\n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n Three Months Ended
\n
March 31<\/b><\/p>\n<\/td>\n | \n Percentage
\n
Change<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n ($ in millions, except per share data)<\/i><\/p>\n<\/td>\n | \n 2025<\/b><\/p>\n<\/td>\n | \n 2024<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nNet Sales\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n3,550\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n3,940\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(10\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOrganic Net Sales, Non-GAAP1<\/sup><\/p>\n<\/td>\n| \n \n$\n<\/p>\n<\/td>\n | \n \n3,605\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n3,940\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(9\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther Financial Results:\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nGross Profit\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n2,661\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n2,833\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(6\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Gross Margin<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n 75.0<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n 71.9<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAdjusted Gross Profit, Non-GAAP1,2<\/sup><\/p>\n<\/td>\n| \n \n$\n<\/p>\n<\/td>\n | \n \n2,661\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n2,833\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(6\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted Gross Margin, Non-GAAP1,2<\/sup><\/i><\/p>\n<\/td>\n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n 75.0<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n 71.9<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOperating Income\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n306\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n531\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(42\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Operating Margin<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n 8.6<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n 13.5<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAdjusted Operating Income, Non-GAAP1,2<\/sup><\/p>\n<\/td>\n| \n \n$\n<\/p>\n<\/td>\n | \n \n403\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n554\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(27\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted Operating Margin, Non-GAAP1,2<\/sup><\/i><\/p>\n<\/td>\n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n 11.4<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n 14.1<\/i><\/p>\n<\/td>\n | \n %<\/i><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDiluted Net Earnings Per Common Share\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n.44\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n.91\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(52\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAdjusted Diluted Net Earnings Per Common Share, Non-GAAP1,2<\/sup><\/p>\n<\/td>\n| \n \n$\n<\/p>\n<\/td>\n | \n \n.65\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n.97\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(33\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n \n\n | \n\u00a0<\/td>\n<\/tr>\n | \n| \n 1<\/sup>See pages 17 and 18 for reconciliation between GAAP and Adjusted Non-GAAP measures.<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n 2<\/sup>Adjusted Non-GAAP measures are calculated based on Net Sales adjusted only for Returns associated with restructuring and other activities.<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n- Net sales<\/b> decreased 10% to $3.6 billion. Organic net sales decreased 9%.\n<\/li>\n
- \nAs Reported and Adjusted Gross margin<\/b> expanded 310 basis points, to 75.0%, despite the decline in net sales, primarily driven by net benefits from the Company\u2019s Profit Recovery and Growth Plan (\u201cPRGP\u201d). This also includes the favorable impact of 240 basis points due to the trigger of an in-period charge for under-absorbed manufacturing overhead costs in the prior-year period, partially offset by the unfavorable impact of 100 basis points due to a similar charge recognized in the fiscal 2025 third quarter.\n<\/li>\n
- Operating margin<\/b> declined to 8.6% from 13.5% in the prior-year period. Adjusted operating margin contracted 270 basis points, to 11.4% from 14.1%. These reflect the increase in consumer-facing investments, along with sales volume deleverage in the fiscal 2025 third quarter. In addition, the net benefits from the Company\u2019s PRGP helped to reduce non-consumer facing expenses.\n<\/li>\n
- Effective tax rate<\/b> was 34.0% compared with 31.1% in the prior-year period. Adjusted effective tax rate was 30.8% compared with 30.5%.\n<\/li>\n
- Diluted net earnings per common share<\/b> decreased to $.44, compared with $.91 in the prior-year period. Adjusted diluted net earnings per common share decreased to $.65, compared with $.97.\n<\/li>\n
- \nFor the nine months ended March 31, 2025:<\/p>\n
\n- Net cash flows provided by operating activities<\/b> decreased to $671 million, compared with $1,471 million in the prior-year period, primarily reflecting lower pre-tax earnings, excluding non-cash items, as well as the unfavorable change in operating assets and liabilities. This includes the impact from the significant reduction in inventory in the prior-year period that drove strong net cash flows in fiscal 2024. The decrease also reflects the increase in restructuring payments.\n<\/li>\n
- Capital expenditures<\/b> decreased to $395 million from $702 million in the prior-year period primarily due to the prior-year payments relating to the manufacturing facility in Japan as well as the Company\u2019s efforts this year to optimize capital expenditures to improve free cash flow.\n<\/li>\n
- \nThe Company paid dividends of $492 million.\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
BEAUTY GAINS AND OPERATIONAL HIGHLIGHTS<\/span>3<\/sup><\/b><\/p>\n\n- \nAchieved prestige beauty share gains for the fiscal 2025 third quarter in some key markets:<\/p>\n
\n- \nU.S.4<\/sup>, driven by Clinique, The Ordinary and Bumble and bumble\n<\/li>\n
- \nMainland China, driven by La Mer, Est\u00e9e Lauder and Tom Ford\n<\/li>\n
- \nJapan, driven by Le Labo, La Mer and Est\u00e9e Lauder\n<\/li>\n<\/ul>\n<\/li>\n
- \nLaunched breakthrough, on-trend and commercial innovations, including:<\/p>\n
\n- \nM\u00b7A\u00b7C Nudes Collection in January 2025, featured new as well as reintroduced fan-favorite nude shades across the lip and eye subcategories\n<\/li>\n
- \nLa Mer Night Recovery Concentrate in January 2025, positioned to speed recovery from signs of sensitivity, including visible post-derm treatment irritation\n<\/li>\n
- \nEst\u00e9e Lauder Double Wear Stay-in-Place 24-hour Concealer in February 2025, introduced as a multi-use skin perfecting concealer with a matte finish and a companion to Double Wear Stay-in-Place foundation\n<\/li>\n
- \nJo Malone London Hand Creams in February 2025, relaunched with new packaging and scent extensions, driving new recruitment at entry prestige pricing, along with one scent launched exclusively on Kakao\n<\/li>\n
- \nLe Labo Eucalyptus 20 in February 2025, extended the brand\u2019s Classic Collection with a genderless blend of eucalyptus, woods and resin\n<\/li>\n
- \nThe Ordinary Multi-Active Delivery Essence in February 2025, formulated to target multiple signs of aging simultaneously\n<\/li>\n
- \nClinique Moisture Surge Active Glow Serum in March 2025, expanded the beloved Moisture Surge product franchise with a serum offered at entry prestige pricing\n<\/li>\n<\/ul>\n<\/li>\n
- \nExpanded consumer coverage:<\/p>\n
\n- \nBroadened Fragrance distribution with approximately 10 net new freestanding stores opened globally in the fiscal 2025 third quarter, led by Le Labo and KILIAN PARIS\n<\/li>\n
- \nLaunched seven additional stores on Shopee in Southeast Asia in January and February 2025\n<\/li>\n
- \nLaunched Est\u00e9e Lauder (January 2025) and The Ordinary (April 2025) on TikTok Shop in Thailand\n<\/li>\n
- \nLaunched The Ordinary in Amazon\u2019s U.S. Premium Beauty (January 2025) and in Turkey (April 2025)\n<\/li>\n<\/ul>\n<\/li>\n
- \nRecognized for investments and expanded strategic partnerships in AI to drive operational efficiencies:<\/p>\n
\n- \nFeatured on Microsoft\u2019s AI @ Work list as an \u201cAgent of Change\u201d in March 2025, highlighting the Company\u2019s dedication and leadership in AI integration across business functions\n<\/li>\n
- \nAnnounced a strategic partnership with Adobe in March 2025 to integrate Firefly generative AI into the Company\u2019s existing Creative Cloud workflows, designed to drive efficiency, accelerate execution and empower creative teams to recapture time and focus on ideating and creating new artistic concepts\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
\n\n | \n\u00a0<\/td>\n<\/tr>\n | \n| \n 3<\/sup>Since the Company\u2019s last earnings announcement, including some previously disclosed.<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n 4<\/sup>Source: Circana, LLC, US Prestige Beauty Total Department\/Specialty, Dollar Share Growth of Corporation, three-months ended March 2025.<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\nFISCAL 2025 THIRD QUARTER RESULTS BY PRODUCT CATEGORY AND BY REGION<\/span><\/b><\/p>\n\n\n| \n Results by Product Category<\/b><\/p>\n (<\/b>Unaudited)<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n Three Months Ended March 31<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n Net Sales<\/b><\/p>\n<\/td>\n | \n Percentage Change1<\/sup><\/b><\/p>\n<\/td>\n| \n Operating
\n
<\/b>Income (Loss)<\/b><\/p>\n<\/td>\n | \n Percentage
\n
<\/b>Change<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n ($ in millions)<\/i><\/p>\n<\/td>\n | \n 2025<\/b><\/p>\n<\/td>\n | \n 2024<\/b><\/p>\n<\/td>\n | \n Reported
\n
<\/b>Basis<\/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 2025<\/b><\/p>\n<\/td>\n | \n 2024<\/b><\/p>\n<\/td>\n | \n Reported
\n
<\/b>Basis<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nSkin Care\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n1,807\n<\/p>\n<\/td>\n | | \n\n \n$\n<\/p>\n<\/td>\n | \n \n2,060\n<\/p>\n<\/td>\n | | \n\n \n(12\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n | \n \n1\n<\/p>\n<\/td>\n | \n \n%\n<\/p>\n<\/td>\n | \n \n(11\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n361\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n468\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(23\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nMakeup\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n1,035\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n1,136\n<\/p>\n<\/td>\n | | \n\n \n(9\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n2\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(7\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n14\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n66\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(79\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nFragrance\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n557\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n575\n<\/p>\n<\/td>\n | | \n\n \n(3\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n2\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(1\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n32\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n29\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n10\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nHair Care\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n126\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n143\n<\/p>\n<\/td>\n | | \n\n \n(12\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n1\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(10\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(13\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(25\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n48\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n25\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n26\n<\/p>\n<\/td>\n | | \n\n \n(4\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u2014\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(4\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n9\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n11\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(18\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Subtotal<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,550<\/b><\/p>\n<\/td>\n | | \n\n $<\/b><\/p>\n<\/td>\n | \n 3,940<\/b><\/p>\n<\/td>\n | | \n\n (10<\/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 (9<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 403<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 549<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n (27<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nReturns\/charges\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nassociated with\n<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nrestructuring and\n<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nother activities\n<\/p>\n<\/td>\n | | \n\n \n\u2014\n<\/p>\n<\/td>\n | | \n | \n\n \n\u2014\n<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n\n \n(97\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | | \n\n \n(18\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n Total<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,550<\/b><\/p>\n<\/td>\n | | \n\n $<\/b><\/p>\n<\/td>\n | \n 3,940<\/b><\/p>\n<\/td>\n | | \n\n (10<\/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 (9<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 306<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 531<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n (42<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Non-GAAP Adjustments to As Reported Operating Income:<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nReturns\/charges associated with restructuring and other activities\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n97\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n18\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nSkin Care – Change in fair value of DECIEM acquisition-related stock options\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u2014\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n5\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Adjusted Operating Income – Non-GAAP<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 403<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 554<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n (27<\/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 net sales, excluding the negative impacts from foreign currency translation that are reflected in the preceding table. In addition to the Operational Highlights above, below are the drivers of the Company\u2019s performance.\n<\/p>\n Skin Care<\/span><\/b><\/p>\n\n- \nSkin Care net sales decreased 11%, primarily due to the decrease in the Company\u2019s Asia travel retail business, which drove declines from Est\u00e9e Lauder and La Mer, including:<\/p>\n
\n- \nOngoing subdued sentiment and lower conversion from Chinese consumers;\n<\/li>\n
- \nThe difficult comparison to the prior-year period due to the Company\u2019s resumption of replenishment orders in the fiscal 2024 third quarter and the Company\u2019s strategic decision to reduce its exposure to reseller activity; and\n<\/li>\n
- \nRetailer shifts in strategies toward more profitable duty-free business models in both Korea and mainland China, which led to lower replenishment orders.\n<\/li>\n<\/ul>\n<\/li>\n
- \nSkin Care operating income decreased, primarily due to the decline in net sales and increase in consumer-facing investments5<\/sup>, partially offset by lower cost of sales.\n<\/li>\n<\/ul>\n
Makeup<\/span><\/b><\/p>\n\n- \nMakeup net sales decreased 7%, primarily driven by declines from:<\/p>\n
\n- \nM\u00b7A\u00b7C, reflecting an unfavorable impact from the timing and lower level of shipments for new product launches compared to the prior-year period\u2014which more than offset the benefit from fiscal 2025 innovation, including the M\u00b7A\u00b7C Nudes Collection and MACximal Sleek Satin Lipstick\u2014as well as retailer destocking primarily driven by elevated inventory levels stemming from retail softness; and\n<\/li>\n
- \nEst\u00e9e Lauder, primarily driven by the decline in the face subcategory, due in part to the timing of shipments for new product launches in the prior-year period, which more than offset the benefit from the fiscal 2025 launch of Double Wear Stay-in-Place 24-Hour Concealer.\n<\/li>\n<\/ul>\n<\/li>\n
- \nMakeup operating income decreased, primarily due to the decline in net sales, partially offset by lower cost of sales.\n<\/li>\n<\/ul>\n
Fragrance<\/span><\/b><\/p>\n\n- \nFragrance net sales decreased 1%, primarily driven by:<\/p>\n
\n- \nDeclines from Clinique, mainly attributable to the Clinique Happy product franchise, and Est\u00e9e Lauder, primarily reflecting retail softness in Asia\/Pacific.\n<\/li>\n
- \nThese declines were partially offset by the low-single-digit increase from the Company\u2019s Luxury Brands6<\/sup>, led by strong double-digit growth from Le Labo. The brand\u2019s performance was driven by hero products such as its Classic Collection, innovation with Osmanthus 19 and Eucalyptus 20, and targeted expanded consumer reach. This growth was partially offset by declines in the cologne and home subcategories from Jo Malone London, driven in part by the timing of shipments.\n<\/li>\n<\/ul>\n<\/li>\n
- \nFragrance operating income increased, primarily due to lower cost of sales, partially offset by the increase in consumer-facing investments.\n<\/li>\n<\/ul>\n
Hair Care<\/span><\/b><\/p>\n\n- \nHair Care net sales decreased 10%, primarily driven by Aveda, reflecting continued softness in the Company\u2019s salon and freestanding stores channels.\n<\/li>\n
- \nHair Care operating results improved, reflecting disciplined expense management and lower cost of sales, partially offset by the decline in net sales.\n<\/li>\n<\/ul>\n
\n\n | \n\u00a0<\/td>\n<\/tr>\n | \n| \n 5<\/sup>Consumer-facing investments includes co-operative advertising, selling, advertising and promotional expenses, as well as store operating costs.<\/i><\/p>\n<\/td>\n<\/tr>\n\n| \n 6<\/sup>In fiscal 2025, the Company expanded its Luxury fragrance brand portfolio with the launch of BALMAIN Beauty.<\/i><\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n\n| \n Results by Geographic Region<\/b><\/p>\n (<\/b>Unaudited)<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n Three Months Ended March 31<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n Net Sales<\/b><\/p>\n<\/td>\n | \n Percentage Change1<\/sup><\/b><\/p>\n<\/td>\n| \n Operating
\n<\/b>
Income (Loss)<\/b><\/p>\n<\/td>\n | \n Percentage
\n<\/b>
Change<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n ($ in millions)<\/i><\/p>\n<\/td>\n | \n 2025<\/b><\/p>\n<\/td>\n | \n 2024<\/b><\/p>\n<\/td>\n | \n Reported
\n
<\/b>Basis<\/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 2025<\/b><\/p>\n<\/td>\n | \n 2024<\/b><\/p>\n<\/td>\n | \n Reported
\n
Basis<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nThe Americas\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n1,052\n<\/p>\n<\/td>\n | | \n\n \n$\n<\/p>\n<\/td>\n | \n \n1,117\n<\/p>\n<\/td>\n | | \n\n \n(6\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n | \n \n1\n<\/p>\n<\/td>\n | \n \n%\n<\/p>\n<\/td>\n | \n \n(5\n<\/p>\n<\/td>\n | \n \n)%\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n8\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n$\n<\/p>\n<\/td>\n | \n \n(6\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n100\n<\/p>\n<\/td>\n | \n \n+%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nEurope, the\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \nMiddle East &\n<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nAfrica\n<\/p>\n<\/td>\n | | \n\n \n1,358\n<\/p>\n<\/td>\n | | \n | \n\n \n1,647\n<\/p>\n<\/td>\n | | \n\n \n(18\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n1\n<\/p>\n<\/td>\n | | \n\n \n(16\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | | \n\n \n239\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n302\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(21\n<\/p>\n<\/td>\n | )<\/td>\n<\/tr>\n | \n| \n \nAsia\/Pacific\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n1,140\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n1,176\n<\/p>\n<\/td>\n | | \n\n \n(3\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n2\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(1\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n156\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n253\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n(38\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Subtotal<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,550<\/b><\/p>\n<\/td>\n | | \n\n $<\/b><\/p>\n<\/td>\n | \n 3,940<\/b><\/p>\n<\/td>\n | | \n\n (10<\/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 (9<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 403<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 549<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n (27<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nReturns\/charges\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \nassociated with\n<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nrestructuring and\n<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n \n| \n \nother activities\n<\/p>\n<\/td>\n | | \n\n \n\u2014\n<\/p>\n<\/td>\n | | \n | \n\n \n\u2014\n<\/p>\n<\/td>\n | | \n | \n | \n | \n | \n\n \n(97\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | | \n\n \n(18\n<\/p>\n<\/td>\n | \n \n)\n<\/p>\n<\/td>\n | | \n | <\/tr>\n \n| \n Total<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 3,550<\/b><\/p>\n<\/td>\n | | \n\n $<\/b><\/p>\n<\/td>\n | \n 3,940<\/b><\/p>\n<\/td>\n | | \n\n (10<\/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 (9<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 306<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 531<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n (42<\/b><\/p>\n<\/td>\n | \n )%<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Non-GAAP Adjustments to As Reported Operating Income:<\/b><\/p>\n<\/td>\n | | <\/tr>\n \n| \n \nReturns\/charges associated with restructuring and other activities\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n97\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n18\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \nThe Americas – Change in fair value of DECIEM acquisition-related stock options\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u2014\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n5\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n Adjusted Operating Income – Non-GAAP<\/b><\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 403<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n $<\/b><\/p>\n<\/td>\n | \n 554<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n (27<\/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 net sales, excluding the negative impacts from foreign currency translation that are reflected in the preceding table. In addition to the Operational Highlights above, below are the drivers of the Company\u2019s performance.\n<\/p>\n The Americas<\/span><\/b><\/p>\n\n- \nNet sales decreased 5%, driven by the mid-single-digit decline in North America. From a retail sales perspective, the Company\u2019s North America business increased low single-digits. The net sales decline in North America was primarily due to:<\/p>\n
\n- \nOngoing retail softness for some brands and declines in consumer confidence and sentiment, which led to elevated inventory levels and destocking at certain retailers;\n<\/li>\n
- \nOperational challenges impacting certain department store retailers and the timing of shipments, which further pressured net sales compared to the prior-year period.\n<\/li>\n
- \nThese challenges more than offset the benefit from nine brands in Amazon\u2019s U.S. Premium Beauty Store, compared to one in the prior-year period.\n<\/li>\n<\/ul>\n<\/li>\n
- \nOperating results increased, primarily driven by disciplined expense management as well as net benefits from the PRGP, primarily benefiting cost of sales, partially offset by the unfavorable year-over-year impact of net intercompany activity, including $164 million of lower intercompany royalty income due to the decline in income from the Company\u2019s global travel retail business.\n<\/li>\n<\/ul>\n
Europe, the Middle East & Africa<\/span><\/b><\/p>\n\n- \nNet sales decreased 16%, driven by:<\/p>\n
\n- \nStrong double-digit decline in the Company\u2019s global travel retail business, reflecting:<\/p>\n
\n- \nOngoing subdued sentiment and lower conversion from Chinese consumers;\n<\/li>\n
- \nThe difficult comparison to the prior-year period due to the Company\u2019s resumption of replenishment orders in the fiscal 2024 third quarter and the Company\u2019s strategic decision to reduce its exposure to reseller activity; and\n<\/li>\n
- \nRetailer shifts in strategies toward more profitable duty-free business models in both Korea and mainland China, which led to lower replenishment orders.\n<\/li>\n<\/ul>\n<\/li>\n
- \nMid-single-digit decline in the region\u2019s markets, primarily driven by ongoing challenges in the United Kingdom, including retail softness for the Company\u2019s brands. This led to elevated inventory levels at certain retailers and, coupled with efforts by retailers to manage their working capital, resulted in destocking and lower shipments.\n<\/li>\n<\/ul>\n<\/li>\n
- \nOperating income decreased, primarily due to the decline in net sales and increase in consumer-facing investments, partially offset by lower cost of sales, including net benefits from the PRGP, and the favorable year-over-year impact of net intercompany activity, including $164 million of lower intercompany royalty expense due to the decline in income from the Company\u2019s global travel retail business.\n<\/li>\n<\/ul>\n
Asia\/Pacific<\/span><\/b><\/p>\n\n- \nNet sales decreased 1%, primarily driven by double-digit declines in Hong Kong SAR and Korea, partially offset by mid-single-digit growth in mainland China.<\/p>\n
\n- \nThe decline in Hong Kong SAR reflects the Company\u2019s strategic decision to reduce its exposure to reseller activity.\n<\/li>\n
- \nThe decline in Korea was primarily due to the impact of political and social unrest, which reduced retail traffic and dampened retail sales, as well as the strategic exit of Dr.Jart+ from the travel retail channel in November 2024.\n<\/li>\n
- \nThese declines were partially offset by growth in mainland China, reflecting:<\/p>\n
\n- \nThe timing of Lunar New Year in fiscal 2025, which created an additional key shopping moment compared to the prior-year period\u2019s overlap with Valentine\u2019s Day and contributed to prestige beauty stabilization; and\n<\/li>\n
- \nThe Company\u2019s prestige beauty share gains, attributable to the partial recapture of consumer demand in mainland China from Asia travel retail and Hong Kong SAR, online growth and the success of innovation, such as La Mer\u2019s Night Recovery Concentrate.\n<\/li>\n
- \nPartially offset by lower shipments to some retailers due to retail softness, reflecting subdued consumer sentiment, and their efforts to manage working capital.\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n
- \nOperating income declined, primarily driven by the decrease in net sales and increase in consumer-facing investments, as well as the year-over-year unfavorable impact of the fiscal 2025 second quarter change in policy related to local government subsidies in China.\n<\/li>\n<\/ul>\n
QUARTERLY DIVIDEND | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |