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Item 2. Management’s Discussion and Analysis

2025-10-30 compared with 2025-05-01 · 256 added, 548 removed, 345 unchanged (70% of the section changed)

1 unchanged sentence

RESULTS OF OPERATIONS

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.

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.

Three Months Ended

March 31, Nine Months Ended

September 30,

($ in millions)

Net sales $ 3,481 100.0 % $ 3,361 100.0 %

Cost of sales 927 26.6 928 27.6

Gross profit 2,554 73.4 2,433 72.4

Operating expenses:

Selling, general and administrative 2,296 66.0 2,298 68.4

Restructuring and other charges 89 2.6 97 2.9

Talcum litigation settlement agreements

Total operating expenses 2,385 68.5 2,554 76.0

Operating income (loss)

169 4.9 (121) (3.6)

Interest expense 86 2.5 92 2.7

Interest income and investment income, net 30 0.9 35 1.0

Other components of net periodic benefit cost 4 0.1 2 0.1

Earnings (loss) before income taxes

109 3.1 (180) (5.4)

Provision (benefit) for income taxes

62 1.8 (24) (0.7)

Net earnings (loss)

$ 47 1.4 % $ (156) (4.6) %

Not adjusted for differences caused by rounding

THE ESTÉE LAUDER COMPANIES INC.

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.

Three Months Ended

September 30,

(In millions) 2025 2024

By Product Category:

3 unchanged sentences

Hair Care 129 139

Other 25 26 80 88

3,550 3,940 10,915 11,738

Returns associated with restructuring and other activities 1 —

Net sales $ 3,481 $ 3,361

By Region (1) :

By Geographic Region (1) :

The Americas $ 1,174 $ 1,197

Europe, the Middle East & Africa 1,358 1,647 4,082 4,488

Europe, United Kingdom and Ireland and Emerging Markets ("EUKEM")

Asia/Pacific 873 806

3,550 3,940 10,915 11,738

Mainland China

Returns associated with restructuring and other activities 1 —

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Hair Care (12) (18)

Other 9 11 (25) 38

403 549 (11) 1,231

Charges associated with restructuring and other activities (86) (106)

1 unchanged sentence

$ 169 $ (121)

By Region (1) :

By Geographic Region (1)(2) :

The Americas $ 87 $ (85)

Europe, the Middle East & Africa 239 302 645 825

Asia/Pacific 150 76

403 549 (11) 1,231

Mainland China

Charges associated with restructuring and other activities (86) (106)

1 unchanged sentence

$ 169 $ (121)

(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.

(1) The net sales and operating results from the Company’s travel retail business are included in the Asia/Pacific region.

(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.

THE ESTÉE LAUDER COMPANIES INC.

The following table presents certain consolidated earnings (loss) data as a percentage of net sales:

Three Months Ended

March 31, Nine Months Ended

2025 2024 2025 2024

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

Cost of sales 25.0 28.1 25.4 28.4

Gross profit 75.0 71.9 74.6 71.6

Operating expenses:

Selling, general and administrative 63.6 58.0 65.4 61.1

Restructuring and other charges 2.7 0.5 3.4 0.2

Impairment of goodwill and other intangible assets

Talcum litigation settlement agreements

Total operating expenses 66.3 58.4 78.2 61.4

Operating income (loss)

8.6 13.5 (3.6) 10.2

Interest expense 2.5 2.4 2.5 2.4

Interest income and investment income, net 0.8 1.1 0.8 1.1

Other components of net periodic benefit cost 0.1 (0.1) 0.1 (0.1)

Earnings (loss) before income taxes

6.8 12.3 (5.4) 9.0

Provision (benefit) for income taxes

2.3 3.8 — 3.0

Net earnings (loss)

4.5 8.5 (5.4) 5.9

Net earnings attributable to redeemable noncontrolling interest

— (0.1) — (0.2)

Net earnings (loss) attributable to The Estée Lauder Companies Inc.

4.5 % 8.4 % (5.4) % 5.7 %

Not adjusted for differences caused by rounding

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.

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Prices of skin care and fragrance products are typically higher than makeup and hair care products.

THE ESTÉE LAUDER COMPANIES INC.

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.

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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.

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.

• 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.

• 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.

THE ESTÉE LAUDER COMPANIES INC.

• 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.

• 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.

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.

• 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.

• 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.

• 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.

THE ESTÉE LAUDER COMPANIES INC.

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.

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.

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.

1 unchanged sentence

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

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.

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.

We continue to monitor the effects of the global macro environment, including the risk of recession;

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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.

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.

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.

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.

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.

Restructuring Program Component of the Profit Recovery and Growth Plan

As announced on November 1, 2023, we launched the PRGP to help progressively rebuild our profit margins in fiscal years 2025 and 2026.

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.

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

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.

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.

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.

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.

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.

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.

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.

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.

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 ESTÉE LAUDER COMPANIES INC.

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.

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.

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.

Talcum Litigation Settlement Agreements

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.

THE ESTÉE LAUDER COMPANIES INC.

Impairment Analysis During the Nine Months Ended March 31, 2025

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.

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.

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:

Impairment Charges (1)

Carrying Value

(In millions)

Nine Months Ended

March 31, 2025

As of March 31, 2025

Brand/Reporting Unit

Geographic Region

Trademark (2)

$ 773 $ — $ 1,805 $ —

Total $ 848 $ 13 $ 1,917 $ —

(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.

(2) The carrying values of the trademark intangible assets, immediately subsequent to the impairment charges, are equal to their fair values.

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

Three Months Ended

March 31, Nine Months Ended

September 30,

($ in millions) 2025 2024

6 unchanged sentences

GAAP measures.

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.

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.

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.

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.

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.

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.

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.

Reported net sales were impacted by approximately $25 million of favorable foreign currency translation for the three months ended September 30, 2025.

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%.

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 Categories and 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.

THE ESTÉE LAUDER COMPANIES INC.

Product Categories

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Net sales $ 1,807 $ 2,060 $ 5,257 $ 5,873

$ Change from prior-year period (253) (616)

% Change from prior-year period (12) % (10) %

Non-GAAP Financial Measure (1) :

% Change from prior-year period in constant currency (11) % (10) %

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 59 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

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.

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.

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.

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.

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%.

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.

THE ESTÉE LAUDER COMPANIES INC.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Net sales $ 1,035 $ 1,136 $ 3,223 $ 3,365

$ Change from prior-year period (101) (142)

% Change from prior-year period (9) % (4) %

Non-GAAP Financial Measure (1) :

% Change from prior-year period in constant currency (7) % (3) %

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 59 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

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.

Net sales from Estée Lauder decreased, primarily driven by lower net sales in the face subcategory.

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 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.

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.

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.

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Reported net sales for our product categories for the three months ended September 30, 2025 and 2024 were as follows:

Three Months Ended September 30,

($ in millions) 2025 2024 $ Change

% Change in Constant Currency (1)

Skin Care $ 1,575 $ 1,529 $ 46 3 % 3 %

Makeup 1,030 1,038 (8) (1) (2)

Fragrance 721 630 91 14 13

Hair Care 129 139 (10) (7) (7)

Other 25 25 — — —

3,480 3,361 119 4 3

Returns associated with restructuring and other activities 1 — 1 100 100

Net sales $ 3,481 $ 3,361 $ 120 4 % 3 %

$ Change from prior-year period (18) (17)

% Change from prior-year period (3) % (1) %

Non-GAAP Financial Measure (1) :

% Change from prior-year period in constant currency (1) % — %

(1) 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.

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.

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.

Partially offsetting the decrease in reported fragrance net sales for the three and nine months ended March 31, 2025 were higher net sales from Le Labo, primarily reflecting growth of hero products, including growth through targeted expanded consumer reach, and new product launches.

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.

Reported fragrance net sales decreased 3% for the three months ended March 31, 2025, driven by the decrease from volume of 7% and the unfavorable impact from foreign currency translation of 2%.

Partially offsetting these decreases was an increase from pricing of 6% due to the favorable impact from strategic pricing actions and changes in mix.

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.

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.

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.

Skin care net sales were impacted by approximately $7 million of favorable foreign currency translation for the three months ended September 30, 2025.

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.

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.

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Net sales $ 126 $ 143 $ 424 $ 464

$ Change from prior-year period (17) (40)

% Change from prior-year period (12) % (9) %

Non-GAAP Financial Measure (1) :

% Change from prior-year period in constant currency (10) % (8) %

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 59 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

Reported hair care net sales decreased for the three and nine months ended March 31, 2025, driven by lower net sales from Aveda, primarily reflecting our softness in the Europe, the Middle East & Africa and North America salon channels, as well as softness in our direct-to-consumer business.

Also contributing to the decrease in net sales for Aveda for the nine months ended March 31, 2025 was the unfavorable impact of timing of shipments compared to the prior-year period.

Hair care net sales were impacted by approximately $2 million of unfavorable foreign currency translation in each of the three and nine months ended March 31, 2025.

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.

Reported hair care net sales decreased 9% for the nine months ended March 31, 2025, driven by the decrease from volume of 7% and a decrease from pricing of 1%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions.

Makeup net sales were impacted by approximately $10 million of favorable foreign currency translation for the three months ended September 30, 2025.

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.

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.

Fragrance net sales were impacted by approximately $8 million of favorable foreign currency translation for the three months ended September 30, 2025.

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%.

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.

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.

Geographic Regions

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Net sales $ 1,052 $ 1,117 $ 3,462 $ 3,567

$ Change from prior-year period (65) (105)

% Change from prior-year period (6) % (3) %

Non-GAAP Financial Measure (1) :

% Change from prior-year period in constant currency (5) % (2) %

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 59 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

Reported net sales in The Americas decreased for the three and nine months ended March 31, 2025, primarily driven by lower net sales in North America.

For the three and nine months ended March 31, 2025, the lower net sales in North America reflected ongoing retail softness for some brands and declines in consumer confidence and sentiment, which led to elevated inventory levels and destocking at certain retailers, as well as operational challenges at certain retailers and the timing of shipments, which further pressured net sales compared to the prior-year periods.

Partially offsetting the net sales decline for North America for the three and nine months ended March 31, 2025 was the impact from the launch of nine brands to-date in Amazon's U.S.

Premium Beauty store.

THE ESTÉE LAUDER COMPANIES INC.

Net sales in The Americas were impacted by approximately $12 million and $36 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.

Reported net sales in The Americas decreased 6% for the three months ended March 31, 2025, driven by the decrease from volume of 9% and the unfavorable impact from foreign currency translation of 1%.

These decreases were partially offset by an increase from pricing of 4%, due to the favorable impact of strategic pricing actions and changes in mix.

Reported net sales in The Americas decreased 3% for the nine months ended March 31, 2025, driven by the decrease from volume of 9% and the unfavorable impact from foreign currency translation of 1%.

These decreases were partially offset by an increase from pricing of 7%, due to the favorable impact of strategic pricing actions and changes in mix.

Europe, the Middle East & Africa

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Reported net sales by geographic region for the three months ended September 30, 2025 and 2024 were as follows:

Three Months Ended September 30,

($ in millions) 2025 2024 $ Change

% Change in Constant Currency (2)

The Americas $ 1,174 $ 1,197 $ (23) (2) % (2) %

901 868 33 4 —

Asia/Pacific (1)

873 806 67 8 9

Mainland China

532 490 42 9 9

3,480 3,361 119 4 3

Returns associated with restructuring and other activities 1 — 1 100 100

Net sales $ 3,481 $ 3,361 $ 120 4 % 3 %

$ Change from prior-year period (289) (406)

% Change from prior-year period (18) % (9) %

Non-GAAP Financial Measure (1) :

% Change from prior-year period in constant currency (16) % (9) %

(1) The net sales from the Company’s travel retail business are included in the Asia/Pacific region.

(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.

Reported net sales decreased in Europe, the Middle East & Africa for the three and nine months ended March 31, 2025, primarily driven by lower net sales in our Asia travel retail business, reflecting the ongoing subdued sentiment and lower conversion from Chinese consumers, the difficult comparison to the prior-year period due to our resumption of replenishment orders in the fiscal 2024 third quarter and our strategic decision to reduce our exposure to reseller activity, as well as retailer shifts in strategies toward more profitable duty-free business models in both Korea and mainland China, which led to lower replenishment orders.

Net sales in Europe, the Middle East & Africa were impacted by approximately $22 million and $3 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.

Reported net sales in Europe, the Middle East & Africa decreased 18% for the three months ended March 31, 2025, driven by the decrease from volume of 12%, a decrease from pricing of 4%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions, and the unfavorable impact from foreign currency translation of 1%.

Reported net sales in Europe, the Middle East & Africa decreased 9% for the nine months ended March 31, 2025, driven by the decrease from volume of 8% and a decrease from pricing of 1%, due to changes in mix, partially offset by the favorable impact from strategic pricing actions.

THE ESTÉE LAUDER COMPANIES INC.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Net sales $ 1,140 $ 1,176 $ 3,371 $ 3,683

$ Change from prior-year period (36) (312)

% Change from prior-year period (3) % (8) %

Non-GAAP Financial Measure (1) :

% Change from prior-year period in constant currency (1) % (8) %

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 59 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

Reported net sales decreased in Asia/Pacific for the three months ended March 31, 2025, primarily driven by lower net sales from Korea, Hong Kong SAR, Singapore, Taiwan and Australia, combined, of approximately $69 million.

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.

Partially offsetting the reported net sales decrease in Asia/Pacific for the three months ended March 31, 2025 were higher net sales from mainland China and Japan, combined, of approximately $37 million.

The 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.

Reported net sales decreased in Asia/Pacific for the nine months ended March 31, 2025, primarily driven by lower net sales from mainland China, Hong Kong SAR, Korea and Singapore, combined, of approximately $332 million.

The decrease in net sales from mainland China and Hong Kong SAR both reflected the overall challenging retail environments, including the ongoing pressure from subdued consumer sentiment.

Additionally, the decline in net sales in Hong Kong SAR, as well as the decrease in net sales in Singapore reflected our strategic decision to reduce our exposure to reseller activity.

The net sales decline in Korea reflects the impact of political and social unrest, which reduced retail traffic and dampened retail sales, as well as the exit of Dr.Jart+ from the travel retail channel in Korea during the fiscal 2025 second quarter.

Partially offsetting the reported net sales decrease in Asia/Pacific for the nine months ended March 31, 2025 were higher net sales from Japan, reflecting higher net sales in fragrance, driven by Le Labo and Jo Malone London, and in skin care, driven by La Mer, including growth through tourism demand.

Net sales in Asia/Pacific were impacted by approximately $21 million and $16 million of unfavorable foreign currency translation for the three and nine months ended March 31, 2025, respectively.

Reported net sales in Asia/Pacific decreased 3% for the three months ended March 31, 2025, driven by the decrease from volume of 6% and the unfavorable impact from foreign currency translation of 2%.

Partially offsetting these decreases was an increase from pricing of 4% due to the favorable impact from strategic pricing actions and changes in mix.

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.

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.

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.

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.

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.

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%.

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%.

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.

THE ESTÉE LAUDER COMPANIES INC.

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.

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.

Gross margin increased to 73.4% for the three months ended September 30, 2025, as compared with 72.4% in the prior-year period.

Favorable (Unfavorable) Basis Points

March 31, 2025

Three Months Ended Nine Months Ended

September 30, 2025

Three Months Ended

Mix of business 50

7 unchanged sentences

Non-GAAP Gross Margin Basis Point Variance

The increase in gross margin for the three and nine months ended March 31, 2025 was driven by the impact from manufacturing costs and other, reflecting the favorable impact of the recognition of manufacturing variances associated with reduced manufacturing volumes on our standard cost within cost of sales in the fiscal 2024 third quarter, partially offset by the impact of a similar charge recorded in the fiscal 2025 third quarter, as well as the favorable impact of cost efficiencies within our global supply chain network.

Also contributing to the increase in gross margin in both periods was lower obsolescence charges, due to a reduction in excess inventory.

Partially offsetting the increase in gross margin for the three months ended March 31, 2025 was the unfavorable impact from our mix of business, reflecting the impact of lower net sales, partially offset by the benefit of net strategic pricing.

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.

THE ESTÉE LAUDER COMPANIES INC.

OPERATING EXPENSES

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.

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.

Favorable (Unfavorable) Basis Points

March 31, 2025

Three Months Ended Nine Months Ended

September 30, 2025

Three Months Ended

General and administrative expenses 90

Advertising, merchandising, sampling and product development (280) (180)

Selling (110) (120)

Shipping 20 20

Advertising, marketing, promotion and product development

Store operating costs 10

2 unchanged sentences

Charges associated with restructuring and other activities 30

Goodwill and other intangible asset impairments

Talcum litigation settlement agreements

Changes in fair value of DECIEM acquisition-related stock options

As Reported Operating Expense Margin Basis Point Variance

(790) (1,680)

Non-GAAP Financial Measure Adjustments:

Impact of restructuring and other activities

Goodwill and other intangible asset impairments

Talcum litigation settlement agreements

Changes in fair value of DECIEM acquisition-related stock options

Non-GAAP Operating Expense Margin Basis Point Variance 240

The unfavorable change in operating expense margin for the three and nine months ended March 31, 2025 reflects the impact of the decrease in net sales.

Also contributing to the unfavorable change in operating expense margin for the three months ended March 31, 2025 was higher advertising, merchandising, sampling and product development expenses, reflecting investments to support sales, including through key shopping moments, campaigns and launches, and higher store operating costs, to support targeted expanded consumer reach.

General and administrative expenses increased for the three and nine months ended March 31, 2025, reflecting the year-over-year unfavorable impact of a change in policy related to local government subsidies in China.

Also contributing to the unfavorable change in operating expense margin for the nine-month period was higher selling expenses, reflecting higher staffing costs to support sales, targeted expanded consumer reach and key campaigns.

As a result of our net sales performance, we were disciplined in our overall expense strategy across the business to manage profitability, which partially offset the unfavorable change in operating expense margin for the three and nine months ended March 31, 2025.

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.

THE ESTÉE LAUDER COMPANIES INC.

1 unchanged sentence

Three Months Ended

March 31, Nine Months Ended

September 30,

($ in millions) 2025 2024

5 unchanged sentences

Non-GAAP Financial Measure (1) :

% Change in operating income (loss) from the prior-year period adjusting for the impact of charges associated with restructuring and other activities, the impact of goodwill and other intangible asset impairments, talcum litigation settlement agreements and the change in fair value of DECIEM acquisition-related stock options

(27) % (19) %

% Change in operating income (loss) from the prior-year period adjusting for the impact of charges associated with restructuring and other activities and talcum litigation settlement agreements

(1) 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.

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

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.

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.

Product Categories

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Operating income $ 361 $ 468 $ 784 $ 920

$ Change from prior-year period (107) (136)

% Change from prior-year period (23) % (15) %

Reported Operating income (loss) for our product categories for the three months ended September 30, 2025 and 2024 were as follows:

Three Months Ended September 30,

($ in millions) 2025 2024 $ Change % Change

(As reported) % Change

(Non-GAAP) (1)

Non-GAAP Financial Measure (1)

% Change in operating income from the prior-year period adjusting for the change in fair value of DECIEM acquisition-related stock options

(24) % (16) %

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 59 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

Reported skin care operating income decreased for the three and nine months ended March 31, 2025, primarily driven by lower operating income from Estée Lauder and La Mer, combined, of approximately $210 million and $368 million, respectively.

Operating income from Estée Lauder decreased in both periods, primarily driven by a decrease in net sales, partially offset by lower cost of sales.

Also partially offsetting the lower operating income from Estée Lauder for the nine months ended March 31, 2025 was disciplined advertising and promotional expense management.

Operating income from La Mer decreased in both periods, primarily driven by decreases in net sales and increases in advertising and promotional activities to support key shopping moments and new product launches, partially offset by lower cost of sales.

Partially offsetting the decline in skin care operating income for the product category overall in both periods was lower cost of sales.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Operating income (loss)

Skin Care $ 187 $ 117 $ 70 60 % 60 %

Makeup (15) (185) 170 92 42 Adjusted for the impact of talcum litigation settlement agreements.

Fragrance 86 60 26 43 43

Hair Care (12) (18) 6 33 33

Other 9 11 (2) (18) (18)

255 (15) 270 100+ 77

$ Change from prior-year period (52) (438)

% Change from prior-year period (79) % (100+)%

Non-GAAP Financial Measure (1) :

% Change in operating income (loss) from the prior-year period adjusting for the impact of goodwill and other intangible asset impairments and talcum litigation settlement agreements

Charges associated with restructuring and other activities

(86) (106) 20 19 68

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 59 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

THE ESTÉE LAUDER COMPANIES INC.

Reported makeup operating income decreased for the three months ended March 31, 2025, primarily driven by lower operating income from Estée Lauder and M·A·C, and to a lesser extent, an increase in operating loss from Bobbi Brown, combined, of approximately $81 million.

The decrease in operating income from Estée Lauder was primarily driven by a decrease in net sales and higher advertising and promotional activities to support key campaigns and key shopping moments, partially offset by lower cost of sales.

Operating income from M·A·C decreased, primarily driven by a decrease in net sales, partially offset by lower cost of sales and lower advertising and promotional activities due to disciplined advertising and promotional expense management and a favorable year-over-year impact of increased advertising and promotional activities in the prior-year period to support new product launches.

The increase in operating loss from Bobbi Brown was primarily driven by a decrease in net sales, partially offset by disciplined advertising and promotional expense management.

Partially offsetting the decline in makeup operating income for the product category overall was lower cost of sales.

Reported makeup operating results decreased for the nine months ended March 31, 2025, primarily driven by the unfavorable year-over-year impacts of other intangible asset impairment charges relating to TOM FORD and Too Faced, combined, of $245 million and a goodwill impairment charge relating to Too Faced of $13 million, as well as the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million.

Also contributing to the reported makeup operating results decrease for the nine months ended March 31, 2025 was a decrease in operating income from M·A·C, primarily driven by a decrease in net sales, partially offset by lower cost of sales.

Partially offsetting the decline in makeup operating results for the product category overall was lower cost of sales.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Operating income (loss)

$ 169 $ (121) $ 290 100+% 100+%

$ Change from prior-year period 3 (621)

% Change from prior-year period 10 % (100+)%

Non-GAAP Financial Measure (1) :

% Change in operating income (loss) from the prior-year period adjusting for the impact of other intangible asset impairments

(1) 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.

Reported fragrance operating income increased slightly for the three months ended March 31, 2025, reflecting favorability in cost of sales for the category overall, as well as higher operating income from Le Labo.

The increase in operating income from Le Labo was driven by an increase in net sales, partially offset by an increase in selling costs and store operating costs to support targeted expanded consumer reach, as well as an increase in cost of sales.

Partially offsetting the increase in reported fragrance operating income for the three months ended March 31, 2025 was lower operating income from Jo Malone London, lower operating income from TOM FORD and lower operating results from Clinique, combined, of approximately $42 million.

Operating income from Jo Malone London decreased, primarily driven by a decrease in net sales and higher selling expenses, including higher staffing costs to support targeted expanded consumer reach.

The decrease in operating income from TOM FORD was primarily driven by an increase in advertising and promotional activities to support new product launches, a decrease in net sales, and higher selling expenses which included increased demonstration costs, partially offset by lower cost of sales.

Operating results from Clinique decreased, primarily driven by a decrease in net sales, partially offset by lower cost of sales.

THE ESTÉE LAUDER COMPANIES INC.

Reported fragrance operating results decreased for the nine months ended March 31, 2025, primarily driven by lower operating results from TOM FORD, and to a lesser extent, lower operating income from Jo Malone London, combined, of approximately $637 million.

The decrease in operating results from TOM FORD was primarily driven by an unfavorable year-over-year impact of the other intangible asset impairment charge of $549 million, as well as a decline in net sales, an increase in advertising and promotional activities to support key campaigns and an increase in selling expenses including to support targeted expanded consumer reach, partially offset by lower cost of sales.

The decrease in operating income from Jo Malone London was due to higher selling expenses, including higher staffing costs to support key campaigns and targeted expanded consumer reach, a decrease in net sales, higher advertising and promotional activities to support key campaigns and higher store operating costs to support targeted expanded consumer reach, partially offset by lower cost of sales.

Partially offsetting the decline in fragrance operating results for the product category overall for the nine months ended March 31, 2025 was lower cost of sales.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Operating loss $ (13) $ (25) $ (34) $ (50)

$ Change from prior-year period 12 16

% Change from prior-year period 48 % 32 %

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.

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.

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.

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.

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.

Geographic Regions

Three Months Ended

March 31, Nine Months Ended

Three Months Ended September 30,

($ in millions)

Operating income (loss)

2025 2024 (1)

$ Change from prior-year period 14 (740)

% Change from prior-year period 100+% (100+)%

(As Reported)

(Non-GAAP) (2)

Non-GAAP Financial Measure (2)

% Change in operating income (loss) from the prior-year period adjusting for the impact of goodwill and other intangible asset impairments, talcum litigation settlement agreements and change in fair value of DECIEM acquisition-related stock options

The Americas $ 87 $ (85) $ 172 100+% 18 % Adjusted for the impact of talcum litigation settlement agreements

6 10 (4) (40) (40)

Asia/Pacific (3)

150 76 74 97 97

Mainland China

12 (16) 28 100+ 100+

255 (15) 270 100+ 77

Charges associated with restructuring and other activities

(86) (106) 20 19 68

Operating income (loss)

$ 169 $ (121) $ 290 100+% 100+%

(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.

(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.

Reported operating results increased in The Americas for the three months ended March 31, 2025, primarily driven by higher operating results in North America of approximately $18 million.

The higher operating results were primarily driven by lower cost of sales and lower general and administrative expenses, partially offset by the unfavorable year-over-year impact relating to net intercompany activity and a decrease in net sales.

THE ESTÉE LAUDER COMPANIES INC.

Reported operating loss increased for the nine months ended March 31, 2025, primarily reflecting an increase in operating loss in North America of approximately $726 million.

The increase in operating loss was primarily driven by the unfavorable year-over-year impacts of other intangible asset impairment charges relating to TOM FORD and Too Faced of $848 million and a goodwill impairment charge relating to Too Faced of $13 million, the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million and the unfavorable year-over-year impact relating to net intercompany activity, partially offset by lower cost of sales.

Europe, the Middle East & Africa

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Operating income $ 239 $ 302 $ 645 $ 825

$ Change from prior-year period (63) (180)

% Change from prior-year period (21) % (22) %

Reported operating income decreased in Europe, the Middle East & Africa for the three months ended March 31, 2025, primarily driven by lower operating income in the United Kingdom, in our travel retail business, and in Russia, as well as lower operating results in Italy, combined, of approximately $47 million.

The decrease in operating income in the United Kingdom was primarily driven by a decrease in net sales and higher advertising and promotional activities to support sales, partially offset by lower cost of sales.

Operating income decreased in our travel retail business, reflecting a decrease in net sales, partially offset by a favorable year-over-year impact of net intercompany activity, lower cost of sales and lower shipping costs reflecting the decrease in net sales.

Operating income decreased in Russia and Italy, primarily driven by decreases in net sales.

Reported operating income decreased in Europe, the Middle East & Africa for the nine months ended March 31, 2025, primarily driven by lower operating income in our travel retail business and in the United Kingdom, combined, of approximately $144 million.

Operating income decreased in our travel retail business, reflecting a decrease in net sales, partially offset by a decrease in cost of sales, a favorable year-over-year impact of net intercompany activity, disciplined advertising and promotional expense management and lower shipping costs reflecting the decrease in net sales.

Operating income in the United Kingdom decreased, primarily driven by an unfavorable year-over-year impact of net intercompany activity, a decrease in net sales and an increase in advertising and promotional activities to support sales, partially offset by lower cost of sales.

Three Months Ended

March 31, Nine Months Ended

($ in millions) 2025 2024 2025 2024

Operating income $ 156 $ 253 $ 327 $ 649

$ Change from prior-year period (97) (322)

% Change from prior-year period (38) % (50) %

Reported operating income decreased in Asia/Pacific for the three months ended March 31, 2025, primarily driven by lower operating income from mainland China, reflecting the year-over-year unfavorable impact of a change in policy related to local government subsidies in China, an increase in advertising and promotional activities to support new product launches and key shopping moments and higher cost of sales, partially offset by an increase in net sales.

(3) The operating results from the Company’s travel retail business are included in the Asia/Pacific region.

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.

THE ESTÉE LAUDER COMPANIES INC.

Reported operating income decreased in Asia/Pacific for the nine months ended March 31, 2025, primarily driven by lower operating income in mainland China, and to a lesser extent Hong Kong SAR and Korea, combined, of approximately $276 million.

The decrease in operating income from mainland China was primarily driven by a decrease in net sales and the year-over-year unfavorable impact of a change in policy related to local government subsidies in China, partially offset by a year-over-year favorable impact of net intercompany activity, disciplined advertising and promotional expense management and lower cost of sales.

Operating income in Hong Kong SAR decreased, primarily driven by a decrease in net sales, partially offset by lower cost of sales and a year-over-year favorable impact of net intercompany activity.

The decrease in operating income in Korea was primarily driven by a decrease in net sales, partially offset by lower cost of sales and lower store operating costs relating to the exit of Dr.Jart+ from the travel retail channel during the fiscal 2025 second quarter.

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.

Reported operating income in Asia/Pacific increased $74 million, or 97%, for the three months ended September 30, 2025, reflecting higher net sales and lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, partially offset by higher cost of sales.

Reported operating results in Mainland China increased $28 million, or over 100%, for the three months ended September 30, 2025, reflecting higher net sales, partially offset by higher cost of sales and the unfavorable year-over-year impact associated with the recognition of local government subsidies in the prior-year period.

INTEREST AND INVESTMENT INCOME

Three Months Ended

March 31, Nine Months Ended

September 30,

(In millions) 2025 2024

1 unchanged sentence

Interest income and investment income, net $ 30 $ 35

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.

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.

PROVISION FOR INCOME TAXES

1 unchanged sentence

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.

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.

Three Months Ended

March 31, Nine Months Ended

2025 2024 2025 2024

September 30,

Effective rate for income taxes 56.9 % 13.3 %

Basis-point change from the prior-year period 4,360

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.

For the nine months ended March 31, 2025, the decrease in the effective tax rate was primarily attributable to the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, the charge associated with the talcum litigation settlement agreements (See Note 8 - Commitments and Contingencies for further discussion) and an unfavorable impact associated with previously issued stock-based compensation.

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.

THE ESTÉE LAUDER COMPANIES INC.

NET EARNINGS (LOSS) ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC.

NET EARNINGS (LOSS)

Three Months Ended

March 31, Nine Months Ended

September 30,

($ in millions, except per share data) 2025 2024

Net earnings (loss) attributable to The Estée Lauder Companies Inc.

$ 159 $ 330 $ (587) $ 674

Net earnings (loss)

$ Change from prior-year period 203

4 unchanged sentences

Non-GAAP Financial Measure (1) :

% Change in diluted net earnings per common share from the prior-year period adjusting for the impact of charges associated with restructuring and other activities, goodwill and other intangible asset impairments, talcum litigation settlement agreements and the change in fair value of DECIEM acquisition-related stock options (33) % (27) %

% Change in diluted net earnings (loss) per common share from the prior-year period adjusting for the impact of charges associated with restructuring and other activities and talcum litigation settlement agreements

(1) See “ Reconciliations of Non-GAAP Financial Measures” below for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

7 unchanged sentences

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.

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;

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;

the change in fair value of DECIEM acquisition-related stock options;

and the effects of foreign currency translation.

The following tables provide reconciliations between these non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

THE ESTÉE LAUDER COMPANIES INC.

The following table provides reconciliations between these non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

($ in millions, except per share data) Three Months Ended

Variance % Change

constant currency

Net sales, as reported $ 3,550 $ 3,940 $ (390) (10) % (8) %

Returns associated with restructuring and other activities — — —

Net sales, as adjusted $ 3,550 $ 3,940 $ (390) (10) % (9) %

Operating income, as reported

$ 306 $ 531 $ (225) (42) % (40) %

Charges associated with restructuring and other activities 97 18 79

Change in fair value of DECIEM acquisition-related stock options

Operating income, as adjusted $ 403 $ 554 $ (151) (27) % (24) %

Diluted net earnings per common share, as reported

$ .44 $ .91 $ (.47) (52) % (49) %

Charges associated with restructuring and other activities .21 .04 .17

Change in fair value of DECIEM acquisition-related stock options (less portion attributable to redeemable noncontrolling interest)

Diluted net earnings per common share, as adjusted $ .65 $ .97 $ (.32) (33) % (30) %

THE ESTÉE LAUDER COMPANIES INC.

($ in millions, except per share data) Nine Months Ended

Variance % Change

September 30, Variance % Change

constant currency

5 unchanged sentences

Charges associated with restructuring and other activities 86 106 (20)

Goodwill and other intangible asset impairments

Talcum litigation settlement agreements

Change in fair value of DECIEM acquisition-related stock options

Operating income, as adjusted $ 255 $ 144 $ 111 77 % 79 %

2 unchanged sentences

Charges associated with restructuring and other activities .19 .23 (.04)

Goodwill and other intangible asset impairments

Talcum litigation settlement agreements

Change in fair value of DECIEM acquisition-related stock options (less portion attributable to redeemable noncontrolling interest)

Diluted net earnings per common share, as adjusted $ .32 $ .14 $ .18 100+% 100+%

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

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:

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:

As Reported Impact of foreign

4 unchanged sentences

Three Months Ended

September 30,

($ in millions) 2025 2024 Variance

8 unchanged sentences

Total $ 3,481 $ 3,361 $ 120 $ (25) $ 95 4 % 3 %

By Geographic Region:

The Americas $ 1,174 $ 1,197 $ (23) $ 4 $ (19) (2) % (2) %

Europe, the Middle East & Africa 1,358 1,647 (289) 22 (267) (18) (16)

Asia/Pacific 1,140 1,176 (36) 21 (15) (3) (1)

901 868 33 (35) (2) 4 —

Returns associated with restructuring and other activities — — — 1 1

Total $ 3,550 $ 3,940 $ (390) $ 56 $ (334) (10) % (8) %

THE ESTÉE LAUDER COMPANIES INC.

As Reported Impact of foreign

currency translation Variance,

in constant currency % Change,

as reported % Change,

in constant currency

Nine Months Ended

($ in millions) 2025 2024 Variance

By Product Category:

Skin Care $ 5,257 $ 5,873 $ (616) $ 13 $ (603) (10) % (10) %

Makeup 3,223 3,365 (142) 28 (114) (4) (3)

Fragrance 1,931 1,948 (17) 12 (5) (1) 0

Hair Care 424 464 (40) 2 (38) (9) (8)

Other 80 88 (8) — (8) (9) (9)

10,915 11,738 (823) 55 (768) (7) (7)

Returns associated with restructuring and other activities — (1) 1 1 2

Total $ 10,915 $ 11,737 $ (822) $ 56 $ (766) (7) % (7) %

The Americas $ 3,462 $ 3,567 $ (105) $ 36 $ (69) (3) % (2) %

Europe, the Middle East & Africa 4,082 4,488 (406) 3 (403) (9) (9)

Asia/Pacific 873 806 67 4 71 8 9

Mainland China

532 490 42 2 44 9 9

3,480 3,361 119 (25) 94 4 3

Returns associated with restructuring and other activities 1 — 1 — 1

1 unchanged sentence

THE ESTÉE LAUDER COMPANIES INC.

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:

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:

As Reported Add:

Change in fair value of DECIEM acquisition-related stock options

Variance, as adjusted % Change, as reported % Change, as adjusted

Talcum litigation settlement agreements Variance, as adjusted % Change, as reported % Change, as adjusted

Three Months Ended

($ in millions) 2025 2024 Variance

By Product Category:

Skin Care $ 361 $ 468 $ (107) $ (5) $ (112) (23) % (24) %

Makeup 14 66 (52) — (52) (79) (79)

Fragrance 32 29 3 — 3 10 10

Hair Care (13) (25) 12 — 12 48 48

Other 9 11 (2) — (2) (18) (18)

403 549 (146) $ (5) $ (151) (27) % (27) %

Charges associated with restructuring and other activities (97) (18) (79)

Total $ 306 $ 531 $ (225)

The Americas $ 8 $ (6) $ 14 $ (5) $ 9 100+% 100+%

Europe, the Middle East & Africa 239 302 (63) — (63) (21) (21)

Asia/Pacific 156 253 (97) — (97) (38) (38)

403 549 (146) $ (5) $ (151) (27) % (27) %

Charges associated with restructuring and other activities (97) (18) (79)

Total $ 306 $ 531 $ (225)

THE ESTÉE LAUDER COMPANIES INC.

As Reported Add:

goodwill and other intangible asset impairments

Talcum litigation settlement agreements

Change in fair value of DECIEM acquisition-related stock options

Variance, as adjusted % Change, as reported % Change, as adjusted

Nine Months Ended

September 30,

($ in millions) 2025 2024 Variance

8 unchanged sentences

Total $ 169 $ (121) $ 290

By Geographic Region (1) :

The Americas $ 87 $ (85) $ 172 $ (159) $ 13 100+% 18 %

Europe, the Middle East & Africa 645 825 (180) — — — (180) (22) (22)

EUKEM 6 10 (4) — (4) (40) (40)

Asia/Pacific 150 76 74 — 74 97 97

Mainland China 12 (16) 28 — 28 100+ 100+

255 (15) 270 $ (159) $ 111 100+% 77 %

1 unchanged sentence

Total $ 169 $ (121) $ 290

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.

FINANCIAL CONDITION

1 unchanged sentence

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.

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.

1 unchanged sentence

Based on past performance and current expectations, we believe that cash on hand, cash generated from operations, available credit lines and access to credit markets will be adequate to support seasonal working capital needs, currently planned business operations, information technology enhancements, capital expenditures, acquisitions, dividends, stock repurchases, restructuring initiatives, commitments and other contractual obligations on both a near-term and long-term basis.

THE ESTÉE LAUDER COMPANIES INC.

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.

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.

THE ESTÉE LAUDER COMPANIES INC.

Inflation impacted our overall operating results in the fiscal 2025 third quarter and we expect it to continue.

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.

1 unchanged sentence

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.

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, 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.

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.

THE ESTÉE LAUDER COMPANIES INC.

At March 31, 2025, our outstanding borrowings were as follows:

At September 30, 2025, our outstanding borrowings were as follows:

($ in millions) Long-term

24 unchanged sentences

(6) Consists of $300 million principal, unamortized debt discount of $3 million and debt issuance costs of $2 million.

(7) Consists of $650 million principal, unamortized debt discount of $2 million and debt issuance costs of $4 million.

(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.

(8) Consists of $200 million principal, unamortized debt discount of $1 million and debt issuance costs of $1 million.

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(13) Consists of $700 million principal and debt issuance costs of $2 million.

(14) Consists of $500 million principal and debt issuance costs of $1 million.

(14) Consists of $500 million principal.

(15) The Senior Notes contain certain customary covenants, including limitations on indebtedness secured by liens.

In April 2025, the Company issued commercial paper under its existing commercial paper program, and as of April 24, 2025, $242 million was outstanding.

The notes have maturities ranging from 10 to 17 days with weighted average interest rates between 4.62% to 4.68%.

The proceeds from the issuance are intended for general corporate purposes.

In December 2024, the Company repaid the outstanding principal balance of its $500 million, 2.000% Senior Notes ("2024 Senior Notes") at maturity with cash from operations.

Total debt as a percent of total capitalization was 63% and 59% at March 31, 2025 and June 30, 2024, respectively.

THE ESTÉE LAUDER COMPANIES INC.

Nine Months Ended

Total debt as a percent of total capitalization was 65% at September 30, 2025 and June 30, 2025.

Three Months Ended

September 30,

(In millions) 2025 2024

Net cash flows provided by operating activities

Net cash flows used for operating activities

$ (340) $ (670)

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$ (239) $ (226)

The change in net cash flows provided by operating activities was primarily driven by lower net earnings for the nine months ended March 31, 2025, excluding non-cash items, and an unfavorable change in operating assets and liabilities variances, including the impact from the significant reduction in inventory in the prior-year period, as compared to the reduction in inventory in the current-year period.

The change in net cash flows used for investing activities was primarily driven by a favorable year-over-year impact from capital expenditure payments made relating to the manufacturing facility in Japan, near Tokyo, in the prior-year period.

The change in net cash flows used for financing activities primarily reflected the favorable year-over-year impact of repayments of commercial paper in the prior-year period and a decrease in dividends paid to stockholders in the current-year period, partially offset by an unfavorable year-over-year impact of the repayment of the outstanding principal balance of our 2024 Senior Notes that matured during the fiscal 2025 second quarter compared to proceeds from the issuance of the 2034 Senior Notes during the fiscal 2024 third quarter.

For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock during the nine months ended March 31, 2025, see Notes to Consolidated Financial Statements, Note 11 – Equity and Redeemable Noncontrolling Interest .

THE ESTÉE LAUDER COMPANIES INC.

The change in net cash flows used for operating activities was primarily driven by higher net earnings in the fiscal 2026 first quarter and a favorable change in operating assets and liabilities variances.

The change in net cash flows used for investing activities was primarily driven by a favorable year-over-year impact from lower capital expenditures compared to the prior-year period.

The change in net cash flows used for financing activities primarily reflected the payment of deferred consideration in the fiscal 2026 first quarter associated with the fiscal 2023 acquisition of TOM FORD, partially offset by a decrease in dividends paid to stockholders in the current-year period.

For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock during the three months ended September 30, 2025, see Notes to Consolidated Financial Statements, Note 11 – Equity and Redeemable Noncontrolling Interest .

Pension and Post-retirement Plan Funding

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For a discussion of credit risk, see Notes to Consolidated Financial Statements, Note 4 – Derivative Financial Instruments (Credit Risk) .

THE ESTÉE LAUDER COMPANIES INC.

We address certain financial exposures through a controlled program of market risk management that includes the use of foreign currency forward contracts to reduce the effects of fluctuating foreign currency exchange rates and to mitigate the change in fair value of specific assets and liabilities on the balance sheet.

To perform a sensitivity analysis of our foreign currency forward contracts, we assess the change in fair values from the impact of hypothetical changes in foreign currency exchange rates.

A hypothetical 10% weakening of the U.S.

dollar against the foreign exchange rates for the currencies in our portfolio would have resulted in a net decrease in the fair value of our portfolio of approximately $275 million and $371 million as of March 31, 2025 and June 30, 2024, respectively.

dollar against the foreign exchange rates for the currencies in our portfolio would have resulted in a net decrease in the fair value of our portfolio of approximately $186 million and $223 million as of September 30, 2025 and June 30, 2025, respectively.

This potential change does not consider our underlying foreign currency exposures.

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A hypothetical 10% weakening of the U.S.

dollar against the foreign exchange rates for the currencies in our cross-currency swap contracts would have resulted in a net decrease in the fair value of our cross-currency swap contracts of approximately $85 million and $49 million as of March 31, 2025 and June 30, 2024, respectively.

In addition, we enter into interest rate derivatives to manage the effects of interest rate movements on our aggregate liability portfolio, including future debt issuances.

Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $44 million and $48 million as of March 31, 2025 and June 30, 2024, respectively.

In addition, we enter into interest rate derivatives to manage the effects of interest rate movements on our funded indebtedness, including future debt issuances.

Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $63 million and $43 million as of September 30, 2025 and June 30, 2025, respectively.

THE ESTÉE LAUDER COMPANIES INC.

Our sensitivity analysis represents an estimate of reasonably possible net losses that would be recognized on our portfolio of derivative financial instruments assuming hypothetical movements in future market rates and is not necessarily indicative of actual results, which may or may not occur.

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These estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates.

Our most critical accounting policies relate to goodwill and other indefinite-lived intangible assets - impairment assessment and income taxes.

Since June 30, 2024, there have been no significant changes to the assumptions and estimates related to our critical accounting policies, except as disclosed within the Impairment Analysis During the Nine Months Ended March 31, 2025 section in Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations on page 43.

Refer to the Critical Accounting Policies and Estimates section within Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Since June 30, 2025, there have been no significant changes to the assumptions and estimates related to our critical accounting policies.

RECENTLY ISSUED ACCOUNTING STANDARDS

For a discussion regarding the impact of accounting standards that were recently issued but not yet effective, on the Company’s consolidated financial statements, see Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies .

THE ESTÉE LAUDER COMPANIES INC.

For a discussion regarding the impact of accounting standards that were recently issued but not yet effective, on our consolidated financial statements, see Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies .

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

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(4) destocking and tighter working capital management by retailers;

THE ESTÉE LAUDER COMPANIES INC.

(5) the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs;

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(11) shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture our products or at our distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings;

THE ESTÉE LAUDER COMPANIES INC.

(12) real estate rates and availability, which may affect our ability to increase or maintain the number of retail locations at which we sell our products and the costs associated with our other facilities;

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The information required by this item is set forth in Item 2 of this Quarterly Report on Form 10-Q under the caption Liquidity and Capital Resources - Market Risk and is incorporated herein by reference.

THE ESTÉE LAUDER COMPANIES INC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis