Stéphane de La Faverie, President and CEO of Estée Lauder.

The Estée Lauder Companies reported a double-digit decline in global travel retail sales in 2024, which contributed to an 8% decline in net sales across the wider business.

The decrease in net sales from its travel retail business, which is reported in the Europe, the Middle East & Africa geographic region, was primarily driven by Asia travel retail, reflecting ongoing subdued sentiment and lower conversion from Chinese consumers.

The business added the difficult comparison to the prior year due to our resumption of replenishment orders in the second half of fiscal 2024 and a strategic decision to reduce its exposure to reseller activity, as well as retailer shifts in strategies toward more profitable duty free business models in both Korea and mainland China, led to lower replenishment orders and a notable decrease in GTR sales.

Stéphane de La Faverie, President and CEO, said, “Having closed fiscal 2025 as expected, we remain wholly focused on continuing to execute our strategic vision of Beauty Reimagined with excellence.

Despite continued volatility in the external environment, we embarked on fiscal 2026 with signs of momentum and confidence in our outlook to deliver organic sales growth this year after three years of declines and to begin rebuilding operating profitability in pursuit of a solid double-digit adjusted operating margin over the next few years.”

Regional overview

The decrease in net sales in North America reflected ongoing retail softness for some brands, and pressure from subdued consumer confidence and sentiment in the second half of fiscal 2025, which led to elevated inventory levels and destocking at certain retailers, as well as the timing of shipments, which further pressured net sales compared to the prior year.

Partially offsetting the net sales decline for North America in fiscal 2025 was the impact from the launch of eleven brands in Amazon’s U.S. Premium Beauty store as of June 2025 compared to three brands as of June 2024, as well as the launch of three brands in the Amazon.ca (Canada) Premium Beauty store in fiscal 2025.

During fiscal 2025, Estée Lauder established a US valuation allowance of $172 million against general foreign tax credit and research and development tax credit carryforwards as it was determined more- likely-than-not that these deferred tax assets would not be realized.

This determination was driven by its weighing of relevant evidence including lower U.S. taxable income in fiscal 2025 as compared to recent years, reflecting reduced income from our travel retail business, and the resulting uncertainty about the ability to realize the carryforwards prior to expiration.

The business noted the decrease in net sales in mainland China reflected the overall challenging retail environment, including subdued consumer sentiment.

The net sales decline in 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.

Reported net sales in The Americas decreased 4% in fiscal 2025, driven by the decrease from volume of 8% and the unfavorable impact from foreign currency translation of 1%. These decreases were partially offset by an increase from pricing of 6%, due to the favorable impact of strategic pricing actions and changes in mix.

Reported net sales in Europe, the Middle East & Africa decreased 12% in fiscal 2025, driven by the decrease from volume of 10% and a decrease from pricing of 3%.

The decrease from pricing was attributed to changes in mix, partially offset by the favorable impact from strategic pricing actions.

Reported net sales in Asia/Pacific decreased 7% in fiscal 2025, driven by the decrease from volume of 12%.

Partially offsetting this decrease was an increase from pricing of 5%, due to the favorable impact from strategic pricing actions and changes in mix.

Skincare

Reported skincare net sales decreased $946 million, or 12%, in fiscal 2025, reflecting lower net sales from Estée Lauder and La Mer, combined, of approximately $829 million, primarily driven by declines in its Asia travel retail business.

Makeup

Reported makeup net sales decreased $265 million, or 6%, in fiscal 2025, reflecting lower net sales primarily from M·A·C, and to a lesser extent, Estée Lauder, Too Faced and Bobbi Brown, combined, of approximately $241 million.

The decrease in net sales from M·A·C was primarily driven by lower net sales in the face subcategory and retail softness for the brand, which led to elevated levels of inventory and retailer destocking.

Net sales from Estée Lauder decreased, primarily driven by lower net sales in the face subcategory, reflecting the aforementioned challenges in its Asia travel retail business. Net sales from Too Faced decreased, driven by North America, primarily reflecting lower net sales in the lip and eye subcategories. Bobbi Brown net sales decreased, primarily driven by lower net sales in the face subcategory.

A more detailed look at product sales by category and region.

Fragrance

Reported fragrance net sales increased slightly in fiscal 2025, reflecting higher net sales from Le Labo and to a lesser extent, Kilian Paris combined, of approximately $87 million, largely offset by lower net sales from Estée Lauder, Clinique, and Tom Ford, combined, of approximately $82 million.

Net sales from Le Labo increased, reflecting growth from hero products, including growth through targeted expanded consumer reach, and new product launches. The increase in net sales from Kilian Paris primarily reflected the success of new product launches.

The decrease in net sales from Estée Lauder was primarily driven by lower net sales from the Estée Lauder Beautiful and Estée Lauder Pleasures franchises. 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, as well as an unfavorable year-over-year impact of prior-year launches.

Hair Care

Reported hair care net sales decreased $64 million, or 10%, in fiscal 2025, driven by lower net sales from Aveda, and to a lesser extent, Bumble and bumble and The Ordinary, combined of approximately $66 million.

Net sales from Aveda decreased, primarily reflecting softness in brick-and-mortar channels and freestanding store closures, partially offset by the impact from its launch in Amazon’s U.S. Premium Beauty store during the fiscal 2025 fourth quarter.

Net sales from Bumble and bumble decreased, primarily reflecting our softness in the salon and specialty-multi channels, partially offset by higher net sales associated with its fiscal 2024 fourth quarter launch in Amazon’s U.S. Premium Beauty store. Hair care net sales were impacted by approximately $2 million of unfavorable foreign currency translation.

Tom Ford

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. A lso during the fiscal 2025 second quarter, the Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels.

As a result, the company revisions to the internal forecasts relating to its Tom Ford brand and Too Faced reporting unit.

Dr.Jart+ exits GTR

Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2025, the Company determined that the carrying value of the Dr.Jart+ and Too Faced trademarks exceeded their estimated fair values. As it relates to Dr.Jart+, a decision was made in the prior year in the reporting unit’s operating plan to exit the travel retail channel.

A revised strategy was implemented that included increased direct investment in other areas of the business, including in mainland China, to support the brand’s future growth.

However, given the lower-than- expected growth within key geographic regions in fiscal 2025, specifically within mainland China and Korea, it was determined that revisions to the internal forecasts were necessary which were finalized and approved in the fiscal 2025 fourth quarter in connection with the brand’s annual planning process, and reflected in the goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2025.

Estée Lauder noted: “We have experienced challenges within our business and we expect volatility and uncertainty to continue. Although there are early signs of stabilization in mainland China, travel retail continues to be weak and challenges persist in the West, including subdued sentiment in the U.S. and Western Europe.

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.”

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