The Estée Lauder Companies reported its financial results for the third quarter ended on March 31, 2025. 

Net sales decreased 10% to $3.6 billion, and organic net sales decreased 9%. However, reported and adjusted gross margins expanded by 75%, mostly due to ELC’s Profit Recovery and Growth Plan (PRGP).

Stéphane de La Faverie, President and Chief Executive Officer, said, 

“In the third quarter of fiscal 2025, we delivered our organic sales outlook and exceeded profitability expectations. We are moving decisively and building momentum as we bring our “Beauty Reimagined” strategic vision to life across its five key priorities. This is evidenced by our prestige beauty share gains in strategic markets like the U.S., China, and Japan, and our mid-single-digit organic net sales growth online.”

Results by Category

Skincare

Skincare net sales decreased 11%, primarily from the decrease in the ELC’s Asia travel retail business, which drove declines from Estée Lauder and La Mer. 

The operating income in this segment decreased mostly due to the decline in net sales and increase in consumer-facing investments, and was partially offset by lower cost of sales.

Makeup

Makeup operating income decreased, mostly because of the decline in net sales, partially offset by lower cost of sales. Net sales also decreased by 7%.

The decline in Makeup was primarily due to a decline in the face subcategory for Estee Lauder, as well as an unfavorable impact from the timing and lower level of shipments for new product launches compared to the prior-year period with MAC. 

Fragrance

Net sales decreased by 1%, and Fragrance’s operating income increased, primarily because of lower cost of sales, partially offset by the increase in consumer-facing investments.

Declines from Clinique were mainly attributed to the Clinique Happy product franchise and Estée Lauder, primarily reflecting retail softness in Asia/Pacific.

However, declines were partially offset by the low-single-digit increase from the ELC’s Luxury Brands, led by strong double-digit growth from Le Labo.

This growth was partially offset by declines in the cologne and home subcategories from Jo Malone London, driven in part by the timing of shipments.

Hair Care

Hair Care net sales decreased by 10%, primarily driven by Aveda, reflecting continued softness in the ELC’s salon and freestanding stores channels.

Hair Care operating results improved, reflecting disciplined expense management and lower cost of sales, partially offset by the decline in net sales.

Results by Region

The Americas

Net sales decreased by 5%, driven by the mid-single-digit decline in North America. Operating results increased, primarily driven by disciplined expense management as well as net benefits from the PRGP.

Overall, ELC’s North America business increased by low single digits. 

Ongoing retail softness for some brands and declines in consumer confidence and sentiment, which led to elevated inventory levels and destocking at certain retailers, caused some of the sales decline in this region. 

These challenges offset the benefit from nine brands in Amazon’s U.S. Premium Beauty Store, compared to one in the prior-year period.

Asia/Pacific

Net sales decreased by 1%, primarily driven by double-digit declines in Hong Kong SAR and Korea, partially offset by mid-single-digit growth in mainland China.

Operating income declined, primarily driven by the decrease in net sales and increase in consumer-facing investments, as well as the year-over-year unfavorable impact of the fiscal 2025 second quarter change in policy related to local government subsidies in China.

The decline in Korea was mostly from reduced retail traffic and dampened retail sales, as well as the strategic exit of Dr.Jart+ from the travel retail channel in November 2024.

Declines were partially offset by Lunar New Year’s overlap with Valentine’s Day, resulting in a stabilization in prestige beauty. 

Europe, the Middle East and Africa

Net sales decreased by 16%. 

Mid-single-digit decline in the region’s markets, primarily driven by ongoing challenges in the United Kingdom, including retail softness for the company’s brands.

La Faverie added,

“Our global business organic sales trends, excluding travel retail, showed sequential improvement. With the strategic reset of our travel retail business well underway to better reflect recent industry trends and market conditions, and provided there is meaningful resolution of the recently enacted tariffs to mitigate potential related negative impacts, we are confident in our ability to return to sales growth in fiscal 2026.”