Estée Lauder Companies (ELC) net sales have plummeted 10% in Q3.
Net sales dropped to US$3.55bn during the quarter, with softening demand in America and declines in consumer confidence and sentiment impacting performance.
This resulted in elevated inventory levels and destocking at certain retailers, and led to an overall 5% decrease in sales for the North America region.
The addition of nine brands to Amazon’s US Premium Beauty Store offset the declines slightly, but US President Donald Trump’s tariff hikes are anticipated to exacerbate the situation further in America.
ELC President and CEO Stéphane de La Faverie is hoping for a “meaningful resolution” to the higher levies that are pushing beauty businesses to raise product costs.
“In the third quarter of fiscal 2025, we delivered our organic sales outlook and exceeded profitability expectations,” said de La Faverie.
“Our global business organic sales trends, excluding travel retail, showed sequential improvement.
“With the strategic reset of our travel retail business well underway to better reflect recent industry trends and market conditions, and provided there is meaningful resolution of the recently enacted tariffs to mitigate potential related negative impacts, we are confident in our ability to return to sales growth in fiscal 2026.”
ELC’s skin care division decreased 11% during the quarter, primarily due to the slowdown in its Asia travel retail business and lower conversion from Chinese consumers.
This drove declines from both Estée Lauder and La Mer.
Make-up also suffered a 7% drop in sales, primarily driven by a lacklustre performance from MAC Cosmetics.
The cosmetics brand was hit by an “unfavourable impact” from the quarter’s timing and lower level of shipments for new product launches compared with Q3 last year.
Fragrance fared slightly better, but still dropped 1% on the back of poor sales of Clinique’s Happy product franchise and retail softness in Asia.
Despite the disappointing Q3, de La Faverie, who has been helming the luxury giant since January 2025, remained optimistic on ELC’s future.
“We are moving decisively and building momentum as we bring our ‘Beauty Reimagined’ strategic vision to life across its five key priorities,” added de La Faverie.
“This is evidenced by our prestige beauty share gains in strategic markets like the US, China and Japan, and our mid single-digit organic net sales growth online.”
2025 is proving to be a challenging year for the luxury giant, as ELC’s lagging Q3 results follow on from a poor second quarter of trading.
Net sales slumped by 6% to $4bn during the three months ended 31 December 2024, while gross profit also sank by 2% to $3bn.
The brand owner’s skin care division saw some of the largest declines during its second quarter in 2025, with sales decreasing by 12% to $1.9bn
This was the result of challenging retail environments in the Asia Pacific market and the company’s Asia travel retail business.
An estimated 7,000 staff roles are also expected to be cut by the end of fiscal 2026.
“This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas,” ELC said in a statement at the time.
This could see the business incur charges of between $1.2bn and $1.6bn.
But in the longer term, ELC anticipates these changes to “help restore operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth”.