\n| \n 1<\/sup><\/i>Organic net sales represents net sales excluding returns associated with restructuring and other activities; non-comparable impacts of acquisitions, divestitures and brand closures; as well as the impact from foreign currency translation. The Company believes that the Non-GAAP measure of organic net sales growth provides year-over-year sales comparisons on a consistent basis. See page 3 for reconciliations to GAAP.<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n 2<\/sup><\/i>Net earnings attributable to The Est\u00e9e Lauder Companies Inc. which excludes net loss (earnings) attributable to redeemable noncontrolling interests for the third fiscal quarter of fiscal 2023 and fiscal 2022 and net earnings attributable to noncontrolling interests for the third quarter of fiscal 2022.<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n\u201cAs the shape of recovery from the pandemic for Asia travel retail comes into better focus, it is proving to be both far more volatile than we expected and more gradual relative to what we experienced in other regions. We are, therefore, lowering our organic sales and EPS outlook for fiscal 2023 to reflect significantly greater headwinds in our fourth quarter than we expected in February.\u201d<\/p>\n \nFreda concluded, \u201cWhile we work through the serious but we believe temporary headwinds facing Asia travel retail, we are encouraged by the strong momentum in the rest of our business. Indeed, consumer demand is robust for our diverse portfolio of brands in developed and emerging markets around the world, evidenced in both organic sales growth and retail sales trends, which drives our confidence in the long-term. What is more, we are thrilled to have acquired the TOM FORD brand last week and are optimistic about its promising growth opportunities.\u201d<\/p>\n Business Update
\n
<\/span><\/b>During the fiscal 2023 third quarter, the phase and pace of recovery from the COVID-19 pandemic continued to vary across markets globally. In the West, in both developed and emerging markets, the momentum of post-COVID recovery growth continued with strong organic net sales performance in The Americas and markets in Europe, the Middle East & Africa, excluding travel retail. In Asia\/Pacific, markets emerged from COVID restrictions more gradually and over a longer period of time, compared to the pace of recovery experienced in the West. These markets continued to evolve in recovery during the fiscal 2023 third quarter, evidenced by strong organic net sales growth in nearly all Asia\/Pacific markets.<\/p>\n\nWhile the Company saw recovery in many markets globally, its Asia travel retail business continued to be pressured by the slower than anticipated recovery from the COVID pandemic. Specifically, in Hainan, while traffic into the island exceeded prior year levels, conversion of travelers to consumers in prestige beauty lagged. This led to the slower than anticipated depletion of elevated levels of retailer inventory and, therefore, lower replenishment orders. In Korea, the shipments to duty free retailers were pressured owing to the transition to post-COVID regulations as traveling consumers gradually return. In Korea, as well as in Asia more broadly, the travel retail recovery was challenged by the slower than anticipated resumption of international flights, granting of visas, and organized group tours.<\/p>\n \nIn mainland China, organic net sales grew in the fiscal 2023 third quarter. While January 2023 was pressured by low retail traffic and retailer destocking from the rise in COVID cases that began in November 2022 and continued into January 2023, organic net sales returned to growth, rising double digits in February and March 2023. However, prestige beauty growth was slower than expected for the fiscal 2023 third quarter.<\/p>\n \nFinally, the Company\u2019s business also continued to be pressured by the strong U.S dollar, historically high inflation and recession concerns.<\/p>\n Fiscal 2023 Third Quarter Results
\n
<\/span><\/b>Reported net sales decreased 12%, including the impact of the license terminations related to certain of the Company\u2019s designer fragrances and the negative impact from foreign currency translation.<\/p>\n\n\n| \n Reconciliation between GAAP and Non-GAAP Net Sales Growth
\n
<\/b>(Unaudited)<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n Three Months Ended
\n
March 31, 2023(1)<\/sup><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n As Reported – GAAP<\/b><\/p>\n<\/td>\n | \n (12<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nImpact of the license terminations related to certain of the Company\u2019s designer fragrances<\/p>\n<\/td>\n | \n \n1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nImpact of foreign currency translation<\/p>\n<\/td>\n | \n \n3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nReturns associated with restructuring and other activities<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Organic, Non-GAAP<\/b><\/p>\n<\/td>\n | \n (8<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n (1)<\/sup><\/i>Percentages are calculated on an individual basis<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\nAdjusted diluted net earnings per common share excludes restructuring and other charges and adjustments as detailed in the following table.<\/p>\n \n\n| \n Reconciliation between GAAP and Non-GAAP – Diluted Net Earnings Per Share (\u201cEPS\u201d)
\n
<\/b>(Unaudited)<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n Three Months Ended<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n March 31<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n | \n Growth<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n As Reported EPS – GAAP<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n .43<\/b><\/p>\n<\/td>\n | \u00a0<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 1.53<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (72<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Non-GAAP<\/span><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nRestructuring and other charges<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n.04<\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n.05<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nChange in fair value of acquisition-related stock options (less the portion attributable to<\/p>\n<\/td>\n | | \n | \n\u00a0<\/td>\n | | \n | \n | \n | <\/tr>\n \n| \n \nredeemable noncontrolling interest)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(.13<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther intangible asset impairments<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n.45<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted EPS – Non-GAAP<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n .47<\/b><\/p>\n<\/td>\n | \u00a0<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 1.90<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (75<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nImpact of foreign currency translation on earnings per share<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n.02<\/p>\n<\/td>\n | \u00a0<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted Constant Currency EPS – Non-GAAP<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n .49<\/b><\/p>\n<\/td>\n | \u00a0<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 1.90<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (74<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n<\/table>\n \nNet sales in the Company\u2019s product categories and regions and operating income in most of its product categories and regions were unfavorably impacted by a stronger U.S. dollar in relation to most currencies. Reported net sales was negatively impacted by 3% of foreign currency translation, primarily reflecting a negative impact in Asia\/Pacific of 7%. In addition, reported and organic net sales were negatively impacted by 1% from foreign currency transactions in key international travel retail locations, with a negative impact in Europe, the Middle East & Africa of 2%.<\/p>\n \nTotal reported operating income was $297 million, a 60% decrease from $738 million in the prior-year period. In constant currency, adjusted operating income decreased 65%, primarily reflecting lower net sales and higher cost of sales, and excludes the following items:<\/p>\n \n- \nFiscal 2023 third quarter: $19 million restructuring and other charges and adjustments.<\/p>\n<\/li>\n
- \nFiscal 2022 third quarter: $216 million of other intangible asset impairments related to Dr.Jart+ and GLAMGLOW and $23 million of restructuring and other charges, partially offset by $60 million of income related to the change in fair value of acquisition-related stock options.<\/p>\n<\/li>\n
- \nThe unfavorable impact of foreign currency translation of $9 million.<\/p>\n<\/li>\n<\/ul>\n
\n\n| \n Results by Product Category
\n
(Unaudited)<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \n\u00a0<\/p>\n<\/td>\n | \n Three Months Ended March 31<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n Net Sales<\/b><\/p>\n<\/td>\n | \n Percentage Change(1)<\/sup><\/b><\/p>\n<\/td>\n| \n Operating
\n
<\/b>Income (Loss)<\/b><\/p>\n<\/td>\n | \n Percentage
\n
Change<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n ($ in millions)<\/i><\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n | \n Reported
\n
<\/b>Basis<\/b><\/p>\n<\/td>\n | \n Impact of
\n
Acquisitions,
\n
Divestitures
\n
and Brand
\n
Closures, Net<\/b><\/p>\n<\/td>\n | \n Impact of
\n
Foreign
\n
Currency
\n
Translation<\/b><\/p>\n<\/td>\n | \n Organic
\n
Net Sales
\n
(Non-GAAP)<\/b><\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n | \n Reported
\n
Basis<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nSkin Care<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n1,922<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n2,395<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(20<\/p>\n<\/td>\n | \n \n)%<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n3<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n(17<\/p>\n<\/td>\n | \n \n)%<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n256<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n667<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(62<\/p>\n<\/td>\n | \n \n)%<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nMakeup<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1,088<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1,114<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(2<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(15<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(100<\/p>\n<\/td>\n | \n \n+)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nFragrance<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n585<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n579<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n10<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n14<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n89<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n105<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(15<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nHair Care<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n149<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n147<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n2<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n3<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(24<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(18<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n(33<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n11<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n11<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(8<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(8<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n9<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u2014<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n100<\/p>\n<\/td>\n | \n \n+<\/p>\n<\/td>\n<\/tr>\n | \n| \n Subtotal<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,755<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 4,246<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (12<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n 1<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n 3<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n (8<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 315<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 761<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (59<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nReturns\/charges<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nassociated with<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nrestructuring and<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nother activities<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(4<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(1<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(18<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(23<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | | <\/tr>\n \n| \n Total<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,751<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 4,245<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (12<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n 1<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n 3<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n (8<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 297<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 738<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (60<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n (1)<\/sup>Percentages are calculated on an individual basis<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\nThe product category net sales commentary below reflects organic performance, excluding the negative\/(positive) impacts which are reflected in the preceding table.<\/p>\n Skin Care<\/span><\/b><\/p>\n\n- \nSkin Care net sales declined 17%, primarily reflecting the slower than anticipated recovery of Asia travel retail from the COVID-19 pandemic. This included lower shipments to retailers in Hainan due to lower conversion of travelers to consumers and the slower than anticipated depletion of elevated levels of retailer inventory, as well as lower shipments to Korean duty free retailers primarily due to the transition to post-COVID regulations as traveling consumers gradually return. In Korea and Asia more broadly, the travel retail recovery was challenged by the slower than anticipated resumption of international flights, granting of visas, and organized group tours. Net sales declined from La Mer, Est\u00e9e Lauder and Dr.Jart+, partially offset by growth from The Ordinary and M\u00b7A\u00b7C.<\/p>\n<\/li>\n
- \nNet sales from La Mer, Est\u00e9e Lauder and Dr.Jart+ declined, primarily reflecting the aforementioned challenges in Asia travel retail.<\/p>\n<\/li>\n
- \nNet sales from The Ordinary grew strong double digits compared to the prior-year period, primarily reflecting growth across every region and benefiting from continued strength from hero products, successful innovation, such as the Multi-Peptide Eye Serum, and the brand\u2019s launch into India and the Middle East in fiscal 2023.<\/p>\n<\/li>\n
- \nM\u00b7A\u00b7C net sales more than doubled, fueled by the successful launch of the Hyper Real franchise line of products in the fiscal 2023 third quarter.<\/p>\n<\/li>\n
- \nSkin Care operating income decreased, primarily reflecting the decline in net sales from Asia travel retail, an increase in cost of sales and the unfavorable impact from the change in fair value of acquisition-related stock options compared to the prior year, partially offset by the prior year other intangible asset impairments of $216 million relating to Dr.Jart+ and GLAMGLOW. The increase in cost of sales included the unfavorable impacts from obsolescence charges and promotional items.<\/p>\n<\/li>\n<\/ul>\n
Makeup<\/span><\/b><\/p>\n\n- \nMakeup net sales were virtually flat to the prior-year period, reflecting growth in most markets as they continued to evolve in recovery and as usage occasions increased, offset by the challenges and the slower than anticipated recovery of Asia travel retail from the COVID-19 pandemic. Net sales declined from Est\u00e9e Lauder, partially offset by growth from M\u00b7A\u00b7C, Clinique and TOM FORD Beauty.<\/p>\n<\/li>\n
- \nNet sales from Est\u00e9e Lauder were negatively impacted by the aforementioned challenges in Asia travel retail.<\/p>\n<\/li>\n
- \nM\u00b7A\u00b7C net sales growth reflected continued success from hero products and recent launches, particularly in the face and lip subcategories. The increase in net sales also reflected the benefit from changes to the brand\u2019s take back loyalty program made in the fiscal 2023 second quarter.<\/p>\n<\/li>\n
- \nNet sales from Clinique rose double digits, benefiting from solid performance in the lip, concealer and eye subcategories.<\/p>\n<\/li>\n
- \nDouble-digit net sales growth from TOM FORD Beauty reflected strength from products in the lip subcategory, including Lip Color Satin Matte and Soleil Lip Blush.<\/p>\n<\/li>\n
- \nMakeup operating income decreased, primarily reflecting an increase in cost of sales, including obsolescence charges, and the decrease in net sales from Asia travel retail.<\/p>\n<\/li>\n<\/ul>\n
Fragrance<\/span><\/b><\/p>\n\n- \nFragrance net sales grew double digits, reflecting strong growth in every region and double-digit growth from TOM FORD Beauty, Le Labo and Est\u00e9e Lauder.<\/p>\n<\/li>\n
- \nNet sales from TOM FORD Beauty rose double digits, reflecting growth in hero franchises like Ebene Fume and Ombre Leather and successful innovation, such as TOM FORD Noir Extreme Parfum and the fiscal 2023 third quarter launch of The Private Blend Cherry Collection.<\/p>\n<\/li>\n
- \nStrong double-digit growth from Le Labo was fueled by growth in every region and virtually all channels of distribution, primarily due to the continued consumer demand for the brand\u2019s hero product franchises, such as Santal 33 and Another 13, and high-touch services, as well as targeted expanded consumer reach.<\/p>\n<\/li>\n
- \nEst\u00e9e Lauder net sales grew double digits, driven by the success from existing product franchises, such as Beautiful and Est\u00e9e Lauder Pleasures.<\/p>\n<\/li>\n
- \nFragrance operating income decreased, driven primarily by an increase in cost of sales, including the change in brand mix.<\/p>\n<\/li>\n<\/ul>\n
Hair Care<\/span><\/b><\/p>\n\n- \nHair Care net sales increased 3%, reflecting growth from The Ordinary\u2019s hair care products, partially offset by a decline from Aveda.<\/p>\n<\/li>\n
- \nAveda net sales declined, driven by softness in North America, partially offset by the launch of the brand in mainland China and growth in Europe, the Middle East & Africa.<\/p>\n<\/li>\n
- \nHair Care operating results decreased, reflecting an increase in cost of sales, including obsolescence charges.<\/p>\n<\/li>\n<\/ul>\n
\n\n| \n Results by Geographic Region
\n
(Unaudited)<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \n\u00a0<\/p>\n<\/td>\n | \n Three Months Ended March 31<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n Net Sales<\/b><\/p>\n<\/td>\n | \n Percentage Change(1)<\/sup><\/b><\/p>\n<\/td>\n| \n Operating
\n
<\/b>Income (Loss)<\/b><\/p>\n<\/td>\n | \n Percentage
\n
Change<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n ($ in millions)<\/i><\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n | \n Reported
\n
<\/b>Basis<\/b><\/p>\n<\/td>\n | \n Impact of
\n
Acquisitions,
\n
Divestitures
\n
and Brand
\n
Closures, Net<\/b><\/p>\n<\/td>\n | \n Impact of
\n
Foreign
\n
Currency
\n
Translation<\/b><\/p>\n<\/td>\n | \n Organic
\n
Net Sales
\n
(Non-GAAP)<\/b><\/p>\n<\/td>\n | \n 2023<\/b><\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n | \n Reported<\/b><\/p>\n Basis<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nThe Americas<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n1,089<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n1,053<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n3<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n2<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n1<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n6<\/p>\n<\/td>\n | \n \n%<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n(93<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n$<\/p>\n<\/td>\n | \n \n408<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(100<\/p>\n<\/td>\n | \n \n+)%<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nEurope, the<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nMiddle East &<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAfrica<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1,474<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1,990<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(26<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(24<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n176<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n281<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(37<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAsia\/Pacific<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1,192<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n1,203<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(1<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n1<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n7<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n232<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n72<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n100<\/p>\n<\/td>\n | \n \n+<\/p>\n<\/td>\n<\/tr>\n | \n| \n Subtotal<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,755<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 4,246<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (12<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n 1<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n 3<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n (8<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 315<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 761<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (59<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nReturns\/charges<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nassociated with<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nrestructuring and<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nother activities<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(4<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(1<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(18<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n(23<\/p>\n<\/td>\n | \n \n)<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n<\/tr>\n | \n| \n Total<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,751<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 4,245<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (12<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n 1<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n 3<\/b><\/p>\n<\/td>\n | \n %<\/b><\/p>\n<\/td>\n | \n (8<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 297<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 738<\/b><\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \n (60<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n (1)<\/sup>Percentages are calculated on an individual basis<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\nThe geographic region net sales commentary below reflects organic performance, excluding the negative impacts which are reflected in the preceding table.<\/p>\n The Americas<\/span><\/b><\/p>\n\n- \nNet sales rose 6%, returning to growth and benefiting from increases in Makeup, Skin Care and Fragrance.<\/p>\n<\/li>\n
- \nNet sales in North America grew mid-single-digits, driven by the United States, reflecting growth in Skin Care, Makeup and Fragrance owing to double-digit growth from The Ordinary, M\u00b7A\u00b7C and Le Labo.<\/p>\n<\/li>\n
- \nIn Latin America, net sales rose strong double digits, fueled by growth in every country as well as in all major categories, led by the Makeup and Fragrance categories.<\/p>\n<\/li>\n
- \nOperating income in The Americas decreased, primarily reflecting $338 million of lower intercompany royalty income due to the decline in income from the Company\u2019s travel retail business. The decrease also reflects higher cost of sales, including obsolescence charges and changes in the mix of business.<\/p>\n<\/li>\n<\/ul>\n
Europe, the Middle East & Africa<\/span><\/b><\/p>\n\n- \nNet sales declined 24%, due to the slower than anticipated recovery of Asia travel retail from the COVID-19 pandemic, partially offset by growth in virtually all markets, led by the United Kingdom and Germany.<\/p>\n<\/li>\n
- \nGlobal travel retail net sales decreased double digits, reflecting the aforementioned challenges that led to lower product shipments primarily to retailers in Hainan and Korea. Travel retail net sales grew strong double digits in Europe, the Middle East & Africa and The Americas, benefiting from the increase in domestic and international travel compared to the prior-year period.<\/p>\n<\/li>\n
- \nNet sales rose double digits in the United Kingdom, fueled by strong growth in Skin Care, led by The Ordinary, Est\u00e9e Lauder and Clinique, as well as the progression of recovery in Makeup as usage occasions returned. Double-digit net sales growth in Germany reflected double-digit growth in each major product category, powered by Est\u00e9e Lauder, M\u00b7A\u00b7C, Clinique and TOM FORD Beauty owing to strong demand for hero products and successful innovation.<\/p>\n<\/li>\n
- \nNet sales rose in nearly all emerging markets in the region3<\/sup>.<\/p>\n<\/li>\n
- \nOperating income decreased, driven by the decline in net sales, partially offset by $338 million of lower intercompany royalty expense due to the decline in income from the Company\u2019s travel retail business.<\/p>\n<\/li>\n<\/ul>\n
Asia\/Pacific<\/span><\/b><\/p>\n\n- \nNet sales grew 7%, driven by the ongoing recovery from eased COVID-related restrictions compared to the prior-year period, led by Hong Kong, Australia, Japan and mainland China. This was somewhat offset by the slower than anticipated recovery of Dr.Jart+ travel retail in Korea from the COVID-19 pandemic.<\/p>\n<\/li>\n
- \nNet sales in Hong Kong doubled, benefiting from the reopening of borders, the resumption of travel and the return of brick-and-mortar traffic.<\/p>\n<\/li>\n
- \nNet sales in Australia rose strong double digits, reflecting the return of brick-and-mortar traffic and benefiting from double-digit growth in each of the major product categories.<\/p>\n<\/li>\n
- \nDouble-digit net sales growth in Japan reflected the ongoing recovery from eased COVID-related restrictions compared to the prior-year period.<\/p>\n<\/li>\n
- \nNet sales in mainland China returned to growth, reflecting double-digit increases in February and March 2023, partially offset by the decline in January 2023 due to the impact from the increase in the number of COVID cases, including slower brick-and-mortar traffic.<\/p>\n<\/li>\n
- \nNearly all emerging markets in Asia\/Pacific4<\/sup> grew double digits.<\/p>\n<\/li>\n
- \nOperating income increased, driven by the prior-year period other intangible asset impairment of $205 million related to Dr.Jart+, partially offset by an increase in cost of sales, including promotional items, and the decrease in net sales.<\/p>\n<\/li>\n<\/ul>\n
Nine-Months Results<\/span><\/b><\/p>\n\n- \nFor the nine months ended March 31, 2023, the Company reported net sales of $12.30 billion, a 13% decrease compared with $14.18 billion in the prior-year period. Organic net sales decreased 8%.<\/p>\n<\/li>\n
- \nNet earnings5<\/sup> were $1.04 billion, and diluted earnings per share was $2.88. In the prior year nine months, the Company reported net earnings of $2.34 billion and diluted earnings per share of $6.39.<\/p>\n<\/li>\n<\/ul>\n
\n\n| _________________________________________________\u00a0<\/td>\n<\/tr>\n | \n| \n 3<\/sup><\/i>Emerging markets in Europe, the Middle East & Africa are India, the Middle East, Turkey, South Africa, Central Europe, Israel, Kazakhstan and Russia.<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n 4<\/sup><\/i>Emerging markets in Asia\/Pacific are Thailand, Malaysia, Vietnam, Indonesia, the Philippines and Singapore.<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n 5<\/sup>Net earnings attributable to The Est\u00e9e Lauder Companies Inc. which excludes net (earnings) attributable to redeemable noncontrolling interests for the nine months ended March 31, 2023 and 2022 and noncontrolling interests for the nine months ended March 31, 2022.<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n- \nDuring the nine months ended March 31, 2023, the Company recorded restructuring and other charges, other intangible asset impairments, and change in fair value of acquisition-related stock options, that, combined, resulted in an unfavorable impact of $238 million ($182 million less the portion attributable to redeemable noncontrolling interest and net of tax), equal to $.50 per diluted share, as detailed on page 15. The prior-year period results include restructuring and other charges, other intangible asset impairments, change in fair value of acquisition-related stock options, and other income related to a gain on a previously held equity investment in Deciem Beauty Group Inc. that, combined, resulted in an unfavorable impact of $201 million ($151 million less the portion attributable to redeemable noncontrolling interest and net of tax), equal to $.41 per diluted share.<\/p>\n<\/li>\n
- \nExcluding restructuring and other charges and adjustments referred to in the previous bullet, adjusted diluted net earnings per common share for the nine months ended March 31, 2023 was $3.38, and declined 47% in constant currency. For the nine months ended March 31, 2023, diluted earnings per common share included the unfavorable impacts of foreign currency translation and foreign currency transactions in key international travel retail locations of $.23 and $.26, respectively.<\/p>\n<\/li>\n<\/ul>\n
Cash Flows<\/span><\/b><\/p>\n\n- \nFor the nine months ended March 31, 2023, net cash flows provided by operating activities were $1.02 billion, compared with $1.97 billion in the prior-year period. This reflects lower earnings before taxes, excluding non-cash items, partially offset by lower working capital.<\/p>\n<\/li>\n
- \nCapital Expenditures were $652 million, virtually flat to the prior year.<\/p>\n<\/li>\n
- \nThe Company ended the quarter with $5.53 billion in cash and cash equivalents after returning $0.95 billion cash to stockholders through dividends and share repurchases. This includes $2.23 billion from the issuance of commercial paper, most of which was issued at various times throughout the quarter.<\/p>\n<\/li>\n
- \nOn April 28, 2023, the Company completed the acquisition of the TOM FORD brand. The amount paid by the Company at closing, approximately $2.25 billion, was funded by cash on hand and proceeds from the issuance of commercial paper, and approximately $250 million received from Marcolin S.p.A. (a continuing TOM FORD licensee). An additional aggregate amount of $300 million in deferred payments, at 5% interest per annum, to the sellers becomes due from the Company beginning in July 2025.<\/p>\n<\/li>\n<\/ul>\n
Outlook
\n
<\/span><\/b>The Company expects organic net sales to return to growth in the fourth quarter, reflecting continued momentum of post-COVID recovery growth in nearly all markets globally. The impacts from the ongoing pressures in Asia travel retail, driven primarily by risks associated with the volatile and slower than originally anticipated pace of recovery, are expected to partially offset the growth in other markets.<\/p>\n\nThe Company remains focused on accelerating balanced growth post-pandemic and optimistic about the prospects and future growth in global prestige beauty. Notwithstanding this difficult environment, the Company plans to continue to invest in its business to support recovery, share gains and long-term growth, including strategic investments in advertising, innovation, support of the retail acceleration of its travel retail business, the growth of its emerging markets, targeted expanded consumer reach and in its new manufacturing facility in Japan.<\/p>\n \nThe full year outlook reflects the following assumptions and expectations:<\/p>\n \n- \nA slower than expected return to growth in Asia travel retail, reflecting:<\/p>\n
\n- \nThe progress towards the rebalancing of inventory levels in Hainan, given the disruptions from the COVID-related impacts throughout fiscal 2023 and the tightening of inventory by retailers.<\/p>\n<\/li>\n
- \nThe temporary pressure to the Company\u2019s travel retail business in Korea due to retailers transitioning to post-COVID regulations as traveling consumers gradually return.<\/p>\n<\/li>\n
- \nA slower pace of resumption of Asia travel retail net sales than previously anticipated given the more gradual return of international flights, granting of visas, availability of organized group tours, and consumer conversion in the beauty category. We now expect the return of traffic and conversion to build gradually over the fiscal 2023 fourth quarter and the first half of fiscal 2024.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n
- \nBalanced growth in the fourth quarter across nearly all other markets globally and accelerated consumer demand in mainland China.<\/p>\n<\/li>\n
- \nStrategic price increases, increased productive distribution to retailers that provide new consumer reach and continued strategic entry into new countries for some of the Company\u2019s brands.<\/p>\n<\/li>\n
- \nIncremental savings from the Post-COVID Business Acceleration Program and reinvestment in advertising and capabilities.<\/p>\n<\/li>\n
- \nAn increase in the full year effective tax rate to approximately 27%, reflecting the expected change in the geographical mix of earnings, notably due to the Company\u2019s travel retail business as previously discussed, for the remainder of the year.<\/p>\n<\/li>\n
- \nThe acquisition of the TOM FORD brand is expected to be approximately $.03 to $.04 dilutive to full year diluted earnings per common share.<\/p>\n<\/li>\n<\/ul>\n
\nThe Company is mindful of risks related to the effects of the global macro environment, including the risk of recession; geopolitical tensions; foreign currency volatility; inflationary pressures; supply chain disruptions; social and political issues; residual impacts related to the COVID-19 pandemic; regulatory matters, including the imposition of tariffs and sanctions; and global security issues. The Company is also mindful of inflationary pressures on its cost base and consumer behaviors.<\/p>\n Full Year Fiscal 2023<\/i><\/b><\/p>\n Sales Outlook<\/span><\/i><\/p>\n\n- \nReported net sales are forecasted to decrease between 12% and 10% versus the prior-year period. This range includes:<\/p>\n
\n- \nThe slower than expected return to growth in Asia travel retail, as detailed above.<\/p>\n<\/li>\n
- \nCurrency exchange rates are volatile and difficult to predict. Using March 31, 2023 spot rates for the fourth quarter of fiscal 2023, a 4% headwind due to foreign currency translation, as well as an additional 1% due to certain foreign currency transactions in key international travel retail locations.<\/p>\n<\/li>\n
- \nThe negative impact of 1% from the termination of the Company\u2019s license agreements for the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines effective June 30, 2022.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n
- \nOrganic net sales, which excludes returns associated with restructuring and other activities; non-comparable impacts from acquisitions, divestitures and brand closures; as well as the impact of foreign currency translation, are forecasted to decrease between 7% to 5%. This includes the impact related to foreign currency transactions, noted above.<\/p>\n<\/li>\n<\/ul>\n
Earnings per Share Outlook<\/span><\/i><\/p>\n\n- \nReported diluted net earnings per common share are projected to be between $2.62 and $2.76. Excluding restructuring and other charges and adjustments, diluted net earnings per common share are projected to be between $3.29 and $3.39.<\/p>\n<\/li>\n
- \nAdjusted diluted earnings per common share are expected to decrease between 51% and 50% on a constant currency basis. Currency exchange rates are volatile and difficult to predict. Using March 31, 2023 spot rates for the fourth quarter of fiscal 2023:<\/p>\n
\n- \nThe foreign currency translation impact equates to about $.26 of dilution to earnings per share.<\/p>\n<\/li>\n
- \nAs reported and adjusted diluted earnings per share in constant currency are expected to be dilutive by 4% from certain foreign currency transactions in key international travel retail locations.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
\n\n| \n Reconciliation between GAAP and Non-GAAP – Net Sales Growth
\n
(Unaudited)<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n \n\u00a0<\/p>\n<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \n \n\u00a0<\/p>\n<\/td>\n | \n Twelve Months Ending<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0<\/p>\n<\/td>\n | \n June 30, 2023(F)<\/sup><\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n As Reported – GAAP<\/b><\/p>\n<\/td>\n | \n (12%) – (10<\/b><\/p>\n<\/td>\n | \n %)<\/b>\u00a0<\/p>\n<\/td>\n<\/tr>\n\n| \n | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |