Estée Lauder Q1 sales rise 7% as fragrance fuels turnaround

The Estée Lauder Companies (ELC) has gained momentum in fiscal Q1 2027, with net sales rising 7% to US$3.72 billion. Fragrance was the standout category with a 20% increase in organic sales and a 93% jump in operating income. 

In the quarter that ended September 30, the company’s numbers showed improvement across organic sales, profitability, and adjusted operating income. The beauty giant recorded net sales growth across almost all product categories and every geographic region. 

The financial report indicates that ELC’s turnaround strategy, Beauty Reimagined, is proving effective as the company continues to move from a defensive recovery phase to sustained growth momentum. The company is also further investing in innovation, online sales, and efficiency as growth engines. 

“We have moved beyond restoring growth. We are building diverse drivers for sustained profitable growth,” says Stéphane de La Faverie, president and CEO at ELC. 

The ELC financials arrive shortly after the company expanded its strategic partnership with Microsoft to strengthen its cloud, data, and AI capabilities aligned with the Beauty Reimagined strategy. The strategy focuses on restoring profitability while modernizing how the business operates.

Fragrance emerged as Estée Lauder’s strongest growth category during the quarter. 

Growth across the board 

ELC’s 2027 Q1 showed an overall strong performance as operating income more than doubled to US$408 million from US$169 million in 2025. Adjusted operating income increased 76% to US$449 million. Adjusted operating margin climbed to 12.1%, from 7.3%. 

Adjusted net earnings per common share (EPS) rose to US$0.72, from US$0.32.

The group reported various value or volume share gains across China, Japan, Korea, the US, and Western Europe. Brands including Tom Ford, The Ordinary, Le Labo, and La Mer enhanced performance in mainland China. 

Previously, growth in China drove ELC’s Q4 and FY2026 results, which logged a 5% organic sales rebound and an improved profitability outlook.  

In the Fragrance segment, ELC’s luxury scent names, including Le Labo, Tom Ford, Jo Malone London, Kilian Paris, and Estée Lauder, drove up category performance. The segment also demonstrated the strongest growth for ELC in Q4 2026 as its organic sales grew 10%, demonstrating a consistent upward curve for the category. 

Skin Care grew 4% organically, led by La Mer and The Ordinary, while operating income increased 40%. Makeup showed a modest uptick of 1%, driven by MAC, partly offset by weakness at the Estée Lauder brand. Hair Care organic sales were flat, while reported sales slipped 1%. 

The results prompted ELC to raise its FY2027 guidance. Organic sales are now projected to grow 4% to 5.5%, up from the previous range of 3% to 5%. Adjusted operating margin is forecast at 12.9% to 13.7%, compared with the previous 12.7% to 13.5%. Additionally, adjusted EPS is expected at US$3.20 to US$3.45, up from US$3.10 to US$3.35. 

Beauty Reimagined is supporting Estée Lauder’s focus on innovation and profitable growth. 

Beauty Reimagined taps innovation 

Product innovation remained central to ELC’s Beauty Reimagined strategy.

The company highlights launches that include PDRN products from Clinique and The Ordinary, Estée Lauder’s longevity-focused skin care, MAC formats, and prestige fragrances. 

“Growth is accelerating, profitability is strengthening significantly, and the impact of Beauty Reimagined is becoming increasingly evident across our business,” says de La Faverie. 

“We are bringing more breakthrough innovation to consumers, amplifying the desirability of our brands with bold, high-impact campaigns, and building a faster, more agile organization that is converting momentum into stronger financial performance.” 

The company is investing in growth, with an increase of 8% in consumer-facing investments, alongside expanded Amazon and TikTok Shop distribution and further specialty retail presence. 

ELC also completed its acquisition of the remaining stake in Forest Essentials, an Indian beauty brand focused on Ayurvedic cosmetics, in October. The acquisition expands ELC’s minority stake in the brand to full ownership. 

The move reflects Estée Lauder’s strategy to strengthen its presence in India and expand the global reach of luxury Ayurvedic beauty products. According to ELC, Forest Essentials ranks as the top prestige skin care brand in India. 

Estée Lauder is expanding its use of AI through its Microsoft partnership.

Accelerating efficiency with AI 

ELC has also collaborated with Microsoft, centering on the company’s One Operating Ecosystem and Unified Data Platform. The platform merges information across brands, regions, channels, and functions to reduce duplication and give ELC teams a clearer overview and insights. 

The partnership will support three priorities: new capabilities and growth, decision intelligence, and productivity and automation. ELC is developing a more connected consumer and product data ecosystem to enable personalized experiences and product innovation. 

The company is also embedding AI across its operations, spanning marketing, commercial, value chain, and R&I workflows. It aims to accelerate decision-making and help products move more efficiently from concept through validation and manufacturing. 

Through the partnership, ELC is expanding its use of AI tools such as Microsoft Copilot across its workforce. Estée Lauder says the broader partnership is designed to improve productivity, accelerate innovation, strengthen consumer centricity, and support sustainable growth and margin expansion. 

“The future of the beauty industry will be shaped by organizations like ELC that connect data, people, and AI responsibly,” says Deb Cupp, executive VP and chief revenue officer at Microsoft. “Our expanded collaboration will help turn insights into action at scale — from empowering employees to modernizing product development and delivering more meaningful consumer experiences.”