and Diluted net earnings per common share adjusted to exclude the impact of charges associated with restructuring and other activities; 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
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
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, 2026, we had cash and cash equivalents of $3,126 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.
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, 2026, we had cash and cash equivalents of $3,198 million compared with $3,498 million at June 30, 2026. 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 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.
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 permanent reinvestment assertion on our remaining applicable foreign earnings. We do not believe that continuing to reinvest these remaining applicable foreign earnings impairs our ability to meet our domestic debt or working capital obligations. If these reinvested earnings were repatriated into the United States as dividends, we would be subject to state income taxes and applicable foreign taxes in certain jurisdictions.
Previous wording
Tariffs negatively impacted our operating results in the fiscal 2026 third quarter and we are continuing to monitor and assess the potential effects of changing tariff conditions globally.
Current wording
Tariffs negatively impacted our operating results in the fiscal 2027 first quarter and we are continuing to monitor and assess the potential effects of changing tariff conditions globally.
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 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 April 24, 2026, our long-term debt is rated A- with a negative outlook by Standard & Poor’s and A3 with a negative outlook by Moody’s.
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 26, 2026, our long-term debt is rated A- with a stable outlook by Standard & Poor’s and A3 with a negative outlook by Moody’s.
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 $7 million and debt issuance costs of $3 million.
Previous wording
(5)Consists of $250 million principal, unamortized debt discount of $1 million and debt issuance costs of $2 million.
Current wording
(5)Consists of $250 million principal, unamortized debt discount of $1 million and debt issuance costs of $1 million.
Previous wording
(7)Consists of $650 million principal, unamortized debt discount of $2 million, debt issuance costs of $4 million and a $16 million loss to reflect the fair value of interest rate swaps.
Current wording
(7)Consists of $650 million principal, unamortized debt discount of $1 million, debt issuance costs of $4 million and a $52 million loss to reflect the fair value of interest rate swaps.
Previous wording
(10)Consists of $600 million principal, unamortized debt discount of $2 million, debt issuance costs of $2 million and a $30 million loss to reflect the fair value of interest rate swaps.
Current wording
(10)Consists of $600 million principal, unamortized debt discount of $2 million, debt issuance costs of $2 million and a $40 million loss to reflect the fair value of interest rate swaps.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
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 nine months ended March 31, 2026. There were no returns associated with restructuring and other activities for the three months ended March 31, 2026 and the three and nine months ended March 31, 2025.
Previous report — wording carried elsewhere
(1)See“Reconciliations of Non-GAAP Financial Measures”beginning on page 57 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Previous report — wording carried elsewhere
(1)See“Reconciliations of Non-GAAP Financial Measures”beginning on page 57 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
Previous report — wording carried elsewhere
(2)The operating results from our travel retail business are included in the Asia/Pacific region.