What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2026-02-05 · 231 added, 191 removed, 566 unchanged (43% of the section changed)

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Additionally, we operate a direct-to-consumer business across freestanding stores, our brands' websites and third-party online platforms.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2026 2025 2026 2025

($ in millions)

$ % $ % $ % $ %

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Restructuring and other charges 224 6.0 97 2.7 520 4.6 375 3.4

Securities class action litigation settlement

84 2.3 — — 84 0.7 — —

Impairment of goodwill and other intangible assets

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Net earnings (loss) $ 89 2.4 % $ 159 4.5 % $ 298 2.6 % $ (587) (5.4) %

Not adjusted for differences caused by rounding

The following table is a comparative summary of operating results for the three and six months ended December 31, 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.

Percentages not adjusted for differences caused by rounding

The following table is a comparative summary of operating results for the three and nine months ended March 31, 2026 and 2025, for our product categories and geographic regions and reflects the basis of presentation described in Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies and Note 13 – Segment Data and Related Information , for our product categories that meet the definition of reportable segments, for all periods presented.

Royalty revenue from license arrangements, and products and services that do not fit within our definitions of skin care, makeup, fragrance and hair care have been included in the “other” category.

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Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

(In millions) 2026 2025 2026 2025

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$ 249 $ 306 $ 819 $ (395)

(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 second quarter (quarter-to-date period) 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 first quarter furnished amounts, and the adjusted amounts were reflected in the fiscal 2026 first quarter Form 10-Q.

No other periods were impacted and there is no impact on the consolidated financial results or results by product category.

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

Period-over-period changes in our net sales are generally attributable to the impacts from (i) pricing on our base portfolio, including changes in mix and those due to strategic pricing actions, (ii) volume, including changes driven by the impact of new product innovation, (iii) acquisitions and/or divestitures, and/or (iv) foreign currency translation.

The percentages disclosed for these impacts are calculated on an individual basis.

THE ESTÉE LAUDER COMPANIES INC.

The net sales impact from pricing consists of changes in list prices, due to strategic pricing actions, and mix shifts within and among product categories, geographic regions, brands and distribution channels.

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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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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, challenges persist in Western Europe, including subdued sentiment.

Within our Asia travel retail business, we continue to experience volatility, including the incremental transitory headwind from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses.

Additionally, within the United States we continue to experience headwinds from challenges in department stores, including the recent announcement of a retailer bankruptcy.

While we have seen improvements within our business, we are mindful of areas of volatility and uncertainty that may impact our results.

We continue to face challenges in key markets in the West, including in some markets in Western Europe and the United States.

Within our Asia travel retail business, we continue to experience a transitory headwind from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses.

We are also monitoring the conflict in the Middle East as it relates to our business in the domestic markets and travel retail locations in the region.

Net sales from locations impacted by the conflict in the Middle East accounted for approximately 2% of consolidated net sales in fiscal 2025.

We continue to monitor and assess the impact that these challenges may have on net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.

We are continuing to monitor and assess the potential effects of new and existing tariffs in the United States as well as in other markets in which we operate.

We are continuing to monitor and assess the potential effects of changing tariff conditions in the United States as well as in other markets in which we operate.

These tariffs have led to significant volatility and uncertainty in global markets and difficulty in forecasting demand.

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We continue to anticipate higher tariff rates to have an adverse effect on fiscal 2026 profitability and cash flows, and depending on actual rates and countries imposing tariffs such adverse impacts could be material.

On February 20, 2026, the U.S.

Supreme Court ruled that the U.S.

tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the U.S.

were unauthorized.

The ruling did not address potential refunds, however on March 4, 2026, the U.S.

Court of International Trade ordered U.S.

Customs and Border Protection to begin refunding all tariffs imposed under IEEPA.

As of March 31, 2026, despite the ruling by the U.S.

Court of International Trade, there continues to be uncertainty as to the ultimate recovery of any funds as a result of a potential appeal of this ruling, as well as uncertainty associated with the process, timing and amount of any potential refunds.

As such, we have determined that the totality of uncertainties prevents us from reasonably asserting the probability of refund recovery at this time.

THE ESTÉE LAUDER COMPANIES INC.

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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, as previously announced 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") during the fiscal 2025 third quarter, as discussed below.

Following the transition of leadership in the second and third quarters of fiscal 2025, we are executing against "Beauty Reimagined," our previously announced strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work, including through the expansion of the Profit Recovery and Growth Plan ("PRGP") during the fiscal 2025 third quarter, as discussed below.

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

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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.

THE ESTÉE LAUDER COMPANIES INC.

In connection with the Restructuring Program, as of December 31, 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.

In connection with the Restructuring Program, we now estimate a final net reduction in the range of approximately 9,000 to 10,000 positions globally, an increase from the previous range of 5,800 to 7,000.

Over 70% of the increase is attributable to the reduction in point-of-sale demonstration roles at select unproductive doors in our department store and freestanding store channels, as we continue to evolve our focus towards high-growth channels.

This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.

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.

We now expect that the Restructuring Program will result in restructuring and other charges totaling between $1,500 million and $1,700 million, before taxes, an increase from the previous range of $1,200 million and $1,600 million, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.

Once fully implemented, we now expect the Restructuring Program to yield annual target gross benefits of between $1,000 million and $1,200 million, before taxes, an increase from the previous range of $800 million and $1,000 million, before taxes, a portion of which is expected to be reinvested in consumer-facing activities.

The net benefits of the PRGP, which includes the Restructuring Program, are expected to enable a return to a double-digit operating margin over the next few years.

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.

Securities Class Action Litigation Settlement

On December 7, 2023 and January 22, 2024, purported securities class action complaints were filed in the United States District Court for the Southern District of New York against the Company and its then Chief Executive Officer and Chief Financial Officer.

The actions were consolidated on February 20, 2024.

On March 22, 2024, plaintiffs filed a consolidated amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged materially false and misleading statements between February 3, 2022 and October 31, 2023.

On March 31, 2025, the Court denied defendants’ motion to dismiss.

On April 2, 2026, the parties reached an agreement in principle to settle the securities class action litigation.

In light of these discussions, we recorded a loss contingency of $84 million, net of the estimated probable insurance recoveries, in the consolidated statements of earnings (loss) relating to a potential settlement of the securities class action.

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

($ in millions) 2026 2025 2026 2025

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GAAP measures.

Reported net sales increased across all product categories for the three and six months ended December 31, 2025, with the exception of hair care, which remained virtually flat, for the six months ended December 31, 2025.

The increase in net sales in both periods was primarily driven by the skin care and fragrance product categories.

By geographic region, reported net sales increased across all geographic regions for the three and six months ended December 31, 2025, with the exception of The Americas, for the six months ended December 31, 2025.

The increase in net sales for the three and six months ended December 31, 2025 was primarily driven by Mainland China and EUKEM, and the increase in net sales for the six months ended December 31, 2025 was also driven by Asia/Pacific.

Reported net sales were impacted by approximately $74 million and $99 million of favorable foreign currency translation for the three and six months ended December 31, 2025, respectively.

Reported net sales increased 6% for the three months ended December 31, 2025, driven by the increase from volume of 3%, the favorable impact from foreign currency translation of 2% and the increase from pricing of 1%, reflecting the favorable impact from strategic price actions, partially offset by changes in mix.

Reported net sales increased 5% for the six months ended December 31, 2025, driven by the increase from volume of 2%, the increase from pricing of 1%, reflecting the favorable impact from strategic price actions and changes in mix, and the favorable impact from foreign currency translation of 1%.

Reported net sales increased across all product categories for the three and nine months ended March 31, 2026.

The increase in net sales was primarily driven by fragrance, skin care and makeup for the three months ended March 31, 2026, and primarily driven by fragrance and skin care for the nine months ended March 31, 2026.

By geographic region, reported net sales increased across all geographic regions for the three and nine months ended March 31, 2026, with the exception of Asia/Pacific for the three months ended March 31, 2026, and The Americas for the nine months ended March 31, 2026, with each remaining virtually flat.

The increase in net sales for the three and nine months ended March 31, 2026 was primarily driven by Mainland China and EUKEM.

THE ESTÉE LAUDER COMPANIES INC.

Reported net sales were impacted by approximately $101 million and $200 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.

Reported net sales increased 5% for the three months ended March 31, 2026, driven by the favorable impact from foreign currency translation of 3%, the increase from volume of 1% and the increase from pricing of 1%, reflecting the favorable impact from strategic price actions, partially offset by changes in mix.

Reported net sales increased 5% for the nine months ended March 31, 2026, driven by the favorable impact from foreign currency translation of 2%, the increase from volume of 2% and the increase from pricing of 1%, reflecting the favorable impact from strategic price actions, partially offset by changes in mix.

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 six months ended December 31, 2025.

There were no returns associated with restructuring and other activities for the three months ended December 31, 2025 and the three and six months ended December 31, 2024.

There were no returns associated with restructuring and other activities for the three months ended March 31, 2026 and the three and nine months ended March 31, 2025.

Product Categories

Reported net sales for our product categories for the three and six months ended December 31, 2025 and 2024 were as follows:

Three Months Ended December 31, Six Months Ended December 31,

Reported net sales for our product categories for the three and nine months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31, Nine Months Ended March 31,

($ in millions) 2026 2025 $ Change

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GAAP measures.

Reported skin care net sales increased $133 million, or 7%, and $179 million, or 5%, for the three and six months ended December 31, 2025, respectively, reflecting higher net sales from La Mer, Estée Lauder and The Ordinary, combined, of approximately $153 million and $214 million, for the respective periods.

Net sales from La Mer increased in both periods, primarily reflecting higher net sales in Mainland China and in our Asia travel retail business.

The increase in net sales in Mainland China was primarily driven by growth attributable to key shopping moments and holiday, reflecting the benefits from key campaigns to drive sales.

The increase in net sales in our Asia travel retail business was primarily attributable to the low net sales base in the prior-year periods 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.

These increases in our Asia travel retail business were partially offset by impacts associated with the transitory headwind from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses.

Net sales from Estée Lauder increased in both periods, primarily driven by higher net sales in Mainland China and in our Asia travel retail business, reflecting the aforementioned growth as discussed above for La Mer.

Also contributing to the increase in net sales in Mainland China for Estée Lauder was the impact from new product launches which benefited the growth during key shopping moments and holiday.

The increase in net sales from The Ordinary in both periods primarily reflected targeted expanded consumer reach.

Skin care net sales were impacted by approximately $27 million and $34 million of favorable foreign currency translation for the three and six months ended December 31, 2025, respectively.

Reported skin care net sales increased $49 million, or 3% for the three months ended March 31, 2026, including the favorable impact of foreign currency translation of 3%.

Including the favorable impact of foreign currency translation, the increase in skin care net sales was primarily driven by higher net sales from La Mer, reflecting the benefit from new product launches and growth from The Treatment Lotion franchise.

Reported skin care net sales increased $228 million, or 4% for the nine months ended March 31, 2026, reflecting higher net sales from La Mer, Estée Lauder and The Ordinary, combined, of approximately $301 million.

Net sales from La Mer increased, reflecting growth in hero product franchises, as well as the benefit from new product launches.

The increase in net sales from Estée Lauder reflected growth attributable to new product launches and key campaigns, benefitting from key shopping moments and holiday.

Net sales from The Ordinary increased, primarily reflecting targeted expanded consumer reach.

Partially offsetting the increase in net sales for the nine months ended March 31, 2026 were lower net sales from Origins, reflecting our retail softness, including the impact of door and market closures.

THE ESTÉE LAUDER COMPANIES INC.

Reported skin care net sales increased 7% for the three months ended December 31, 2025, driven by the increase from volume of 4%, the increase from pricing of 2%, reflecting the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 1%.

Reported skin care net sales increased 5% for the six months ended December 31, 2025, driven by the increase from pricing of 2%, reflecting the favorable impact from strategic pricing actions and changes in mix, the increase from volume of 2% and the favorable impact from foreign currency translation of 1%.

Reported makeup net sales increased slightly for the three and six months ended December 31, 2025, increasing by $14 million, or 1%, and $6 million, or less than 1%, respectively, including the favorable impact of foreign currency translation of 2% in both periods.

The increase in makeup net sales reflected higher net sales from M·A·C and Clinique in both periods, combined, of approximately $50 million and $53 million, respectively.

The increase in net sales from M·A·C in both periods reflects higher net sales from shipments to support the launch of the brand in select U.S.

Sephora locations as well as online and in Sephora at Kohl's expected in the March 2026, as well as higher net sales in the lip subcategory, driven by the success of Lip Pencil and Lipglass Air.

Net sales from Clinique increased in both periods, reflecting higher net sales in the face and eye subcategories.

Partially offsetting the makeup net sales increase for the three months ended December 31, 2025 were lower net sales from Estée Lauder, primarily driven by the impact of estimated returns for the existing Double Wear Stay-in-Place Long-Wear Matte Foundation in advance of the February 2026 launch of its next-generation of Double Wear matte innovation.

Partially offsetting the makeup net sales increase for the six months ended December 31, 2025 were lower net sales from Estée Lauder, Bobbi Brown Cosmetics and Too Faced, combined, of approximately $46 million.

The decrease in net sales from Estée Lauder was primarily driven by the aforementioned impact of estimated returns as discussed above.

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, reflecting lower net sales in the face and eye subcategories.

Makeup net sales were impacted by approximately $26 million and $36 million of favorable foreign currency translation for the three and six months ended December 31, 2025, respectively.

Reported makeup net sales increased 1% for the three months ended December 31, 2025, driven by the increase from volume of 4% and the favorable impact from foreign currency translation of 2%.

Skin care net sales were impacted by approximately $46 million and $80 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.

Reported skin care net sales increased 3% for the three months ended March 31, 2026, driven by the increase from pricing of 4%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 3%, partially offset by the decrease from volume of 4%.

Reported skin care net sales increased 4% for the nine months ended March 31, 2026, driven by the increase from pricing of 3%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 2%.

The impact from volume was flat period-over-period.

Reported makeup net sales increased $37 million, or 4% for the three months ended March 31, 2026, including the favorable impact of foreign currency translation of 3%.

Including the favorable impact of foreign currency translation, the increase in makeup net sales was primarily driven by higher net sales from Estée Lauder, reflecting the launch of its next-generation of Double Wear Stay-in-Place Longwear Matte Foundation during the fiscal 2026 third quarter.

Reported makeup net sales increased $43 million, or 1% for the nine months ended March 31, 2026, including the favorable impact of foreign currency translation of 2%.

Including the favorable impact of foreign currency translation, the increase in makeup net sales was primarily driven by an increase in net sales from M·A·C, reflecting higher net sales in the lip subcategory, driven by the success of Lipglass Air, Lip Pencil and Powder Kiss Lipstick.

Also contributing to the increase in M·A·C net sales were higher net sales from shipments to support the launch of the brand in select U.S.

Sephora locations as well as online and in Sephora at Kohl's.

Makeup net sales were impacted by approximately $35 million and $71 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.

Reported makeup net sales increased 4% for the three months ended March 31, 2026, driven by the increase from volume of 5% and the favorable impact from foreign currency translation of 3%.

Partially offsetting these increases was the decrease from pricing of 5%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.

Reported makeup net sales increased slightly, less than 1%, for the six months ended December 31, 2025, driven by the increase from volume of 2% and the favorable impact from foreign currency translation of 2%.

Largely offsetting these increases was the decrease from pricing of 3%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.

Reported fragrance net sales increased $68 million, or 9%, and $159 million, or 12%, for the three and six months ended December 31, 2025, respectively, primarily driven by higher net sales from TOM FORD and Le Labo, combined, of approximately $55 million and $112 million, for the respective periods.

Net sales from TOM FORD increased in both periods, 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.

Le Labo net sales increased in both periods, led by the Classic Collection, reflecting growth from targeted expanded consumer reach and new product launches.

Fragrance net sales were impacted by approximately $20 million and $28 million of favorable foreign currency translation for the three and six months ended December 31, 2025, respectively.

Reported fragrance net sales increased 9% for the three months ended December 31, 2025, driven by the increase from pricing of 5%, reflecting changes in mix and the favorable impact from strategic pricing actions, the favorable impact from foreign currency translation of 3% and the increase from volume of 1%.

Reported makeup net sales increased 1% for the nine months ended March 31, 2026, driven by the increase from volume of 3% and the favorable impact from foreign currency translation of 2%.

Partially offsetting these increases was the decrease from pricing of 4%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.

Reported fragrance net sales increased $71 million, or 13%, and $230 million, or 12%, for the three and nine months ended March 31, 2026, respectively, reflecting higher net sales from Le Labo, TOM FORD and Kilian Paris, combined, of approximately $51 million and $185 million, for the respective periods.

Le Labo net sales increased in both periods, led by the Classic Collection, reflecting growth from targeted expanded consumer reach and the benefit from new product launches.

The net sales increase from TOM FORD in both periods reflected the benefit from new product launches which created halo benefits on existing products, with overall growth in both the Private Blend and Signature franchises.

Net sales from Kilian Paris increased in both periods, driven by the Angels' Share and Love, don't be shy franchises including growth attributable to new product launches and key campaigns, as well as growth from targeted expanded consumer reach.

Fragrance net sales were impacted by approximately $18 million and $46 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.

Reported fragrance net sales increased 13% for the three months ended March 31, 2026, driven by the increase from volume of 7%, the favorable impact from foreign currency translation of 3%, and the increase from pricing of 2%, reflecting the favorable impact from strategic pricing actions, partially offset by changes in mix.

THE ESTÉE LAUDER COMPANIES INC.

Reported fragrance net sales increased 12% for the six months ended December 31, 2025, driven by the increase from pricing of 5%, reflecting changes in mix and the favorable impact from strategic pricing actions, the increase from volume of 4% and the favorable impact from foreign currency translation of 2%.

Reported hair care net sales increased $9 million, or 6%, for the three months ended December 31, 2025, primarily driven by higher net sales from The Ordinary, reflecting the impacts from targeted expanded consumer reach, including the launch in Amazon's U.S.

Premium Beauty store during the fiscal 2025 third quarter, and growth from the Multi-Peptide Serum for Hair Density.

Reported hair care net sales decreased slightly, $1 million, or less than 1%, for the six months ended December 31, 2025, primarily reflecting lower net sales from Aveda and higher net sales from The Ordinary.

The decrease in net sales from Aveda reflected 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.

Reported fragrance net sales increased 12% for the nine months ended March 31, 2026, driven by the increase from volume of 5%, the increase from pricing of 4%, reflecting the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 2%.

Reported hair care net sales increased $2 million, or 2%, including the impact of foreign currency translation of 2%, for the three months ended March 31, 2026, and increased $1 million, or less than 1%, including the impact of foreign currency translation of 1%, for the nine months ended March 31, 2026.

Including the favorable impact of foreign currency translation, the increase in hair care net sales in both periods was primarily driven by higher net sales from The Ordinary, reflecting the growth of the Multi-Peptide Serum for Hair Density and impacts from targeted expanded consumer reach.

Partially offsetting the hair care net sales increase for the nine months ended March 31, 2026 were lower net sales from Aveda, reflecting the brand’s strategies to improve long-term performance, including (i) planned reductions in online promotional activity and (ii) the exit from underperforming doors, including freestanding stores.

These declines were partially offset by the impact from its launch in Amazon's U.S.

Premium Beauty store during the fiscal 2025 fourth quarter.

The increase in net sales from The Ordinary reflected the aforementioned growth as discussed above.

Hair care net sales were impacted by approximately $1 million of favorable foreign currency translation for each of the three and six months ended December 31, 2025.

Reported hair care net sales increased 6% for the three months ended December 31, 2025, driven by the increase from pricing of 8%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 1%.

Hair care net sales were impacted by approximately $2 million and $3 million of favorable foreign currency translation for the three and nine months ended March 31, 2026, respectively.

Reported hair care net sales increased 2% for the three months ended March 31, 2026, driven by the increase from pricing of 2%, reflecting the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 2%.

These increases were partially offset by the decrease from volume of 2%.

Reported hair care net sales decreased slightly, less than 1%, for the six months ended December 31, 2025, driven by the decrease from volume of 8%, largely offset by the increase from pricing of 7%, reflecting changes in mix and the favorable impact from strategic pricing actions.

Reported hair care net sales were virtually flat for the nine months ended March 31, 2026, driven by the increase from pricing of 6%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 1%.

These increases were offset by the decrease from volume of 6%.

Geographic Regions

Reported net sales by geographic region for the three and six months ended December 31, 2025 and 2024 were as follows:

Three Months Ended December 31, Six Months Ended December 31,

Reported net sales by geographic region for the three and nine months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31, Nine Months Ended March 31,

($ in millions) 2026 2025 $ Change

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Net sales $ 3,712 $ 3,550 $ 162 5 % 2 % $ 11,422 $ 10,915 $ 507 5 % 3 %

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

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

(2) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 57 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

Reported net sales increased for the three months ended March 31, 2026, primarily driven by higher net sales in Mainland China and our Priority Emerging Markets, combined, of approximately $121 million.

The increase in net sales in Mainland China reflected growth attributable to key shopping moments, including the benefits from key campaigns to drive sales and new product launches.

Net sales in our Priority Emerging Markets within EUKEM and The Americas increased collectively, reflecting growth in all product categories, supported by targeted expanded consumer reach, successful campaigns and new product launches.

THE ESTÉE LAUDER COMPANIES INC.

Reported net sales increased for the three months ended December 31, 2025, primarily driven by higher net sales in Mainland China, our Priority Emerging Markets and the United Kingdom, combined, of approximately $181 million.

The increase in net sales in Mainland China was primarily driven by growth attributable to key shopping moments and holiday, reflecting the benefits from key campaigns to drive sales and new product launches.

Net sales in our Priority Emerging Markets within The Americas and EUKEM increased collectively, reflecting growth in all product categories, supported by targeted expanded consumer reach, successful campaigns and new product launches.

The increase in net sales in the United Kingdom reflected the favorable impact from foreign currency translation and growth from The Ordinary, reflecting targeted expanded consumer reach.

Reported net sales increased for the six months ended December 31, 2025, reflecting higher net sales in Mainland China, primarily driven by the aforementioned growth as discussed above, and higher net sales in our travel retail business, combined, of approximately $244 million.

Reported net sales increased for the nine months ended March 31, 2026, primarily driven by higher net sales in Mainland China and our Priority Emerging Markets, reflecting the aforementioned growth as discussed above, and higher net sales in our travel retail business, combined, of approximately $443 million.

The increase in net sales in our travel retail business was driven by Asia travel retail, reflecting favorability attributable to the low prior-year period net sales base which reflected (i) the challenging retail environment, including low consumer sentiment and conversion from Chinese consumers, as well as (ii) our prior-year efforts to improve in-trade inventory levels.

Also contributing to the growth in Asia travel retail was the favorable impact of higher traffic in certain areas of the business, including during key shopping moments, supported by key campaigns to drive growth.

These increases were partially offset by impacts associated with the transitory headwind from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses.

Also contributing to the increase in net sales in our travel retail business were higher net sales from our Europe, the Middle East & Africa travel retail business, primarily driven by growth in fragrance.

Reported net sales in The Americas increased 1% for the three months ended December 31, 2025, driven by the increase from volume of 6%, partially offset by the decrease from pricing of 6%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.

Reported net sales in EUKEM increased 9% for the three months ended December 31, 2025, driven by the increase from volume of 7% and the favorable impact of foreign currency translation of 7%.

Reported net sales in The Americas increased 1% for the three months ended March 31, 2026, driven by the increase from volume of 4% and the favorable impact from foreign currency translation of 1%.

These increases were partially offset by the decrease from pricing of 3%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.

Reported net sales in Asia/Pacific increased 1% for the three months ended December 31, 2025, driven by the increase from pricing of 9%, reflecting changes in mix and the favorable impact from strategic pricing actions, partially offset by the decrease from volume of 8% and the unfavorable impact from foreign currency translation of 1%.

Reported net sales in Mainland China increased 13% for the three months ended December 31, 2025, driven by the increase from pricing of 9%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the increase from volume of 4%.

Reported net sales in The Americas decreased 1% for the six months ended December 31, 2025, driven by the decrease from pricing of 2%, reflecting changes in mix, partially offset by the favorable impact of strategic pricing actions.

This decrease was partially offset by the increase from volume of 2%.

Reported net sales in EUKEM increased 7% for the six months ended December 31, 2025, driven by the favorable impact of foreign currency translation of 5% and the increase from volume of 2%.

Reported net sales in EUKEM increased 9% for the three months ended March 31, 2026, driven by the increase from volume of 7% and the favorable impact of foreign currency translation of 7%.

These increases were partially offset by the decrease from pricing of 5%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.

Reported net sales in Asia/Pacific increased 5% for the six months ended December 31, 2025, driven by an increase from pricing of 7%, reflecting changes in mix and the favorable impact from strategic pricing actions, partially offset by the decrease from volume of 2% and the unfavorable impact of foreign currency translation of 1%.

Reported net sales in Mainland China increased 11% for the six months ended December 31, 2025, driven by the increase from volume of 7% and the increase from pricing of 4%, reflecting changes in mix and the favorable impact from strategic pricing actions.

Reported net sales in Asia/Pacific were virtually flat for the three months ended March 31, 2026, driven by the decrease from volume of 4%, offset by the increase from pricing of 3%, reflecting the favorable impact from strategic pricing actions and changes in mix.

Reported net sales in Mainland China increased 11% for the three months ended March 31, 2026, driven by an increase from pricing of 10%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 5%.

These increases were partially offset by the decrease from volume of 4%.

Reported net sales in The Americas were virtually flat for the nine months ended March 31, 2026, driven by the decrease from pricing of 2%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.

This decrease was offset by the increase from volume of 2%.

Reported net sales in EUKEM increased 7% for the nine months ended March 31, 2026, driven by the favorable impact of foreign currency translation of 6% and the increase from volume of 4%.

These increases were partially offset by the decrease from pricing of 2%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions.

Reported net sales in Asia/Pacific increased 3% for the nine months ended March 31, 2026, driven by an increase from pricing of 6%, reflecting changes in mix and the favorable impact from strategic pricing actions, partially offset by the decrease from volume of 3%.

Reported net sales in Mainland China increased 11% for the nine months ended March 31, 2026, driven by the increase from pricing of 6%, reflecting changes in mix and the favorable impact from strategic pricing actions, the increase from volume of 3% and the favorable impact from foreign currency translation of 2%.

THE ESTÉE LAUDER COMPANIES INC.

Gross margin increased to 76.5% and 75.1% for the three and six months ended December 31, 2025, as compared with 76.1% and 74.4% in the prior-year periods.

Gross margin increased to 76.4% and 75.5% for the three and nine months ended March 31, 2026, as compared with 75.0% and 74.6% in the prior-year periods.

Favorable (Unfavorable) Basis Points

December 31, 2025

Three Months Ended Six Months Ended

March 31, 2026

Three Months Ended Nine Months Ended

Mix of business 75 25

7 unchanged sentences

Non-GAAP Gross Margin Basis Point Variance

The increase in gross margin for the three and six months ended December 31, 2025 reflected net benefits from the PRGP, largely offset by unfavorable impacts in manufacturing costs and other, reflecting the impact of tariffs and inflation on our costs, as well as changes in our mix of business.

The PRGP benefits were driven by the favorable impact of cost efficiencies within our global supply chain network and reductions in excess inventory.

The increase in gross margin for the three and nine months ended March 31, 2026 reflected net benefits from the PRGP, including reductions in excess inventory, accretive new product launches and lower promotional activity in both periods, as well as the favorable impact of cost efficiencies within our global supply chain network, primarily in the nine months ended March 31, 2026.

Additionally, in both periods, favorability in manufacturing costs and other benefited from the year-over-year favorable impact of the recognition of manufacturing variances associated with reduced manufacturing volumes on our standard cost within cost of sales in the fiscal 2025 third quarter, with offsets to overall favorability driven by the impact of tariffs and inflation on our costs.

THE ESTÉE LAUDER COMPANIES INC.

OPERATING EXPENSES

Operating expenses as a percentage of net sales was 67.0% and 67.7% for the three and six months ended December 31, 2025, as compared with 90.6% and 83.9% in the prior-year periods.

Operating expenses as a percentage of net sales were 69.7% and 68.3% for the three and nine months ended March 31, 2026, as compared with 66.3% and 78.2% in the prior-year periods.

Favorable (Unfavorable) Basis Points

December 31, 2025

Three Months Ended Six Months Ended

March 31, 2026

Three Months Ended Nine Months Ended

General and administrative expenses 160 120

6 unchanged sentences

Charges associated with restructuring and other activities (330) (120)

Securities class action litigation settlement (230) (70)

Impairment of goodwill and other intangible assets

3 unchanged sentences

Impact of restructuring and other activities

Securities class action litigation settlement 230 70

Impairment of goodwill and other intangible assets

(2,150) (1,170)

Talcum litigation settlement agreements — (150)

Non-GAAP Operating Expense Margin Basis Point Variance 220 230

The favorability in our operating expense margin for the three and six months ended December 31, 2025 reflected the impact of the increase in net sales, as well as lower expenses within non-consumer-facing areas of the business collectively, primarily within marketing, product development and general and administrative expenses, reflecting lower employee-related costs realized through initiatives as part of the PRGP.

The decrease in general and administrative expenses also includes the favorable year-over-year impact of a change in policy related to local government subsidies in China, which negatively impacted the fiscal 2025 second quarter, partially offset by higher employee incentive costs.

Partially offsetting these expense reductions were increased investments in consumer-facing areas of the business to drive sales, including advertising, store operating costs, selling and promotion expenses.

The increase in our operating expense margin for the three months ended March 31, 2026 reflected the year-over-year unfavorable impact of restructuring and other activities and the securities class action litigation settlement.

Partially offsetting these increases was favorability reflecting the impact of the increase in net sales, as well as the favorable year-over-year impact within general and administrative expenses associated with the timing of recognition of local government subsidies in China in the fiscal 2026 third quarter.

Additionally, we increased investments in consumer-facing areas of the business to drive sales, including selling, advertising, store operating costs and promotion expenses, offsetting a portion of the favorability from the increase in net sales.

The favorability in our operating expense margin for the nine months ended March 31, 2026 reflected the impact of the increase in net sales, as well as the favorable year-over-year impact within general and administrative expenses associated with the timing of recognition of local government subsidies in China in the fiscal 2026 third quarter, with additional favorability associated with the impact of the change in policy related to local government subsidies in China that impacted the fiscal 2025 second quarter.

Also contributing to the overall favorability were lower expenses within non-consumer facing areas of the business collectively, including lower employee-related costs realized through initiatives as part of the PRGP, with these benefits partially offset by higher employee incentive costs.

Partially offsetting the overall favorability in our operating expense margin, including the benefit from the increase in net sales, were increased investments in consumer-facing areas of the business to drive sales, including advertising, selling, store operating costs and promotion expenses.

THE ESTÉE LAUDER COMPANIES INC.

1 unchanged sentence

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

($ in millions) 2026 2025 2026 2025

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 impairment of goodwill and other intangible assets and talcum litigation settlement agreements

% Change in operating income (loss) from the prior-year period adjusting for the impact of charges associated with restructuring and other activities, the securities class action litigation settlement, impairment of goodwill and other intangible assets and talcum litigation settlement agreements

(1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 57 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

The increase in reported operating margin for the three and six months ended December 31, 2025 was driven by the favorable operating expense margin, which includes the year-over-year impact of the goodwill and other intangible asset impairment charges in the fiscal 2025 second quarter of $861 million, as well as the increase in net sales and increase in gross margin, as discussed above.

The decrease in reported operating margin for the three months ended March 31, 2026 reflected the unfavorable operating expense margin, which includes the unfavorable impacts from restructuring and other activities and the securities class action litigation settlement.

Partially offsetting the increased operating expense margin was the increase in net sales and increase in gross margin, as discussed above.

The increase in reported operating margin for the nine months ended March 31, 2026 was driven by the favorable operating expense margin, which includes the favorable year-over-year impact of the goodwill and other intangible asset impairment charges in the fiscal 2025 second quarter of $861 million, as well as the increase in net sales and increase in gross margin, as discussed above.

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 December 31, 2025 and 2024 of $207 million and $181 million, respectively, and for the six months ended December 31, 2025 and 2024 of $293 million and $287 million, respectively.

Accordingly, the following discussions of Operating income (loss) by Product Categories and Geographic Regions exclude the impact of charges associated with restructuring and other activities for the three months ended March 31, 2026 and 2025 of $224 million and $97 million, respectively, and for the nine months ended March 31, 2026 and 2025 of $517 million and $384 million, respectively.

THE ESTÉE LAUDER COMPANIES INC.

Product Categories

Reported Operating income (loss) for our product categories for the three and six months ended December 31, 2025 and 2024 were as follows:

Three Months Ended December 31,

Reported Operating income (loss) for our product categories for the three and nine months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31,

($ in millions) 2026 2025 $ Change % Change

2 unchanged sentences

Non-GAAP Financial Measure (1)

Skin Care $ 454 $ 306 $ 148 48 % 48 %

Makeup 18 (211) 229 100+ (62) Adjusted for the impact of impairment of goodwill and other intangible assets

Fragrance 105 (446) 551 100+ 2 Adjusted for the impact of other intangible asset impairments

Hair Care 18 (3) 21 100+ 100+

Other 13 (45) 58 100+ 44 Adjusted for the impact of other intangible asset impairments

Skin Care $ 444 $ 361 $ 83 23 % 30 % Adjusted for the impact of the securities class action litigation settlement

Makeup (3) 14 (17) (100+) 100+ Adjusted for the impact of the securities class action litigation settlement

Fragrance 21 32 (11) (34) 6 Adjusted for the impact of the securities class action litigation settlement

Hair Care (5) (13) 8 62 100+ Adjusted for the impact of the securities class action litigation settlement

Other 16 9 7 78 78

473 403 70 17 38 %

1 unchanged sentence

(224) (97) (127) (100+)

Operating income (loss)

Operating income

$ 249 $ 306 $ (57) (19) %

1 unchanged sentence

GAAP measures.

Six Months Ended December 31,

Nine Months Ended March 31,

($ in millions) 2026 2025 $ Change % Change

2 unchanged sentences

Non-GAAP Financial Measure (1)

Skin Care $ 641 $ 423 $ 218 52 % 52 %

Makeup 3 (396) 399 100+ (86) Adjusted for the impact of impairment of goodwill and other intangible assets and talcum litigation settlement agreements

Fragrance 191 (386) 577 100+ 17 Adjusted for the impact of other intangible asset impairments

Hair Care 6 (21) 27 100+ 100+

Skin Care $ 1,085 $ 784 $ 301 38 % 42 % Adjusted for the impact of the securities class action litigation settlement

Makeup — (382) 382 100 — Adjusted for the impact of the securities class action litigation settlement, impairment of goodwill and other intangible assets and talcum litigation settlement agreements

Fragrance 212 (354) 566 100+ 15 Adjusted for the impact of the securities class action litigation settlement and other intangible asset impairments

Hair Care 1 (34) 35 100+ 100+ Adjusted for the impact of the securities class action litigation settlement

Other 38 (25) 63 100+ 31 Adjusted for the impact of other intangible asset impairments

6 unchanged sentences

GAAP measures.

Reported skin care operating income increased $148 million, or 48%, and $218 million, or 52%, for the three and six months ended December 31, 2025, respectively, 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, partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

THE ESTÉE LAUDER COMPANIES INC.

Reported makeup operating results increased $229 million, or over 100%, and $399 million, or over 100%, for the three and six months ended December 31, 2025, respectively, primarily reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior-year periods relating to TOM FORD and Too Faced, combined, of $245 million and a goodwill impairment charge relating to Too Faced of $13 million.

Also contributing to the increase in makeup operating results for the six months ended December 31, 2025 was 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.

Reported fragrance operating results increased $551 million, or over 100%, and $577 million, or over 100%, for the three and six months ended December 31, 2025, respectively, reflecting the favorable year-over-year impact of the other intangible asset impairment charge in the prior-year periods of $549 million relating to TOM FORD and an increase in net sales, partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

Reported hair care operating results increased $21 million, or over 100%, for the three months ended December 31, 2025, primarily reflecting an increase in net sales and lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP.

Reported hair care operating income increased $27 million, or over 100%, for the six months ended December 31, 2025, primarily reflecting 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.

Reported skin care operating income increased $83 million, or 23%, and $301 million, or 38%, for the three and nine months ended March 31, 2026, respectively, reflecting an increase in net sales.

Also contributing to the increase for the nine months ended March 31, 2026 was lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, partially offset by higher employee incentive costs.

In both periods, the increase in operating income was partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

Reported makeup operating results decreased $17 million, or over 100%, for the three months ended March 31, 2026, reflecting an increase in investments in consumer-facing areas of the business, including to support new product launches and key campaigns, as well as the unfavorable allocated impact of the securities class action litigation settlement.

Largely offsetting the decrease in operating results was an increase in net sales and lower cost of sales.

Reported makeup operating results increased $382 million, or 100%, for the nine months ended March 31, 2026, reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior-year period relating to TOM FORD and Too Faced, combined, of $245 million and a goodwill impairment charge relating to Too Faced of $13 million, as well as the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million.

Partially offsetting the increase in operating results was an increase in investments in consumer-facing areas of the business, including to support new product launches and key campaigns.

Reported fragrance operating income decreased $11 million, or 34%, for the three months ended March 31, 2026, reflecting an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach, an increase in cost of sales, as well as the unfavorable allocated impact of the securities class action litigation settlement, partially offset by an increase in net sales.

Reported fragrance operating results increased $566 million, or over 100%, for the nine months ended March 31, 2026, reflecting the favorable year-over-year impact of the other intangible asset impairment charge in the prior-year period of $549 million relating to TOM FORD and an increase in net sales, partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

Reported hair care operating results increased $8 million, or 62%, for the three months ended March 31, 2026, reflecting lower operating expenses, as well as an increase in net sales.

These increases to operating results were partially offset by the unfavorable allocated impact of the securities class action litigation settlement.

Reported hair care operating results increased $35 million, or over 100%, for the nine months ended March 31, 2026, reflecting lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, lower consumer-facing investments and lower cost of sales.

These increases to operating results were partially offset by the unfavorable allocated impact of the securities class action litigation settlement.

THE ESTÉE LAUDER COMPANIES INC.

Geographic Regions

Three Months Ended December 31,

Three Months Ended March 31,

($ in millions)

2025 2024 (1)

2026 2025 $ Change

(As Reported)

1 unchanged sentence

Non-GAAP Financial Measure (2)

The Americas $ 104 $ (771) $ 875 100+% 15 % Adjusted for the impact of impairment of goodwill and other intangible assets

The Americas $ 21 $ 67 $ (46) (69) % 57 % Adjusted for the impact of the securities class action litigation settlement

32 28 4 14 14

6 unchanged sentences

(224) (97) (127) (100+)

Operating income (loss)

Operating income

$ 249 $ 306 $ (57) (19) %

(1) Operating results by geographic region for the fiscal 2025 second quarter (quarter-to-date period) 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 first quarter furnished amounts, and the adjusted amounts were reflected in the fiscal 2026 first quarter Form 10-Q.

No other periods were impacted and there is no impact on the consolidated financial results or results by product category.

(1) See “Reconciliations of Non-GAAP Financial Measures” beginning on page 57 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.

GAAP measures.

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

THE ESTÉE LAUDER COMPANIES INC.

Six Months Ended December 31,

(2) The operating results from our travel retail business are included in the Asia/Pacific region.

Nine Months Ended March 31,

($ in millions)

3 unchanged sentences

Non-GAAP Financial Measure (1)

The Americas $ 191 $ (856) $ 1,047 100+% 16 % Adjusted for the impact of impairment of goodwill and other intangible assets and talcum litigation settlement agreements

The Americas $ 212 $ (789) $ 1,001 100+% 28 % Adjusted for the impact of the securities class action litigation settlement, impairment of goodwill and other intangible assets and talcum litigation settlement agreements

194 183 11 6 6

10 unchanged sentences

GAAP measures.

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

Reported operating results in The Americas increased $875 million, or over 100%, and $1,047 million, or over 100%, for the three and six months ended December 31, 2025, respectively, reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior-year periods relating to TOM FORD and Too Faced, combined, of $848 million and a goodwill impairment charge relating to Too Faced of $13 million.

Also contributing to the increase in The Americas operating results for the six months ended December 31, 2025 was 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.

Reported operating income in EUKEM increased $11 million, or 8%, and $7 million, or 5%, for the three and six months ended December 31, 2025, respectively, including the favorable impact of foreign currency translation of 11% and 12% for the respective periods.

The increase in operating income reflected higher net sales, offset in part by higher cost of sales and an increase in investments in consumer-facing areas of the business, including to support targeted expanded consumer reach, key campaigns and new product launches.

Reported operating income in Asia/Pacific increased $48 million, or 32%, and $122 million, or 54%, for the three and six months ended December 31, 2025, respectively.

For the three months ended December 31, 2025, reported operating income increased, reflecting lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP.

For the six months ended December 31, 2025, reported operating income increased, 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.

Reported operating income in Mainland China increased $73 million, or 97%, and $101 million, or over 100%, for the three and six months ended December 31, 2025, respectively, reflecting higher net sales, as well as the favorable year-over-year impact of a change in policy related to local government subsidies in China, which negatively impacted the fiscal 2025 second quarter, partially offset by an increase in investments in consumer-facing expenses, including to support key campaigns, new product launches and targeted expanded consumer reach.

(2) The operating results from our travel retail business are included in the Asia/Pacific region.

Reported operating income in The Americas decreased $46 million, or 69%, for the three months ended March 31, 2026, reflecting the unfavorable impact of the securities class action litigation settlement charge in the fiscal 2026 third quarter.

Partially offsetting the lower operating income were lower non-consumer-facing expenses, due in part to the reduction in employee-related costs realized through initiatives as part of the PRGP, despite higher employee incentive costs, and higher net sales.

Reported operating results in The Americas increased $1,001 million, or over 100%, for the nine months ended March 31, 2026, reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior-year periods relating to TOM FORD and Too Faced, combined, of $848 million and a goodwill impairment charge relating to Too Faced of $13 million, as well as the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million.

Partially offsetting the increase in operating results is the unfavorable impact of the securities class action litigation settlement charge in the fiscal 2026 third quarter.

THE ESTÉE LAUDER COMPANIES INC.

Reported operating income in EUKEM increased $4 million, or 14%, and $11 million, or 6%, for the three and nine months ended March 31, 2026, respectively.

Included in the nine months ended March 31, 2026 is the favorable impact of foreign currency translation of 6%.

The increase in operating income for both periods reflected higher net sales, partially offset by an increase in non-consumer-facing expenses, due in part to higher employee incentive costs, an increase in investments in consumer-facing areas of the business, including to support targeted expanded consumer reach, key campaigns and new product launches, and higher cost of sales.

Reported operating income in Asia/Pacific increased $29 million, or 13%, and $151 million, or 33%, for the three and nine months ended March 31, 2026, respectively.

For the three months ended March 31, 2026, reported operating income increased, reflecting lower cost of sales and lower non-consumer-facing expenses, due in part to the reduction in employee-related costs realized through initiatives as part of the PRGP, despite higher employee incentive costs.

These increases in operating income were partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns.

For the nine months ended March 31, 2026, reported operating income increased, reflecting higher net sales and lower non-consumer-facing expenses, due in part to the reduction in employee-related costs realized through initiatives as part of the PRGP, partially offset by higher employee incentive costs.

Reported operating income in Mainland China increased $83 million, or over 100%, and $184 million, or over 100%, for the three and nine months ended March 31, 2026, respectively, reflecting higher net sales, as well as the favorable year-over-year timing of recognition of local government subsidies in the fiscal 2026 third quarter, with additional favorability for the nine months ended March 31, 2026 associated with the impact of the change in policy related to local government subsidies that impacted the fiscal 2025 second quarter.

Partially offsetting the increase in operating income in both periods was an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

INTEREST AND INVESTMENT INCOME

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

(In millions) 2026 2025 2026 2025

1 unchanged sentence

Interest income and investment income, net $ 15 $ 27 $ 66 $ 85

Interest expense decreased for the three and six months ended December 31, 2025, primarily reflecting a lower average debt balance compared to the prior-year period.

Interest income and investment income, net decreased for the three and six months ended December 31, 2025, reflecting lower average interest rates compared to the prior-year period, partially offset by the favorable year-over-year impact of cost method investment activity.

Also contributing to the decrease in Interest income and investment income, net for the six months ended December 31, 2025 was a lower average cash balance compared to the prior-year period.

Interest expense decreased for the three and nine months ended March 31, 2026, primarily reflecting a lower average debt balance compared to the prior-year periods, with commercial paper outstanding during the fiscal 2025 third quarter.

Interest income and investment income, net decreased for the three months ended March 31, 2026, primarily driven by the impact of the impairment of a cost method minority investment.

Interest income and investment income, net decreased for the nine months ended March 31, 2026, primarily driven by a lower average cash balance compared to the prior-year period, as well as the impact of the impairment of a cost method minority investment, partially offset by the favorable year-over-year impact of cost method minority investment activity.

PROVISION FOR INCOME TAXES

4 unchanged sentences

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.

THE ESTÉE LAUDER COMPANIES INC.

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2026 2025 2026 2025

1 unchanged sentence

Basis-point change from the prior-year period 1,630 5,170

For the three months ended December 31, 2025, the increase in effective tax rate was primarily attributable to the loss before income taxes and the impact of the discrete treatment of the impairment of goodwill and other intangible assets, both during the fiscal 2025 second quarter.

Further contributing to the increase in the effective tax rate was the estimated unfavorable impact of the One Big Beautiful Bill Act, and a higher effective tax rate on the Company's foreign operations due to an unfavorable impact associated with the establishment of valuation allowances against certain net deferred tax assets, partially offset by the year-over-year favorable impact associated with previously issued stock-based compensation.

For the six months ended December 31, 2025, the increase in effective tax rate was primarily attributable to the loss before income taxes, the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, and the charge associated with the talcum litigation settlement agreements, each during the six months ended December 31, 2024.

Further contributing to the increase in the effective tax rate was the estimated unfavorable impact of the One Big Beautiful Bill Act, a higher effective tax rate on the Company’s foreign operations due to an unfavorable impact associated with the establishment of valuation allowances against certain net deferred tax assets, partially offset by the year-over-year favorable impact associated with previously issued stock-based compensation.

THE ESTÉE LAUDER COMPANIES INC.

For the three months ended March 31, 2026, the increase in effective tax rate was primarily attributable to the estimated unfavorable impact of the One Big Beautiful Bill Act, resulting from an increase in tax deductible interest expense which reduced U.S.

taxable income and increased the excess foreign tax credits generated which require a valuation allowance.

For the nine months ended March 31, 2026, the increase in effective tax rate was primarily attributable to the loss before income taxes, the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, and the charge associated with the talcum litigation settlement agreements, each during the nine months ended March 31, 2025.

Further contributing to the increase in the effective tax rate was the estimated unfavorable impact of the One Big Beautiful Bill Act, resulting from an increase in tax deductible interest expense which reduced U.S.

taxable income and increased the excess foreign tax credits generated which require a valuation allowance, a higher effective tax rate on our foreign operations due to an unfavorable impact associated with the establishment of valuation allowances against certain net deferred tax assets, partially offset by the year-over-year favorable impact associated with previously issued stock-based compensation.

NET EARNINGS (LOSS)

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

($ in millions, except per share data) 2026 2025 2026 2025

7 unchanged sentences

Non-GAAP Financial Measure (1) :

% 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, impairment of goodwill and other intangible assets and talcum litigation settlement agreements

% 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, the securities class action litigation settlement, impairment of goodwill and other intangible assets 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.

GAAP measures.

THE ESTÉE LAUDER COMPANIES INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

6 unchanged sentences

The following tables present Net sales, Operating income (loss) and Diluted net earnings (loss) per common share adjusted to exclude the impact of charges associated with restructuring and other activities;

the securities class action litigation settlement;

impairment of goodwill and other intangible assets;

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and the effects of foreign currency translation.

THE ESTÉE LAUDER COMPANIES INC.

The following tables provide 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 December 31, Variance % Change

($ in millions, except per share data) Three Months Ended March 31, Variance % Change

constant currency

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Net sales, as adjusted $ 3,712 $ 3,550 $ 162 5 % 2 %

Operating income (loss), as reported

Operating income, as reported

$ 249 $ 306 $ (57) (19) % (22) %

Charges associated with restructuring and other activities 224 97 127

Impairment of goodwill and other intangible assets

Securities class action litigation settlement

Operating income, as adjusted $ 557 $ 403 $ 154 38 % 35 %

Diluted net earnings (loss) per common share, as reported

Diluted net earnings per common share, as reported

$ .24 $ .44 $ (.20) (45) % (48) %

Charges associated with restructuring and other activities .49 .21 .28

Impairment of goodwill and other intangible assets

— 1.87 (1.87)

Securities class action litigation settlement

Diluted net earnings per common share, as adjusted $ .91 $ .65 $ .26 40 % 37 %

THE ESTÉE LAUDER COMPANIES INC.

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

December 31, Variance % Change

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

March 31, Variance % Change

constant currency

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Charges associated with restructuring and other activities 517 384 133

Securities class action litigation settlement

Impairment of goodwill and other intangible assets

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Charges associated with restructuring and other activities 1.12 .83 .29

Securities class action litigation settlement

Impairment of goodwill and other intangible assets

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in constant currency

Three Months Ended December 31,

Three Months Ended March 31,

($ in millions) 2026 2025 Variance

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in constant currency

Six Months Ended

Nine Months Ended

($ in millions) 2026 2025 Variance

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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 results excluding the impact of impairment of goodwill and other intangible assets, as well as the talcum litigation settlement agreements for the six months ended December 31, 2025:

The following tables reconcile the change in operating results by product category and geographic region, as reported, to the change in operating results excluding the impact of the securities class action litigation settlement for the three and nine months ended March 31, 2026, as well as the impairment of goodwill and other intangible assets and talcum litigation settlement agreements for the nine months ended March 31, 2026:

As Reported Add:

Changes in Impairment of goodwill and other intangible assets

Securities class action

litigation settlement

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

Three Months Ended December 31,

Three Months Ended March 31,

($ in millions) 2026 2025 Variance

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As Reported Add:

Impairment of goodwill and other intangible assets

and other intangible assets

Securities class action litigation settlement

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

Six Months Ended December 31,

Nine Months Ended March 31,

($ in millions) 2026 2025 Variance

By Product Category:

Skin Care $ 1,085 $ 784 $ 301 $ — $ 27 $ — $ 328 38 % 42 %

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1,336 (11) 1,347 $ (861) $ 84 $ (159) $ 411 100+% 41 %

Charges associated with restructuring and other activities (293) (287) (6)

Charges associated

with restructuring

and other activities

(517) (384) (133)

Total $ 819 $ (395) $ 1,214

By Geographic Region:

By Geographic

The Americas $ 212 $ (789) $ 1,001 $ (861) $ 84 $ (159) $ 65 100+% 28 %

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1,336 (11) 1,347 $ (861) $ 84 $ (159) $ 411 100+% 41 %

Charges associated with restructuring and other activities (293) (287) (6)

Charges associated

with restructuring

and other activities

(517) (384) (133)

Total $ 819 $ (395) $ 1,214

THE ESTÉE LAUDER COMPANIES INC.

FINANCIAL CONDITION

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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 December 31, 2025, we had cash and cash equivalents of $3,082 million compared with $2,921 million at June 30, 2025.

At March 31, 2026, we had cash and cash equivalents of $3,126 million compared with $2,921 million at June 30, 2025.

Our cash and cash equivalents are maintained at a number of financial institutions.

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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.

Tariffs negatively impacted our operating results in the fiscal 2026 second quarter and we expect these impacts 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 impacts.

Tariffs negatively impacted our operating results in the fiscal 2026 third quarter and we are continuing to monitor and assess the potential effects of changing tariff conditions globally.

Credit Ratings

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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 January 29, 2026, our long-term debt is rated A- with a negative outlook by Standard & Poor’s and A3 with a negative outlook by Moody’s.

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

($ in millions) Long-term

Debt Total Debt

As of April 24, 2026, our long-term debt is rated A- with a negative outlook by Standard & Poor’s and A3 with a negative outlook by Moody’s.

THE ESTÉE LAUDER COMPANIES INC.

At March 31, 2026, our outstanding borrowings were as follows:

($ in millions) Long-term Debt

5.150% Senior Notes, due May 15, 2053 ("2053 Senior Notes") (1), (15)

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

Total debt as a percent of total capitalization was 64.7% and 65.4% at March 31, 2026 and June 30, 2025, respectively.

THE ESTÉE LAUDER COMPANIES INC.

Total debt as a percent of total capitalization was 64.5% and 65.4% at December 31, 2025 and June 30, 2025, respectively.

Six Months Ended

Nine Months Ended

(In millions) 2026 2025

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$ (682) $ (1,016)

The change in net cash flows provided by operating activities was primarily driven by higher net earnings, excluding non-cash items.

The change in net cash flows provided by operating activities was primarily driven by higher net earnings, excluding non-cash items, and the 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 a decrease in repayments of long-term debt due to the repayment of the outstanding principal balance of our $500 million, 2.000% Senior Notes that matured during the fiscal 2025 second quarter, and a decrease in dividends paid to stockholders in the current-year period.

These decreases were partially offset by the payment of deferred consideration in the fiscal 2026 first quarter associated with the fiscal 2023 acquisition of TOM FORD.

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

These decreases were partially offset by payments of deferred consideration in the fiscal 2026 first and third quarters associated with the fiscal 2023 acquisition of TOM FORD.

For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock for the nine months ended March 31, 2026, see Notes to Consolidated Financial Statements, Note 11 – Equity and Redeemable Noncontrolling Interest .

Pension and Post-retirement Plan Funding

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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 $137 million and $223 million as of December 31, 2025 and June 30, 2025, 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 $205 million and $223 million as of March 31, 2026 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 as of December 31, 2025 and June 30, 2025.

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 $60 million and $43 million as of December 31, 2025 and June 30, 2025, respectively.

Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $77 million and $43 million as of March 31, 2026 and June 30, 2025, respectively.

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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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