The Estée Lauder Companies (EL) Q1 FY2027 Earnings Call: Q&A Summary

Q: Dara Mohsenian with MS asked about the pace of organic sales growth for the balance of the year and whether the beauty category is experiencing any external pressure points from consumer stress.

A: Stephane de la Faverie (CEO) and Akhil Shrivastava (CFO) answered that the first half benefits from stronger innovation contribution while the second half will see a rebalancing and higher Travel Retail base comparisons. They expressed strong confidence in the beauty category's continued robust growth and noted strong performance across emerging markets.

Q: Lauren Lieberman with Barclays asked about the strategic unlocks and long-term opportunities resulting from the shift to the One ELC operating model compared to the PRGP restructuring.

A: Stephane de la Faverie answered that One ELC serves as the permanent operating backbone and new way of working utilizing partners like Accenture, Shopify, WPP, and Microsoft to reduce duplication and enhance agility. Akhil Shrivastava added that the model relies on the three pillars of culture, system processes, and one team to drive empowerment, clear accountability, and best-in-class solutions.

Q: Steve Powers with Deutsche Bank asked about the outsized growth in Fragrance versus other areas, future trends, and how consumption relates to organic run rates and inventory builds.

A: Stephane de la Faverie stated that fragrance growth is driven by a strong luxury portfolio combined with new prestige price tier entries such as Estee Lauder Glimmer, Balmain Beauty, and KILIAN PARIS. Akhil Shrivastava confirmed that shipments are closely aligned with retail and inventories remain balanced across regions.

Q: Bonnie Herzog with Goldman Sachs asked how much of the operating margin guidance raise stemmed from first-quarter over-delivery versus underlying expansion, and how potential commodity and freight inflation risks are managed.

A: Akhil Shrivastava answered that a portion of the first-quarter strength was carried over while keeping investments robust, and noted that while commodity and freight impacts are factored into the full-year guidance, PRGP savings and scenario planning provide multiple paths to deliver on the range.

Q: Chris Carey with Wells Fargo Securities asked about the puts and takes across categories and regions that would push performance to the high or low end of the full year organic sales range.

A: Stephane de la Faverie explained that the first half will outpace the second half due to innovation phasing and Travel Retail base comparisons, while rest-of-world markets continue accelerating. The high end of the guidance will be driven by strong innovation, a turnaround in the West, and accelerated Travel Retail West.

Q: Rupesh Parikh with Oppenheimer asked about current ground-level trends in Mainland China, the sustainability of momentum, and early thoughts on the 11/11 holiday.

A: Stephane de la Faverie answered that the Chinese market shows healthy mid-single-digit growth where Estee Lauder is gaining share for the seventh consecutive quarter across categories. He added that it is too early to discuss specific 11/11 results due to the dynamic nature of the event.

Q: Filippo Falorni with Citi asked if retail sales improvements in Travel Retail allowed for market share gains in airports and how online versus offline sales are performing in Hainan.

A: Stephane de la Faverie stated that Travel Retail worldwide is stabilizing to slight positive with strong growth in Hainan and Korea, complete airport transitions in Beijing and Shanghai, and accelerating online and experiential retail initiatives.

Q: Olivia Tong Cheang with Raymond James asked about sustaining share gains in China and the US, and the importance of driving volume share versus dollar share.

A: Stephane de la Faverie and Akhil Shrivastava answered that volume is critical for reigniting consumer recruitment and loyalty, which eventually converts into value share as demonstrated in fragrances, hair care, and with brands like MAC and The Ordinary.