The Estée Lauder Companies is gaining momentum in its turnaround, with fragrance leading category growth and a new strategic partnership with Microsoft aimed at accelerating AI adoption, innovation and operational efficiency.
For its fiscal 2027 first quarter ended September 30, 2026, Estée Lauder reported net sales of $3.72 billion, up 7% year over year, with organic sales increasing 6%. Fragrance was the standout performer, posting 20% organic sales growth, driven by double-digit gains across its luxury portfolio, including Le Labo, Tom Ford, Jo Malone London and Kilian Paris, as well as Estée Lauder. The category's operating income climbed 93%.
Le Labo benefited from continued strength in its Classic Collection, including Another 13 and Santal 33, alongside its City Exclusives. Tom Ford saw growth across its Private Blend and Signature franchises, while Jo Malone London benefited from innovation and established hero products. Kilian Paris, identified as the company's fastest-growing luxury brand, continued to gain from its Cocktails Collection and core fragrances. Estée Lauder also entered the gourmand fragrance space with the launch of Glimmer.
Skin care delivered 4% growth, led by La Mer and The Ordinary, while makeup increased just 1%, as M·A·C gains were partially offset by declining Estée Lauder makeup sales. Hair care was flat, with The Ordinary's growth offset by Aveda's decline amid supply chain challenges.
Geographically, organic sales increased across all regions, led by Asia/Pacific, up 10%, and Mainland China, up 9%. The Americas and Europe, the U.K. and emerging markets (EUKEM) each grew 4%.
The company also reported improved profitability, with operating income rising across all geographic regions and adjusted operating margin expanding. Reflecting the stronger-than-expected quarter, Estée Lauder raised its fiscal 2027 outlook to 4-5.5% organic sales growth, up from its previous 3–5% forecast. Its adjusted operating margin outlook increased to 12.9–13.7%, from 12.7–13.5%, while adjusted earnings per share are now projected at $3.20–3.45, versus the previous $3.10–3.35 range. The company expects continued growth in fragrance and skin care, alongside a return to full-year makeup growth.
The improved outlook comes as Estée Lauder works to reduce its reliance on promotions and strengthen brand desirability, while navigating ongoing geopolitical and macroeconomic uncertainty.
That turnaround strategy also underpins a newly announced partnership with Microsoft. The collaboration will strengthen Estée Lauder's cloud and data infrastructure and support the responsible adoption of AI across its global business. A central initiative is the development of a Unified Data Platform connecting information across brands, regions, sales channels and business functions. The goal is to make data and insights more accessible, reduce duplicated work and equip teams to accelerate product innovation, improve productivity and deliver more personalized consumer experiences.
The partnership forms part of Estée Lauder's broader One Operating Ecosystem initiative, with the company positioning technology and AI as tools to improve operational efficiency, support margin expansion and create capacity for reinvestment in consumer-facing growth.
