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What changed in Estée Lauder Companies (The)'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Estée Lauder Companies (The)'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+306 added−310 removedSource: 10-K (2025-08-20) vs 10-K (2024-08-19)

Top changes in Estée Lauder Companies (The)'s 2025 10-K

306 paragraphs added · 310 removed · 235 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFrom time to time, we also make minority investments in companies, mainly in the beauty industry, including through our New Incubation Ventures, the strategic early-stage investment and incubation arm of our Company. In some cases, we have acquired the remaining interests (e.g., Have & Be Co. Ltd. (i.e. Dr.Jart+) and DECIEM).
Biggest changeBALMAIN Beauty was established in 2022 through a license from the fashion house Balmain Paris “to celebrate all the beauties of the world, no exceptions.” Building upon an exceptional fashion and fragrance legacy, BALMAIN Beauty launched its first fragrances in fiscal 2025. 7 Table of Contents From time to time, we also make minority investments in companies, mainly in the beauty industry, including through our New Incubation Ventures, the strategic early-stage investment and incubation arm of our Company.
In addition, we connect with our consumers directly through freestanding stores, e-commerce sites and social media to build a robust omnichannel experience that allows a consumer to shop in these and other channels. Marketing Our strategy to market and promote our products begins with our well-diversified portfolio of distinctive brands across four product categories.
In addition, we connect with our consumers directly through freestanding stores, e-commerce sites and social media to build a robust omnichannel experience that allows consumers to shop in these and other channels. Marketing Our strategy to market and promote our products begins with our well-diversified portfolio of distinctive brands across four major product categories.
Members of the Lauder family, some of whom are directors, executive officers and/or employees, beneficially own, directly or indirectly, as of August 12, 2024, shares of our Company's Class A Common Stock and Class B Common Stock having approximately 84% of the outstanding voting power of the Common Stock. 2 Table of Contents Products Skin Care - Our broad range of skin care products address various skin care needs.
Members of the Lauder family, some of whom are directors, executive officers and/or employees, beneficially own, directly or indirectly, as of August 13, 2025, shares of our Company's Class A Common Stock and Class B Common Stock having approximately 84% of the outstanding voting power of the Common Stock. 2 Table of Contents Products Skin Care - Our broad range of skin care products address various skin care needs.
The brand’s famous colognes are perfect alone or artfully layered. Jo Malone London embodies the spirit of gifting generosity and inspires emotional elevation. Acquired in 2006, Bumble and bumble is a New York-based hair care brand that creates high-quality hair care and styling products.
The brand’s famous colognes are perfect alone or artfully layered. Jo Malone London embodies the spirit of gifting generosity and inspires emotional elevation. Acquired a majority interest in 2000 (and the remaining interest in 2006), Bumble and bumble is a New York-based hair care brand that creates high-quality hair care and styling products.
Item 1. Business. The Estée Lauder Companies Inc., founded in 1946 by Estée and Joseph Lauder, is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products, and is a steward of luxury and prestige brands globally.
Item 1. Business. The Estée Lauder Companies Inc., founded in 1946 by Estée and Joseph Lauder, is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. We are a steward of over 20 luxury and prestige brands globally.
The modernization and simplification of our technology ecosystem remains a key focus, as we increasingly leverage the benefits of the cloud. We recognize technology presents opportunities for competitive advantage, and we continue to invest in new capabilities and the use of emerging technologies, including investments in artificial intelligence ("AI"), across various aspects of our business.
The modernization and simplification of our technology ecosystem remains a key focus, as we increasingly leverage the benefits of the cloud. 10 Table of Contents We recognize technology presents opportunities for competitive advantage, and we continue to invest in new capabilities and the use of emerging technologies, including investments in AI, across various aspects of our business.
We also sell related items such as compacts, brushes and other makeup tools. Fragrance - We offer a variety of fragrance products. The fragrances are sold in various forms, including eau de parfum sprays and colognes, as well as lotions, powders, creams, candles and soaps that are based on a particular fragrance.
We also sell related items such as compacts, brushes and other makeup tools. Fragrance - We offer a variety of fragrance products. The fragrances are sold in various forms, including parfum, eau de parfum, eau de toilette, eau de cologne, and body spray, as well as lotions, creams, powders, candles and soaps that are based on a particular fragrance.
We build brand equity and drive traffic to retail locations and to our own and authorized retailers’ websites including through digital and social media, billboards in cities and airports, and email. In addition, we seek editorial coverage for our brands and products in digital and social media and print, to drive influencer amplification.
We build brand equity and drive traffic to retail locations and to our own and authorized retailers’ websites including through digital and social media, broad reach advertising, such as billboards in cities and airports, television and email. In addition, we seek editorial coverage for our brands and products in digital and social media and print, to drive influencer amplification.
We continue to focus on increasing our brand awareness and sales through our strategic emphasis on technology, by expanding our digital presence encompassing e-commerce, as well as digital, social media and influencer marketing. Our ongoing investments in new analytical capabilities enable us to create more personalized experiences across our distribution channels.
We continue to focus on increasing our brand awareness and sales through our strategic emphasis on technology, by expanding our digital and omnichannel presence, including social media and influencer marketing. Our ongoing investments in new analytical capabilities enable us to create more personalized experiences across our distribution channels.
Our research and development costs totaled $360 million, $344 million and $307 million in fiscal 2024, 2023 and 2022, respectively, and are expensed as incurred. As of June 30, 2024, we had approximately 1,430 employees engaged in research and development activities.
Our research and development costs totaled $316 million, $360 million and $344 million in fiscal 2025, 2024 and 2023, respectively, and are expensed as incurred. As of June 30, 2025, we had approximately 1,100 employees engaged in research and development activities.
Our “Emerging Markets” in Europe, the Middle East & Africa are India, the Middle East, Turkey, South Africa, Central Europe, Israel, Russia and Kazakhstan; in Asia/Pacific are Thailand, Malaysia, Vietnam, Indonesia, the Philippines and Singapore; and in The Americas are Brazil, Mexico, Chile, Colombia, Panama, Peru and Argentina.
Our “Emerging Markets” in The Americas are Argentina, Brazil, Chile, Colombia, Mexico, Panama and Peru and in our reorganized region of EUKEM are Central Europe, India, Indonesia, Israel, Kazakhstan, Malaysia, the Middle East, the Philippines, Russia, South Africa, Thailand, Turkey and Vietnam.
Below is a chart showing the brands we sell and how we view them based on lifestyle and price point: 4 Table of Contents Estée Lauder brand products, which have been sold since 1946, have a reputation for innovation, sophistication and superior quality.
Below is a chart showing brands we sell and how we view them based on lifestyle and price point: 4 Table of Contents Estée Lauder brand products, which have been sold since 1946, have a reputation for innovation, sophistication and superior quality. Estée Lauder is one of the world’s most renowned beauty brands, producing iconic skin care, makeup and fragrances.
The other category also includes royalty revenue from our licensing of the TOM FORD trademark to third parties since our fiscal 2023 acquisition of the TOM FORD brand. 3 Table of Contents Our Brands Given the personal nature of our products and the wide array of consumer preferences and tastes, as well as competition for the attention of consumers, our strategy has been to market and promote our products through distinctive brands seeking to address broad preferences and tastes.
Other - The other category includes royalty revenue from our licensing of the TOM FORD trademark to third parties since our fiscal 2023 acquisition of the TOM FORD brand as well as sales from ancillary products and services that do not fit within the definitions of skin care, makeup, fragrance, and hair care. 3 Table of Contents Our Brands Given the personal nature of our products and the wide array of consumer preferences and tastes, as well as competition for the attention of consumers, our strategy has been to market and promote our products through distinctive brands seeking to address broad preferences and tastes.
The Nominating and ESG Committee of our Board of Directors has oversight responsibility for our Company’s environmental, social and governance (“ESG”) activities and practices, including citizenship and sustainability matters. Our social impact and sustainability efforts are led by our Executive Chairman and our President and Chief Executive Officer.
Certain goals are also intended to help us reduce cost and waste. The Nominating and ESG Committee of our Board of Directors has oversight responsibility for our Company’s environmental, social and governance (“ESG”) activities and practices, including citizenship and sustainability matters. Our social impact and sustainability efforts are led by our President and Chief Executive Officer.
We have wholly-owned operations in over 50 countries through which we market, sell and distribute our products. In certain countries, we sell our products through carefully selected distributors who we believe share our commitment to protecting the image and position of our brands. For information regarding our net sales and long-lived assets by geographic region, see Item 8.
In certain countries, we sell our products through carefully selected distributors who we believe share our commitment to protecting the image and position of our brands. For information regarding our net sales by geographic region, see Item 8.
This includes strategically deploying our brands and tailoring product assortments and communications to fit local tastes and preferences in cities and neighborhoods, and also using these insights to develop new ways to innovate, engage consumers, build brand equity and sell products.
This includes strategically deploying our brands and tailoring product assortments and communications to fit local tastes and preferences in cities and neighborhoods, and also using these insights to develop new ways to innovate, engage consumers, build brand equity and sell products. For a number of products, we create and deploy 360° integrated consumer engagement programs.
On May 31, 2024, we purchased the remaining interest in the Deciem Beauty Group Inc. ("DECIEM") after increasing our investment in 2021 to 76%. Known as “The Abnormal Beauty Company,” DECIEM is a Toronto-based, vertically integrated multi-brand beauty company rooted in a consumer-focused and functional approach.
After increasing our investment to 76% in 2021, we purchased the remaining interest in the Deciem Beauty Group Inc. ("DECIEM") in 2024. Known as “The Abnormal Beauty Company,” DECIEM is a Toronto-based, vertically integrated multi-brand beauty company rooted in a consumer-focused and functional approach. Its portfolio includes The Ordinary, an ingredient-focused brand, and NIOD, a science-driven skin care brand.
M·A·C, the leading brand of professional cosmetics, was created in Toronto, Canada. We completed our acquisition of M·A·C in 1998. The brand’s popularity has grown through a tradition of word-of-mouth endorsement from professional makeup artists, models, photographers and journalists around the world.
After having acquired a majority interest in 1994, we completed our acquisition of M·A·C in 1998. The brand’s popularity has grown through a tradition of word-of-mouth endorsement from professional makeup artists, models, photographers and journalists around the world.
Lab Series, introduced in 1987, is a series of high performance, specialized skin care solutions uniquely created to improve the look and feel of men’s skin.
The skin care and makeup products are based on the research and related expertise of leading dermatologists. Lab Series, introduced in 1987, is a series of high performance, specialized skin care solutions uniquely created to improve the look and feel of men’s skin.
These products include moisturizers, serums, cleansers, toners, body care, exfoliators, acne and oil correctors, facial masks and sun care products. Makeup - Our full array of makeup products includes lipsticks, lip glosses, mascaras, foundations, eyeshadows and powders. Many of the products are offered in an extensive palette of shades and colors.
These products include moisturizers, serums, cleansers, toners, eye care, body care, exfoliators, acne and oil correctors, facial masks and sun care products. Makeup - We offer an extensive array of makeup products across shades and colors. Our full array of makeup products includes foundations, powders, concealers and setting sprays, lipsticks, lip liners and lip glosses, and mascaras, eyeshadows and eyeliners.
Our research and development group, which includes scientists, engineers, analysts, and other employees involved in product and packaging innovation, works closely with our marketing and product development teams and third-party suppliers to generate ideas, develop new products and product-line extensions, create new packaging concepts, and improve, redesign or reformulate existing products.
Our research and development group, which includes scientists, engineers, analysts, and other employees involved in product and packaging innovation, works closely with our marketing and product development teams, as well as external partners in certain cases, to generate new technologies, design new testing methods, identify new materials, develop new products and product-line extensions, create new packaging concepts, and improve, redesign or reformulate existing products.
Other members of senior management, along with employees across the organization, help to drive our strategic initiatives concerning social impact and sustainability.
Other members of senior management, along with employees across the organization, help to drive our strategic initiatives concerning social impact and sustainability. Additional information related to our social impact and sustainability matters can be found at www.elcompanies.com .
This includes the strategic utilization of data to provide better visibility into consumer trends, to increase responsiveness in our product development. 10 Table of Contents Research and Development We believe we are an industry leader in the development of new products.
As an example, this includes the strategic utilization of data to provide better visibility into consumer trends, to increase responsiveness in our product development. Research and Development We believe we are an industry leader in the development of new products, and strive to deliver breakthrough, on-trend and commercial innovation to consumers around the world.
In addition to continuing to attract existing consumers, our hero products provide an opportunity for new consumers to be introduced to our desirable products, creating consumer traffic across all channels of distribution. We aim to further strengthen our hero products, and create new ones, through continuous review of our product portfolio and strategic innovation.
In addition to continuing to attract existing consumers, our hero products provide an opportunity for new consumers to be introduced to our desirable products, creating consumer traffic across all channels of distribution.
Introduced in 1990, Origins is known for high-performance natural skin care that is “powered by nature and proven by science.” The brand also sells makeup and fragrance products and is distributed primarily through online, specialty-multi and freestanding Origins stores. Origins has a license agreement to develop and sell beauty products using the name of Dr. Andrew Weil.
Introduced in 1990, Origins is known for high-performance natural skin care that is “powered by nature and proven by science” and also sells fragrance products. Origins has a license agreement to develop and sell beauty products using the name of Dr. Andrew Weil. M·A·C, the leading brand of professional cosmetics, was created in Toronto, Canada.
Introduced in 1968, Clinique skin care and makeup products are all allergy tested and 100% fragrance free and have been designed to address individual skin types and needs. Clinique also offers select fragrances. The skin care and makeup products are based on the research and related expertise of leading dermatologists.
We pioneered the marketing of prestige men’s fragrance, grooming and skin care products with the introduction of Aramis products in 1964. Introduced in 1968, Clinique skin care and makeup products are all allergy tested and 100% fragrance free and have been designed to address individual skin types and needs. Clinique also offers select fragrances.
On April 28, 2023, we acquired the TOM FORD brand and related intellectual property. The TOM FORD brand is a luxury brand created in 2005, encompassing fashion, fragrance, eyewear and other accessories. From 2005 until the closing of the acquisition, we developed, manufactured and distributed luxury fragrances and beauty products as a licensee.
In 2005, we entered into a license agreement under the TOM FORD brand name and developed, manufactured and distributed luxury fragrances and beauty products. In fiscal 2023, we acquired the TOM FORD brand and related intellectual property. The TOM FORD brand is a luxury brand created in 2005, encompassing fashion, fragrance, eyewear and other accessories.
Our “High-Touch” approach is demonstrated through our integrated consumer engagement models that leverage our product specialists and technology to provide the consumer with a distinct and truly personalized experience that can include personal consultations with beauty advisors, in person or online, who demonstrate and educate the consumer on product usage and application.
Our “High-Touch” approach is demonstrated through our integrated consumer engagement models that leverage our product specialists and technology to provide the consumer with a distinct and truly personalized experience.
Our “Priority Emerging Markets” in Europe, the Middle East & Africa are India, the Middle East, Turkey and South Africa; in Asia/Pacific are Thailand, Malaysia, Vietnam, Indonesia, and the Philippines; and in The Americas are Brazil and Mexico.
Our “Priority Emerging Markets” in The Americas are Brazil and Mexico and in EUKEM are India, Indonesia, Malaysia, the Middle East, the Philippines, South Africa, Thailand, Turkey and Vietnam. Our references to North America within this document include the United States and Canada.
Our luxury portfolio also includes Estée Lauder's Re-Nutriv product franchise. Our “Large Brands” are Estée Lauder, La Mer, M·A·C and Clinique. Our “Scaling Brands” are Jo Malone London, TOM FORD, The Ordinary, Aveda, and Bobbi Brown Cosmetics.
Our “Luxury Brands” are La Mer, Jo Malone London, TOM FORD, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle, KILIAN PARIS and BALMAIN Beauty. Our luxury portfolio also includes Estée Lauder's Re-Nutriv product franchise. Our “Large Brands” are Estée Lauder, La Mer, Clinique and M·A·C.
We have set goals or made commitments within these focus areas. For example, our goals related to climate and energy support efficiency and conservation within our facilities, internal supply chain and value chain. Certain goals are also intended to help us reduce cost and waste.
Areas of focus include climate and energy; packaging; sourcing; green chemistry and ingredient transparency; inclusion; employee health and safety; and social investments. We have set goals or made commitments within these focus areas. For example, our goals related to climate and energy support efficiency and conservation within our facilities, internal supply chain and value chain.
Our social impact and sustainability initiatives help drive innovation, growth and efficiency across the business and within our brand portfolio. These initiatives also aim to foster employee engagement and build consumer trust and loyalty. Areas of focus include climate and energy; packaging; sourcing; green chemistry and ingredient transparency; inclusion, diversity and equity; employee health and safety; and social investments.
Social Impact and Sustainability We continue to integrate social impact and sustainability into our strategy and business operations. Our social impact and sustainability initiatives help drive innovation, growth and efficiency across the business and within our brand portfolio. These initiatives also aim to foster employee engagement and build consumer trust and loyalty.
Our marketing planning approach leverages local insights to optimize allocation of resources across different media outlets and retail touch points to resonate with our most discerning consumers most effectively.
Our marketing planning approach focuses on effective and impactful visible advertising spending, optimizing marketing programs, and eliminating low-return activities to accelerate new consumer acquisition. To that end, we also leverage local insights to optimize allocation of resources across different media outlets and retail touch points to resonate with our most discerning consumers most effectively.
We also support our authorized retailers to strengthen their e-commerce businesses and drive sales of our brands on their websites.
We also support our authorized retailers to strengthen their e-commerce businesses and drive sales of our brands on their websites. We are leveraging artificial intelligence (“AI”) across the marketing value chain to enhance personalization at scale, increase speed to market and reduce costs.
Our products are sold on our own and authorized retailer websites, on third-party online malls, in stores in airports, in duty-free locations and in our own and authorized freestanding stores. In addition, our products are sold in brick-and-mortar retail stores, including department stores, specialty-multi retailers, upscale perfumeries and pharmacies and top-tier salons and spas.
We operate as a wholesaler, with our products sold in brick-and-mortar locations and on various e-commerce platforms, including those operated by department stores, duty-free retailers, specialty-multi retailers, online pure players, upscale perfumeries and pharmacies, and top-tier salons and spas. Additionally, we operate a direct-to-consumer business across freestanding stores, our brands' websites and third-party online platforms.
We have dedicated resources to implement creative, coordinated, brand-enhancing strategies across all online activities to increase our direct access to consumers. Promotional activities, in-store displays, and online navigation are designed to attract new consumers, build demand and loyalty and introduce existing consumers to other product offerings from the respective brands.
As examples, we are using AI to identify insights to inform consumer-centric campaigns, develop and test concepts, and produce creative content. Promotional activities, in-store displays, and online navigation are designed to attract new consumers, build demand and loyalty and introduce existing consumers to other product offerings from the respective brands.
Our “Developing Brands” are Le Labo, Too Faced, Dr.Jart+, Origins, Kilian Paris, Bumble and bumble, Smashbox, Darphin Paris, Editions de Parfums Frédéric Malle, Lab Series, and GLAMGLOW. Social Impact and Sustainability We continue to integrate social impact and sustainability into our strategy and business operations.
Our “Scaling Brands” are Jo Malone London, TOM FORD, The Ordinary, Aveda, and Bobbi Brown Cosmetics. Our “Developing Brands” are Le Labo, Too Faced, Dr.Jart+, Origins, KILIAN PARIS, Bumble and bumble, Editions de Parfums Frédéric Malle, Smashbox, Darphin Paris, Lab Series, AERIN Beauty, NIOD, Aramis, BALMAIN Beauty and GLAMGLOW.
Our general practice is to accept returns of our products from customers if properly requested and approved. Online, we sell products from most of our brands direct-to-consumer through our brand.com sites and third-party online malls. We also sell our products wholesale to authorized retailers that resell online through retailer.com and pure-play sites. Our sites are in approximately 50 countries.
Our general practice is to accept returns of our products from customers if properly requested and approved. Our online sites, including our brand.com sites as well as those operated by authorized retailers and through third-party online platforms are in approximately 50 countries, with a majority of these online sales generated in mainland China, the United States and the United Kingdom.
Our portfolio can be deployed in multiple distribution channels, key travel corridors and geographies where our global reputation and awareness of our brands benefit us. Our geographic and distribution channel diversity allows us to engage local consumers across an array of developed and emerging markets by emphasizing products and services with local relevance, inclusiveness and appeal.
By putting the consumer at the center of every engagement and leveraging our geographic and distribution channel diversity, we offer strong consumer coverage which allows us to reach and engage local consumers across an array of developed and emerging markets by emphasizing products and services with local relevance, inclusiveness and appeal.
Hair Care - Our hair care products include shampoos, conditioners, styling products, treatment, finishing sprays and hair color products. Other - We also sell ancillary products and services that do not fit the definition of skin care, makeup, fragrance, and hair care.
Hair Care - Our hair care products include shampoos, conditioners, styling products, treatment, finishing sprays and hair color products.
We have several minority investments including a company based in India that manufactures, markets and sells Ayurvedic skin care and other products under the Forest Essentials brand name, primarily in India. Our “Luxury Brands” are La Mer, Jo Malone London, TOM FORD, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle and Kilian Paris.
In some cases, we have acquired the remaining interests (e.g., Have & Be Co. Ltd. (i.e. Dr.Jart+) and DECIEM). We have several minority investments including a company based in India that manufactures, markets and sells Ayurvedic skin care and other products under the Forest Essentials brand name, primarily in India.
Most freestanding stores are operated by us under a single brand name, such as M·A·C, Jo Malone London, Le Labo and Aveda. We also operate over 300 multi-branded company stores, primarily in outlet malls. We maintain dedicated sales teams that manage our retail accounts.
During fiscal 2025, we closed freestanding stores in underperforming areas of our business and opened new freestanding stores where growth opportunities existed. We operated approximately 1,600 freestanding stores as of June 30, 2025. Most freestanding stores are operated by us under a single brand name, such as M·A·C, Jo Malone London and Le Labo.
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Our products are sold in approximately 150 countries and territories under a number of well-known brand names including: Estée Lauder, Clinique, Origins, M·A·C, Bobbi Brown Cosmetics, La Mer, Aveda, Jo Malone London, TOM FORD, Too Faced, Dr.Jart+, and The Ordinary. We are also the global licensee of the AERIN, BALMAIN and Dr. Andrew Weil brand names for fragrances and cosmetics.
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Since the initial launch of the Estée Lauder brand in the United States, we have significantly expanded our consumer reach to approximately 150 countries and territories.
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Each brand is distinctly positioned within the market for cosmetics and other beauty products. We believe we are a leader in the beauty industry due to the global recognition of our brand names, our excellence in product innovation, our strong position in key geographic markets and the consistently high quality of our products and “High-Touch” services.
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In February 2025, we embarked on “Beauty Reimagined,” a strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work. We have been controlled by the Lauder family since the founding of our Company.
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We sell our prestige products through distribution channels that complement the luxury image and prestige status of our brands, and we provide “High-Touch” consumer experiences across our distribution channels. Our products are sold on our own and authorized retailer websites, on third-party online malls, in stores in airports, in duty-free locations and in our own and authorized freestanding stores.
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Distribution We operate as a wholesaler, with our products sold in brick-and-mortar locations and on various e-commerce platforms, including those operated by department stores, duty-free retailers, specialty-multi retailers, online pure players, upscale perfumeries and pharmacies, and top-tier salons and spas. Additionally, we operate a direct-to-consumer business across freestanding stores, our brands' websites and third-party online platforms.
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In addition, our products are sold in brick-and-mortar retail stores, including department stores, specialty-multi retailers, upscale perfumeries and pharmacies and top-tier salons and spas. We have been controlled by the Lauder family since the founding of our Company.
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Over 300 of the freestanding stores are multi-branded company stores, primarily in outlet malls. We maintain dedicated sales teams that manage our retail accounts. We have wholly-owned operations in over 50 countries through which we market, sell and distribute our products.
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Estée Lauder is one of the world’s most renowned beauty brands, producing iconic skin care, makeup and fragrances. We pioneered the marketing of prestige men’s fragrance, grooming and skin care products with the introduction of Aramis products in 1964.
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Financial Statements and Supplementary Data – Note 15 – Revenue Recognition. 8 Table of Contents As we have done historically, we continue to develop our strategy, assess performance and allocate resources by product category and will continue to report results by product category.
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Its portfolio includes The Ordinary, an ingredient-focused brand, and NIOD, a science-driven skin care brand. 7 Table of Contents In fiscal 2022, we negotiated early termination agreements for our previous license agreements for the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines effective June 30, 2022.
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To enhance accountability and streamline operations within the organization, as well as to align with our recently announced leadership changes, we have reorganized our geographic regions. Beginning with the fiscal 2026 first quarter, we will be reporting our fiscal 2026 and comparative fiscal 2025 results by geographic region under the new regional structure.
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Additional information related to our social impact and sustainability matters can be found at www.elcompanies.com . 8 Table of Contents Distribution We sell our prestige products through distribution channels that complement the luxury image and prestige status of our brands, and we provide “High-Touch” consumer experiences across our distribution channels.
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Our four new geographic regions are: • The Americas, which will continue to include North America and Latin America; • Europe, the United Kingdom and Ireland and Emerging Markets ("EUKEM"), which will continue to include the geographic markets of our previously reported Europe, the Middle East & Africa region, will exclude our global travel retail business, and will include our Southeast Asian Emerging Markets, previously reported in our Asia/Pacific region, of Indonesia, Malaysia, the Philippines, Thailand and Vietnam; • Asia/Pacific, which will continue to include certain geographic markets of our previously reported Asia/Pacific region, such as Japan, Korea, Hong Kong SAR, and Australia, among others, and will also include our global travel retail business, previously reported in our Europe, the Middle East & Africa region; and • Mainland China, previously reported in our Asia/Pacific region, will now be reported as a separate region.
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While today a majority of these online sales are generated in mainland China, the United States and the United Kingdom, we continue to expand in other markets globally. As of June 30, 2024, we operated approximately 1,600 freestanding stores. The total reflects the net impact during fiscal 2024 of lease expirations, offset by new door openings.
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Our portfolio can be deployed in multiple distribution channels, key travel corridors and geographies and we continue to expand our consumer coverage by entering high-growth, consumer-preferred channels, markets, media and price tiers where our global reputation and awareness of our brands benefit us.
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Financial Statements and Supplementary Data – Note 24 – Segment Data and Related Information .
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We aim to further strengthen our hero products, and create new ones, through continuous review of our product portfolio and transformative innovation that delivers fast-to-market, trend-driven products across prestige price tiers focused on in-demand subcategories, benefits, and occasions.
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Most of our creative marketing work is done by in-house teams, in collaboration with external resources, that design and produce the sales materials, social media strategies, advertisements and packaging for products in each brand. For a number of products, we create and deploy 360° integrated consumer engagement programs.
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We also anticipate and monitor emerging platforms, balancing speed to market with brand protection to ensure readiness while safeguarding brand equity.
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We have opportunities to expand our brand portfolio online around the world, and we continue to invest in omnichannel concepts in the United States, China and other markets to increase brand loyalty by better serving consumers as they shop across channels and travel corridors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+19 added−6 removed49 unchanged
Biggest changeThe failure of one or more such providers to deliver the expected services, provide them on a timely basis or to provide them at the prices we expect may have a material adverse effect on our business. In addition, when we transition external service providers, we may experience challenges that could have a material adverse effect on our business.
Biggest changeThe failure of one or more such providers to deliver the expected services, provide them on a timely basis or to provide them at the prices or service levels that we expect, the failure of one or more of such providers to meet our performance standards and expectations, including with respect to data security, compliance with laws, disruptions arising from the transition of functions to an outsourcing provider, or the costs incurred in returning these outsourced functions to being performed under our management and direct control, could have a material adverse effect on our business.
The general level of consumer spending is affected by many factors, including general economic conditions, inflation, interest rates, energy costs, and consumer confidence generally, all of which are beyond our control. Consumer purchases of discretionary items tend to decline during recessionary periods, when disposable income is lower, and may impact sales of our products.
The general level of consumer spending is affected by many factors, including general economic conditions, inflation, interest rates, energy costs, and consumer confidence and sentiment generally, all of which are beyond our control. Consumer purchases of discretionary items tend to decline during recessionary periods, when disposable income is lower, and may impact sales of our products.
We continuously review acquisition and strategic investment opportunities that would expand our current product offerings, our distribution channels, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities. In addition, we periodically review our brand portfolio, and our strategy includes potential divestitures of certain brands as we rationalize product offerings.
We continuously review acquisition and strategic opportunities that would expand our current product offerings, our distribution channels, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities. In addition, we periodically review our brand portfolio, and our strategy includes potential divestitures of certain brands as we rationalize product offerings.
A downturn in the economies of, or continuing recessions in, the countries where we sell our products or a disruption of business conditions in those countries could adversely affect consumer confidence, the financial strength of our retailers and our sales and profitability. We are also cautious of foreign currency movements, including their impact on tourism.
A downturn in the economies of, or continuing recessions in, the countries where we sell our products or a disruption of business conditions in those countries could adversely affect consumer confidence and sentiment, the financial strength of our retailers and our sales and profitability. We are also cautious of foreign currency movements, including their impact on tourism.
Acquisitions including strategic investments or alliances entail numerous risks, which may include: (i) difficulties in integrating acquired operations or products, including the loss of key employees from, or customers, consumers or suppliers of, acquired businesses; (ii) diversion of management’s attention from our existing businesses; (iii) adverse effects on existing business relationships with suppliers, customers and consumers of ours or the companies in which we invest; (iv) adverse impacts of margin and product cost structures different from those of our current mix of business; (v) reputational risks associated with the activities of the businesses that we acquire or in which we invest; and (vi) risks of entering distribution channels, categories or markets in which we have limited or no prior experience.
Acquisitions including strategic investments or other activities entail numerous risks, which may include: (i) difficulties in integrating acquired operations or products, including the loss of key employees from, or customers, consumers or suppliers of, acquired businesses; (ii) diversion of management’s attention from our existing businesses; (iii) adverse effects on existing business relationships with suppliers, customers and consumers of ours or the companies in which we invest; (iv) adverse impacts of margin and product cost structures different from those of our current mix of business; (v) reputational risks associated with the activities of the businesses that we acquire or in which we invest; and (vi) risks of entering distribution channels, categories or markets in which we have limited or no prior experience.
In addition, if significant stock indices decide to prohibit the inclusion of companies with dual-class stock structures, the price of our Class A Common Stock could be negatively impacted and could become more volatile. 22 Table of Contents We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, are relying on exemptions from certain corporate governance requirements that are designed to provide protection to stockholders of companies that are not “controlled companies.” The Lauder family and their related entities own more than 50% of the total voting power of our common shares and, as a result, we are a “controlled company” under the New York Stock Exchange corporate governance standards.
In addition, if significant stock indices decide to prohibit the inclusion of companies with dual-class stock structures, the price of our Class A Common Stock could be negatively impacted and could become more volatile. 23 Table of Contents We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, are relying on exemptions from certain corporate governance requirements that are designed to provide protection to stockholders of companies that are not “controlled companies.” The Lauder family and their related entities own more than 50% of the total voting power of our common shares and, as a result, we are a “controlled company” under the New York Stock Exchange corporate governance standards.
Risks related to our Business and our Industry The beauty business is highly competitive, and if we are unable to compete effectively our results will suffer. We face vigorous competition from companies throughout the world, including multinational consumer product companies.
Risks related to our Business and our Industry The beauty business is highly competitive, and if we are unable to compete effectively our business will suffer. We face vigorous competition from companies throughout the world, including multinational consumer product companies.
We operate on a global basis, with a substantial majority of our fiscal 2024 net sales and operating income generated outside the United States. We maintain offices in over 50 countries and have key operational facilities located inside and outside the United States that manufacture, warehouse or distribute goods for sale throughout the world.
We operate on a global basis, with a substantial majority of our net sales and operating income generated outside the United States. We maintain offices in over 50 countries and have key operational facilities located inside and outside the United States that manufacture, warehouse or distribute goods for sale throughout the world.
If our information technology does not function properly, or is not adequately supported, it could adversely affect the Company’s business and operations.
If our information technology does not function properly, or is not adequately supported or updated, it could adversely affect the Company’s business and operations.
The failure to realize benefits, which may be due to our inability to execute plans, global or local economic conditions, competition, changes in the beauty industry and the other risks described herein, could have a material adverse effect on our business. Acquisitions and divestitures may expose us to additional risks.
The failure to realize benefits, which may be due to our inability to execute plans, global or local economic conditions, competition, changes in the beauty industry and the other risks described herein, could have a material adverse effect on our business. Acquisitions, divestitures and other strategic actions may expose us to additional risks.
Our global operations are subject to many risks and uncertainties, including: (i) fluctuations in foreign currency exchange rates and the relative costs of operating in different places, which can affect our results of operations, the value of our foreign assets, the relative prices at which we and competitors sell products in the same markets, the cost of certain inventory and non-inventory items required in our operations, and the relative prices at which we sell our products in different markets; (ii) foreign or U.S. laws, regulations and policies, including restrictions on trade, immigration and travel, operations, and investments; currency exchange controls; restrictions on imports and exports, including license requirements; tariffs; sanctions; and taxes; (iii) lack of well-established or reliable legal and administrative systems in certain countries in which we operate; (iv) adverse weather conditions and natural disasters; (v) concentration of sales growth or profitability in one or more countries (e.g., China); and (vi) social, economic and geopolitical conditions, such as a pandemic, terrorist attack, war or other military action.
Our global operations are subject to many risks and uncertainties, including: (i) fluctuations in foreign currency exchange rates and the relative costs of operating in different places, which can affect our business, the value of our foreign assets, the relative prices at which we and competitors sell products in the same markets, the cost of certain inventory and non-inventory items required in our operations, and the relative prices at which we sell our products in different markets; (ii) foreign or U.S. laws, regulations and policies, including restrictions on trade, immigration and travel, operations, and investments; currency exchange controls; restrictions on imports and exports, including license requirements; tariffs; sanctions; and taxes; (iii) lack of well-established or reliable legal and administrative systems in certain countries in which we operate; (iv) adverse weather conditions and natural disasters; (v) concentration of sales growth or profitability in one or more countries; and (vi) social, economic and geopolitical conditions, such as a pandemic, terrorist attack, war or other military action.
If any financial institutions that are parties to our revolving credit facility or other financing arrangements, such as foreign exchange or interest rate hedging instruments, were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with us.
If any financial institutions that are parties to our revolving credit facilities or other financing arrangements, such as foreign exchange or interest rate hedging instruments, were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with us.
If one or more of our largest customers change their strategies (including pricing or promotional activities), enter bankruptcy (or similar proceedings) or if our relationship with any large customer is changed or terminated for any reason, there could be a material adverse effect on our business. 17 Table of Contents Our future success depends, in part, on our ability to achieve our long-term strategy.
If one or more of our largest customers change their strategies (including pricing or promotional activities), enter bankruptcy (or similar proceedings) or if our relationship with any large customer is changed or terminated for any reason, there could be a material adverse effect on our business. Our future success depends, in part, on our ability to achieve our long-term strategy.
It is not possible to predict the final resolution of the litigation, disputes or proceedings to which we currently are or may in the future become party to, and the impact of certain of these matters could have a material adverse effect on our business . Government reviews, inquiries, investigations and actions could harm our business.
It is not possible to predict the final resolution of the litigation, disputes or proceedings to which we currently are or may in the future become party to, and the impact of certain of these matters could have a material adverse effect on our business . 21 Table of Contents Government reviews, inquiries, investigations and actions could harm our business.
In addition, a cybersecurity incident could require that we expend significant additional resources on remediation, restoration and enhancement of our information technology. Risks related to our Securities and our Ownership Structure The trading prices of our securities periodically may rise or fall based on the accuracy of predictions of our financial performance.
In addition, a cybersecurity incident could require that we expend significant additional resources on remediation, restoration and enhancement of our information technology. 22 Table of Contents Risks related to our Securities and our Ownership Structure The trading prices of our securities periodically may rise or fall based on the accuracy of predictions of our financial performance.
Achieving our long-term strategy will require investment in new capabilities, brands, categories, distribution channels, supply chain facilities, technologies and emerging and more mature geographic markets (e.g., China). These investments may result in short-term costs without any current sales and, therefore, may be dilutive to our earnings.
Achieving our long-term strategy will require investment in new capabilities, brands, categories, distribution channels, supply chain facilities, technologies and emerging and more mature geographic markets. These investments may result in short-term costs without any current sales and, therefore, may be dilutive to our earnings.
In addition, disruptions in local or global business conditions, for example, from events such as a pandemic or other health issues, geo-political or local conflicts, civil unrest, terrorist attacks, adverse weather conditions, climate changes or seismic events, can have a short-term and, sometimes, long-term impact on consumer spending.
In addition, disruptions in local or global business conditions, for example, from events such as a pandemic or other health issues, geopolitical or local conflicts, civil unrest, terrorist attacks, adverse weather conditions, climate changes or seismic events, can have a short-term and, sometimes, long-term impact on consumer spending.
Our business may also be adversely affected by risks and uncertainties not presently known to us or that we currently believe to be immaterial.
Our business may also be adversely affected by risks and uncertainties not presently known to us or that we currently believe to be not material.
These risks could have a material adverse effect on our business. A disruption in our operations, including supply chain, could adversely affect our business. As a company engaged in manufacturing and distribution on a global scale, we are subject to the risks inherent in such activities.
These risks could have a material adverse effect on our business. 20 Table of Contents A disruption in our operations, including supply chain, could adversely affect our business. As a company engaged in manufacturing and distribution on a global scale, we are subject to the risks inherent in such activities.
As of August 12, 2024, members of the Lauder family beneficially own, directly or indirectly, shares of the Company’s Class A Common Stock (with one vote per share) and Class B Common Stock (with 10 votes per share) having approximately 84% of the outstanding voting power of the Common Stock.
As of August 13, 2025, members of the Lauder family beneficially own, directly or indirectly, shares of the Company’s Class A Common Stock (with one vote per share) and Class B Common Stock (with 10 votes per share) having approximately 84% of the outstanding voting power of the Common Stock.
These changes include accounting standards, as well as laws and regulations relating to tax matters, trade (including sanctions), data privacy (e.g., General Data Protection Regulation (GDPR)), cybersecurity, anti-corruption, advertising, marketing, manufacturing, distribution, customs matters, product registration, ingredients, chemicals, packaging, selective distribution, and environmental or climate change matters. 20 Table of Contents Disputes and other legal or regulatory proceedings could adversely affect our financial results.
These changes include accounting standards, as well as laws and regulations relating to tax matters, trade (including sanctions), data privacy (e.g., General Data Protection Regulation (GDPR)), cybersecurity, anti-corruption, advertising, marketing, manufacturing, distribution, customs matters, product registration, ingredients, chemicals, packaging, selective distribution, and environmental or climate change matters. Disputes and other legal or regulatory proceedings could adversely affect our business.
If any of the events contemplated by the following discussion of risks should occur or other risks arise or develop, our business, which includes our prospects, financial condition and results of operations, the trading prices of our securities and our reputation, may be adversely affected.
If any of the events contemplated by the following discussion of risks should occur or other risks arise or develop, our business, which includes (a) our prospects, (b) our financial condition, (c) our results of operations, (d) our reputation, and (e) the trading prices of our securities, may be adversely affected.
We must continually work to develop, manufacture and market new products, maintain and adapt our “High-Touch” services to existing and emerging distribution channels, maintain and enhance the recognition of our brands, achieve a favorable mix of products, successfully manage our inventories, and modernize and refine our approach as to how and where we market and sell our products.
We must continually work to develop, manufacture and market new products, maintain and adapt our selling, advertising, promotional and other consumer engagement activities to existing and emerging distribution channels, maintain and enhance the recognition of our brands, achieve a favorable mix of products, successfully manage our inventories, and modernize and refine our approach as to how and where we market and sell our products.
In addition, four members of the Lauder family are on our Board of Directors (three of whom are executive officers). A fifth member of the Lauder family is an executive officer.
In addition, four members of the Lauder family are on our Board of Directors. One other member of the Lauder family is an executive officer.
Our Company has a well-recognized and strong reputation that could be negatively impacted by social media and many other factors, including, given the legal, regulatory and ethical landscape around the use of AI, our ability to adapt and use the emerging technology in an effective and ethical manner.
Our reputation could be negatively impacted by social media and many other factors, including, given the legal, regulatory and ethical landscape around the use of AI, our ability to adapt and use the emerging technology in an effective and ethical manner. If our reputation is adversely affected, our ability to attract and retain customers, consumers and employees could be impacted.
There can be no assurance we will be able to identify these strategic actions and consummate such transactions on favorable terms.
There can be no assurance we will be able to identify these strategic actions, be the successful bidder, and consummate such transactions on favorable terms, or otherwise realize the full intended benefit of such transactions.
As part of our long-term strategy, we are continually looking for opportunities to provide essential business services in a more cost-effective manner. In some cases, this requires the outsourcing of functions or parts of functions that can be performed more effectively by external service providers. These include certain information technology, supply chain, finance and human resource functions.
As part of our long-term strategy, we are continually looking for opportunities to improve our essential business services, which includes finding ways to be more cost-effective and efficient. In some cases, this requires the outsourcing of functions or parts of functions that we believe can be performed more effectively by external service providers.
Our success depends, in part, on our ability to retain our key personnel, including our executive officers and senior management team. The unexpected loss of, or misconduct by, one or more of our key employees could adversely affect our business.
The unexpected loss of, or misconduct by, one or more of our key employees could adversely affect our business. Our success also depends, in part, on our continuing ability to identify, hire, train and retain personnel across all levels of our business.
If required, the financing for these transactions could result in an increase in our indebtedness, dilute the interests of our stockholders or both. The purchase price for some acquisitions may include additional amounts to be paid in cash in the future, a portion of which may be contingent on the achievement of certain future operating results of the acquired business.
The purchase price for some acquisitions may include additional amounts to be paid in cash in the future, a portion of which may be contingent on the achievement of certain future operating results of the acquired business.
Any such matters, or related ESG matters, could have a material adverse effect on our business. 18 Table of Contents A general economic downturn, or disruption in business conditions may affect our business including consumer purchases of discretionary items and/or the financial strength of our customers that are retailers, which could adversely affect our financial results.
A general economic downturn, or disruption in business conditions may adversely affect our business including consumer purchases of discretionary items and/or the financial strength of our customers that are retailers.
We share some of this information with certain third parties who assist us with business matters. Moreover, the success of our operations depends upon the secure transmission of confidential, proprietary or otherwise sensitive data, including personal information, over networks.
Moreover, the success of our operations depends upon the secure transmission of confidential, proprietary or otherwise sensitive data, including personal information, over networks.
Should the value of goodwill or other intangible assets become impaired, there could be a material adverse effect on our business. Our failure to achieve the long-term plan for acquired businesses, as well as any other adverse consequences associated with our acquisition, divestiture and investment activities, could have a material adverse effect on our business.
Our failure to achieve the long-term plan for acquired businesses, as well as any other adverse consequences associated with our acquisition, divestiture and strategic activities, could have a material adverse effect on our business. 18 Table of Contents Our business could be negatively impacted by social impact and sustainability matters.
In certain key markets, such as the United States, we have seen a longer-term decline in retail traffic in our department store customers. Consolidation or liquidation in the retail trade, from these or other factors, may result in us becoming increasingly dependent on key retailers and could result in an increased risk related to the concentration of our customers.
Consolidation or liquidation in the retail trade, from these or other factors, may result in us becoming increasingly dependent on key retailers and could result in an increased risk related to the concentration of our customers. A severe, adverse impact on the business operations of our customers could have a corresponding material adverse effect on us.
We are required at least annually, or as facts and circumstances exist, to test goodwill and other intangible assets with indefinite lives to determine if impairment has occurred. We cannot accurately predict the amount and timing of any impairment of assets.
We are required at least annually, or as facts and circumstances exist, to test goodwill and other intangible assets with indefinite lives to determine if impairment has occurred, as well as assess the recoverability of other intangible assets, and have recorded goodwill and other intangible asset impairment charges in each of the last few fiscal years.
Risks related to Legal and Regulatory Matters Changes in laws, regulations and policies that affect our business could adversely affect our financial results. Our business is subject to numerous laws, regulations and policies around the world. Changes in these laws, regulations and policies, including the interpretation or enforcement thereof, that affect our business could adversely affect our financial results.
Changes in these laws, regulations and policies, including the interpretation or enforcement thereof, that affect our business could adversely affect our business.
The evolution and adoption of emerging technologies, such as AI, may intensify cybersecurity risks as techniques used in cyberattacks and cybersecurity incidents continue to evolve and develop.
The evolution and adoption of emerging technologies, such as AI, may intensify cybersecurity risks as techniques used in cyberattacks and cybersecurity incidents continue to evolve and develop. Insurance policies that may provide coverage with regard to such events may not cover any or all of the resulting financial losses.
Volatility in the financial markets and a related economic downturn in key markets or markets generally throughout the world could have a material adverse effect on our business. While we typically generate significant cash flows from our ongoing operations and have access to global credit markets through our various financing activities, credit markets may experience significant disruptions.
While we typically generate significant cash flows from our ongoing operations and have access to global credit markets through our various financing activities, credit markets may experience significant disruptions. Deterioration in global financial markets or an adverse change in our credit ratings could make future financing difficult or more expensive.
If we are unable to anticipate and respond to challenges that we may face in the marketplace, trends in the market for our products and changing consumer demands and sentiment, our financial results will suffer.
If we are unable to anticipate and respond to challenges that we may face in the marketplace, trends in the market for our products and changing consumer demands and sentiment, our business will suffer. In addition, from time to time, sales growth or profitability may be concentrated in a relatively small number of our brands, channels and/or countries.
Some competitors have greater resources than we do, others are newer companies (some backed by private-equity investors), and some are competing in distribution channels where we are less represented. In some cases, we may not be able to respond to changing business and economic conditions as quickly as our competitors.
Some competitors have greater resources than we do, others are newer companies (such as Indie Brands, some of which are backed by private-equity investors), and some are competing in distribution channels where we are less represented. The beauty business can change rapidly due to consumer preferences and industry trends.
Such failures could be due to changes in our business (e.g., shifts in business among distribution channels or acquisitions). Moreover, the standards by which ESG efforts and related matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time.
Moreover, the standards by which ESG efforts and related matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time. In addition, we could be criticized for the scope of our initiatives or goals by stakeholders who support these initiatives or those that oppose them.
From time to time, we announce certain initiatives, including goals and commitments, regarding our focus areas, which include environmental and climate matters; packaging; sourcing; product formulation; social investments; and inclusion, diversity and equity. We could fail, or be perceived to fail, in our achievement of such initiatives, or in accurately reporting our progress on such initiatives.
There continues to be a focus from certain investors, customers, consumers, regulators, employees, and other stakeholders concerning social impact and sustainability and other ESG matters. From time to time, we announce certain initiatives, including goals and commitments, regarding our focus areas, which include environmental and climate matters; packaging; sourcing; product formulation; social investments; and inclusion.
Our inability to continue to compete effectively in key countries around the world (e.g., China) could have a material adverse effect on our business. Our inability to anticipate and respond to market trends and changes in consumer preferences could adversely affect our financial results.
In addition, certain of our key retailers around the world market and sell competing brands or are owned or otherwise affiliated with companies that market and sell competing brands. Our inability to continue to compete effectively in key countries around the world (e.g., China or the United States) could have a material adverse effect on our business.
Insurance policies that may provide coverage with regard to such events may not cover any or all of the resulting financial losses. 21 Table of Contents As part of our normal business activities, we collect and store certain information that is confidential, proprietary or otherwise sensitive, including personal information of consumers, customers, suppliers, service providers and employees.
As part of our normal business activities, we collect, maintain, transmit, store and otherwise process certain information that is confidential, proprietary or otherwise sensitive, including personal information of consumers, customers, suppliers, service providers and employees. We share some of this information with certain third parties who assist us with business matters.
Our success also depends, in part, on our continuing ability to identify, hire, train and retain personnel across all levels of our business. Competition for employees can be intense. We may not be able to attract, assimilate or retain necessary personnel in the future, and our failure to do so could have a material adverse effect on our business.
We may not be able to attract, assimilate or retain necessary personnel in the future, and our failure to do so could have a material adverse effect on our business. These risks may be exacerbated by the stresses associated with the implementation of our strategic plan and other initiatives, as well as by market conditions.
In addition, from time to time, sales growth or profitability may be concentrated in a relatively small number of our brands, channels or countries (e.g., China). If such a situation persists or one or more brands, channels or countries fails to perform as expected, there could be a material adverse effect on our business.
If such a situation persists or one or more brands, channels or countries fails to perform as expected, there could be a material adverse effect on our business. 17 Table of Contents In certain key markets, such as the United States, we have seen a longer-term decline in retail traffic in our department store customers.
In addition, we could be criticized for the scope of our initiatives or goals or perceived as not acting responsibly in connection with these matters.
In addition, we could be perceived as not acting responsibly in connection with these matters. Any such matters, or related ESG matters, could have a material adverse effect on our business. We use AI, and challenges with properly managing its use could have an adverse impact on our business.
Removed
If our reputation is adversely affected, our ability to attract and retain customers, consumers and employees could be impacted. In addition, certain of our key retailers around the world market and sell competing brands or are owned or otherwise affiliated with companies that market and sell competing brands.
Added
In some cases, we may not be able to respond to changing business and economic conditions as quickly as our competitors.
Removed
A severe, adverse impact on the business operations of our customers could have a corresponding material adverse effect on us.
Added
Our Company has a well-recognized and strong reputation and our ability to maintain our reputation is critical to our business.
Removed
Our business could be negatively impacted by social impact and sustainability matters. There is an increased focus from certain investors, customers, consumers, regulators, employees, and other stakeholders concerning social impact and sustainability and other ESG matters.
Added
Our inability to anticipate and respond to market trends and changes in consumer preferences could adversely affect our business.
Removed
Deterioration in global financial markets or an adverse change in our credit ratings could make future financing difficult or more expensive.
Added
In addition, the assumptions we use to evaluate acquisition opportunities have in the past, and may in the future, prove to be inaccurate, and intended benefits may not be realized. If required, any financing for these transactions would result in an increase in our indebtedness, dilute the interests of our stockholders or both.
Removed
This risk may be exacerbated by the stresses associated with the implementation of our strategic plan and other initiatives, as well as by market conditions. 19 Table of Contents We are subject to risks related to the global scope of our operations.
Added
We cannot accurately predict the amount and timing of any impairment of assets. Should the value of goodwill or other intangible assets become impaired, there could be a material adverse effect on our business.
Removed
As we disclosed on July 18, 2023, and as noted in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, an unauthorized third party gained access to some of our systems and data (including unauthorized acquisition of such data), which caused disruption to parts of our business operations and resulted in various expenses for investigation, remediation and other related matters.
Added
We could fail, or be perceived to fail, in our achievement of such initiatives, or in accurately reporting our progress on such initiatives. Such failures could be due to changes in our business (e.g., shifts in business among distribution channels or acquisitions).
Added
We are using AI solutions, including machine learning and generative AI tools, to assist in the development of our products, engage with consumers, and in the use of internal tools that support our business. These applications may become increasingly important in our operations over time.
Added
This emerging technology presents risks inherent in its use, including risks related to harmful content, inaccuracies, hallucinations, bias or discrimination, and intellectual property infringement. In addition, the use of AI may increase cybersecurity and data privacy risks, such as intended, unintended, or inadvertent access to, transmission, or leakage of proprietary or sensitive information.
Added
These risks may become more pronounced as organizational reliance on AI increases. No assurance can be made that the usage of AI will assist us in being more efficient in all cases.
Added
Our competitors or other third parties may incorporate AI into their business, services, and products more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our business.
Added
The technologies underlying AI and their use cases are rapidly developing, and it is not possible to predict all the legal, reputational, operational or technological risks related to the use of AI.
Added
While new AI initiatives, laws, and regulations are emerging and evolving, uncertainty will remain, and our obligation to comply with the evolving regulatory landscape could entail significant costs, negatively affect our business, or limit our ability to incorporate certain AI capabilities into our business.
Added
For example, tariffs imposed on goods we import into the United States and/or tariffs on goods we import into other countries could have a material adverse effect on our business, as could geopolitical tensions involving countries that are key markets for us, or where we manufacture our products or source ingredients. 19 Table of Contents Volatility in the financial markets and a related economic downturn in key markets or markets generally throughout the world could have a material adverse effect on our business.
Added
Our success depends, in part, on our ability to retain our key personnel, including our executive officers and senior management team.
Added
We have had, and may continue to have, changes to senior management and the composition of our Board of Directors, and we are still in the process of implementing a change in our organizational design, including through Beauty Reimagined and our Profit Recovery and Growth Plan (“PRGP”).
Added
Transition periods accompanying changes in leadership and changes due to business reorganization may result in uncertainty, impact business performance and strategies and retention of personnel. As we restructure our workforce from time to time, the risk of potential employment-related claims and disputes may also increase, resulting in potential reputational harm, costs, losses, and other liabilities.
Added
Competition for employees can be intense, and although many of our key personnel have signed non-compete agreements, it is possible that these agreements would be unenforceable, in whole or in part, in some jurisdictions, permitting employees in those jurisdictions to work for our competitors. We are subject to risks related to the global scope of our operations.
Added
In addition, when we transition to, from or between external service providers, we may experience challenges that could have a material adverse effect on our business. Risks related to Legal and Regulatory Matters Changes in laws, regulations and policies could adversely affect our business. Our business is subject to numerous laws, regulations and policies around the world.
Added
Such incidents have also caused, and may in the future cause, disruption to parts of our business operations and result in various expenses for investigation, remediation and other related matters.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur enterprise risk management team collaborates with the information security function, led by the Chief Information Officer (“CIO”) and Chief Information Security Officer (“CISO”), to gather their insights and risk mitigation strategies for managing cybersecurity threats.
Biggest changeItem 1C. Cybersecurity. Risk Management and Strategy Our enterprise risk management framework considers cybersecurity risk in conjunction with our other Company risks as part of the overall risk assessment process. Our enterprise risk management team collaborates with the cybersecurity function, led by the Chief Information Security Officer (“CISO”), to gather their insights and risk mitigation strategies for managing cybersecurity threats.
We also maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of cybersecurity incidents. 23 Table of Contents We have experienced cybersecurity incidents of varying degrees on our information technology; however, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our business strategy, results of operation or financial condition.
We also maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of cybersecurity incidents. 24 Table of Contents We have experienced cybersecurity incidents of varying degrees on our information technology; however, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our business strategy, results of operation or financial condition.
The Americas Europe, the Middle East & Africa Asia/Pacific Owned Leased Owned Leased Owned Leased Manufacturing 2 2 4 — 1 — R&D 1 4 — — — 1 Distribution — 6 1 7 — 2 Manufacturing and R&D 1 — — — — — Manufacturing and Assembly — 3 — — — — Distribution and Manufacturing — — 1 — — — Principal Executive Offices — 1 — — — — Total 4 16 6 7 1 3 Certain of our manufacturing facilities are utilized primarily for the production of products relating to particular product categories: five for makeup and skin care; three for makeup; three for skin care; two for skin care and fragrance; and one for skin care and hair care.
The Americas Europe, the Middle East & Africa Asia/Pacific Owned Leased Owned Leased Owned Leased Manufacturing 2 2 4 — 1 — R&D 1 4 — — — 1 Distribution — 6 1 6 — 1 Manufacturing and R&D 1 — — — — — Manufacturing and Assembly — 2 — — — — Distribution and Manufacturing — — 1 — — — Principal Executive Offices — 1 — — — — Total 4 15 6 6 1 2 Certain of our manufacturing facilities are utilized primarily for the production of products relating to particular product categories: five for skin care and makeup; three for skin care; two for makeup; two for skin care and fragrance; and one for skin care and hair care.
Financial Statements and Supplementary Data – Note 17 – Commitments and Contingencies. 24 Table of Contents Item 4. Mine Safety Disclosures. Not applicable. 25 Table of Contents PART II
Financial Statements and Supplementary Data – Note 17 – Commitments and Contingencies. 25 Table of Contents Item 4. Mine Safety Disclosures. Not applicable. 26 Table of Contents PART II
The CISO, who reports to the CIO, regularly provides updates to the Chair of the Audit Committee and Chief Financial Officer. We also have protocols by which certain cybersecurity incidents are reported promptly to the Chair of the Audit Committee and Chief Financial Officer, as appropriate.
The CISO, who reports to the Chief Technology, Data and Analytics Officer, regularly provides updates to the Chair of the Audit Committee and Chief Financial Officer. We also have protocols by which certain cybersecurity incidents are reported promptly to the Chair of the Audit Committee and Chief Financial Officer, as appropriate.
The following table sets forth our principal owned and leased manufacturing, assembly, research and development (“R&D”) and distribution facilities, some of which include contiguous office space, as well as our principal executive offices, as of August 12, 2024. The leases expire at various times through 2079 subject to certain renewal options.
The following table sets forth our principal owned and leased manufacturing, assembly, research and development (“R&D”) and distribution facilities, some of which include contiguous office space, as well as our principal executive offices, as of August 13, 2025. The leases expire at various times through 2040 subject to certain renewal options.
Removed
Item 1C. Cybersecurity. Risk Management and Strategy Our enterprise risk management framework considers cybersecurity risk in conjunction with our other Company risks as part of the overall risk assessment process.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThese documents and any waiver of a provision of the Code granted to any senior officer or director or any material amendment to the Code may be found in the “Investors” section of our website : www.elcompanies.com under the heading “Corporate Governance.” The charters for the Audit Committee, Compensation Committee and Nominating and ESG Committee may be found in the same location on our website.
Biggest changeThese documents and any waiver of a provision of the Code granted to any senior officer or director or any material amendment to the Code may be found in the “Investors” section of our website : www.elcompanies.com under the heading “Corporate Governance.” The charters for the Audit Committee, Compensation Committee and Nominating and ESG Committee may be found in the same location on our website. 14 Table of Contents Information about our Executive Officers* Name Age Position(s) Held Michael Bowes 54 Executive Vice President, Chief People Officer Roberto Canevari 59 Executive Vice President, Chief Value Chain Officer Stéphane de La Faverie 51 President, Chief Executive Officer and a Director Jane Hertzmark Hudis 65 Executive Vice President, Chief Brand Officer Rashida La Lande 51 Executive Vice President and General Counsel Ronald S.
Seasonality Our results of operations in total, by geographic region and by product category, are subject to seasonal fluctuations, with net sales in the first half of the fiscal year typically being slightly higher than in the second half of the fiscal year.
Seasonality Our results of operations in total, by product category and geographic region, are subject to seasonal fluctuations, with net sales in the first half of the fiscal year typically being slightly higher than in the second half of the fiscal year.
Fluctuations in net sales and operating income in total and by geographic region and product category in any fiscal quarter may be attributable to the level and scope of new product introductions or the particular retail calendars followed by our customers that are retailers, which may impact their order placement and receipt of goods.
Fluctuations in net sales and operating income in total and by product category and geographic region in any fiscal quarter may be attributable to the level and scope of new product introductions or the particular retail calendars followed by our customers that are retailers, which may impact their order placement and receipt of goods.
Procurement of materials for all manufacturing facilities is generally made on a global basis through our Global Supplier Relations function. We also partner with an extensive network of third-party manufacturers that help us access innovation and capacity. We review our supplier base periodically with the specific objectives of improving quality, increasing innovation and speed-to-market, ensuring supply sufficiency and reducing costs.
Procurement of materials for all manufacturing facilities is generally made on a global basis through our Global Supplier Management function. We also partner with an extensive network of third-party manufacturers that help us access innovation and capacity. We review our supplier base periodically with the specific objectives of improving quality, increasing innovation and speed-to-market, ensuring supply sufficiency and reducing costs.
We establish and update safety policies and procedures, train employees on our safety guidelines and local requirements, and create a culture focused on well-being and safety through ongoing communication, awareness and engagement. Employee Rewards We offer competitive compensation and benefit packages to attract, motivate and retain world-class talent, and we are committed to fair and equitable pay across the organization.
We establish and update safety policies and procedures, train employees on our safety guidelines and local requirements, and seek to create a culture focused on well-being and safety through ongoing communication, awareness and engagement. Employee Rewards We offer competitive compensation and benefit packages to attract, motivate and retain world-class talent, and we are committed to fair pay across the organization.
Environmental efforts include waste reduction, reducing industrial waste to landfill, investments in renewable energy sources and packaging that incorporates recyclable and recycled content. The principal raw materials used in the manufacture of our products are essential oils, alcohols and specialty chemicals. We also purchase packaging components that are manufactured to our design specifications.
Environmental efforts include waste reduction, reducing industrial waste to landfills, investments in renewable energy sources and packaging that incorporates recyclable and recycled content. The principal raw materials used in the manufacture of our products are essential oils, alcohols and specialty chemicals. We also purchase packaging components that are manufactured to our design specifications.
We are the exclusive worldwide licensee for fragrances, cosmetics and/or related products for AERIN, BALMAIN, and Dr. Andrew Weil. For further discussion on license arrangements, including their duration, see Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies – Royalty Fees - License Arrangements .
We are the exclusive worldwide licensee for fragrances, cosmetics, skin care and/or related products for AERIN, BALMAIN, and Dr. Andrew Weil. For further discussion on license arrangements, including their duration, see Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies – Royalty Fees - License Arrangements .
Paul J. Fribourg Chairman and Chief Executive Officer, Continental Grain Company, an international agribusiness and investment company Jennifer Hyman Co-Founder, Chief Executive Officer, and Chair, Rent the Runway, Inc., a company that enables women to subscribe, rent items, and shop resale from an unlimited closet of designer brands Gary M.
Fribourg Chairman and Chief Executive Officer, Continental Grain Company, an international agribusiness and investment company Jennifer Hyman Co-Founder, Chief Executive Officer, and Chair, Rent the Runway, Inc., a company that enables women to subscribe, rent items, and shop resale from an unlimited closet of designer brands Gary M.
Trademarks, Patents and Copyrights We own the trademark rights used in connection with the manufacturing, marketing, distribution and sale of our products both in the United States and in the other principal countries where such products are sold, including Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, TOM FORD, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, Kilian Paris, Too Faced, Dr.Jart+, The Ordinary and NIOD.
Trademarks, Patents and Copyrights We own the trademark rights used in connection with the manufacturing, marketing, distribution and sale of our products in the United States, China and in the other principal markets where such products are sold, including Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, TOM FORD, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, The Ordinary and NIOD.
In addition, we focus on supply sourcing within the region of manufacture to allow for improved supply chain efficiencies, lead-time reduction and reduced emissions. Some of our products rely on single-source or a limited number of suppliers; however, we believe we have a robust business continuity strategy, sophisticated capacity planning tools and strategic inventory buffer and multi-sourcing solutions.
In addition, we focus on supply sourcing within the region of manufacture to allow for improved supply chain efficiencies, lead-time reduction and reduced emissions. 11 Table of Contents Some of our products rely on single-source or a limited number of suppliers; however, we believe we have a robust business continuity strategy, sophisticated capacity planning tools and strategic inventory buffer and multi-sourcing solutions.
We are continuously evaluating and adjusting this physical distribution network, particularly as we work to anticipate and respond to shifts in channel and consumer preferences, as well as identifying opportunities to increase efficiencies and reduce costs.
We are continuously evaluating and adjusting this physical distribution network, particularly as we work to anticipate and respond to shifts in channel and consumer preferences, external challenges, as well as identifying opportunities to increase efficiencies and reduce costs.
Securities and Exchange Commission. 14 Table of Contents Corporate Governance Guidelines and Code of Conduct The Board of Directors has developed corporate governance practices to help it fulfill its responsibilities to stockholders in providing general direction and oversight of management. These practices are set forth in our Corporate Governance Guidelines.
Securities and Exchange Commission. Corporate Governance Guidelines and Code of Conduct The Board of Directors has developed corporate governance practices to help it fulfill its responsibilities to stockholders in providing general direction and oversight of management. These practices are set forth in our Corporate Governance Guidelines.
Based on our review of employee survey results, action plans are implemented to enhance employee satisfaction and to ensure alignment with our overall human capital strategy.
Based on our review of employee survey results, action plans are implemented to enhance employee satisfaction and to drive alignment with our overall human capital strategy.
We protect our trademarks in the United States and significant markets worldwide. We consider the protection of our trademarks to be important to our business. A number of our products incorporate patented, patent-pending or proprietary technology. In addition, several products and packaging for such products are covered by design patents or copyrights.
We protect our trademarks in the United States, China and other principal markets worldwide. We consider the protection of our trademarks to be important to our business. A number of our products incorporate patented, patent-pending or proprietary technology. In addition, several products and packaging for such products are covered by design patents or copyrights.
While we consider these patents and copyrights, and the protection thereof, to be important, no single patent or copyright, or group of patents or copyrights, is considered material to the conduct of our business. 12 Table of Contents Human Capital We strive to operate responsibly and to build a sustainable business based on uncompromising ethics, integrity, fairness, diversity and trust, consistent with our Company values.
While we consider these patents and copyrights, and the protection thereof, to be important, no single patent or copyright, or group of patents or copyrights, is considered material to the conduct of our business. Human Capital We strive to operate responsibly and to build a sustainable business based on uncompromising ethics and integrity, consistent with our Company values.
The higher net sales in the first half of the fiscal year are attributable to the increased levels of purchasing by consumers for special events and by retailers for holiday selling seasons.
The higher net sales that we typically recognize in the first half of the fiscal year are attributable to the increased levels of purchasing by consumers for special events and by retailers for holiday selling seasons.
Webster joined the Company in 2021; previously from January 2021 to May 2021, she served as Chief of Staff, Domestic Policy Council, The White House; from 2018 to 2021, she was Chief Communications Officer, Vox Media, Inc., an independent media company; from 2017 to 2018, Ms.
Webster joined the Company in 2021. Previously from January 2021 to May 2021, she served as Chief of Staff, Domestic Policy Council, The White House; and from 2018 to 2021, she was Chief Communications Officer, Vox Media, Inc., an independent media company. Ms. La Lande joined the Company in August 2024.
Sternlicht Chairman and Chief Executive Officer, Starwood Capital Group, a privately-held global investment firm focused on global real estate Jennifer Tejada Chief Executive Officer and Chair, PagerDuty, Inc., a digital operations management platform for businesses Richard F. Zannino Managing Director, CCMP Capital Advisors, LLC, a private equity firm *As of August 12, 2024 16 Table of Contents
Sternlicht Chairman and Chief Executive Officer, Starwood Capital Group, a privately-held global investment firm focused on global real estate Jennifer Tejada Chief Executive Officer and Chair, PagerDuty, Inc., a digital operations management platform for businesses Richard F. Zannino Managing Director, CCMP Capital Advisors, LLC, a private equity firm Eric L.
Lauder Managing Director, Lauder Partners LLC, a venture capital firm Jane Lauder Executive Vice President, Enterprise Marketing and Chief Data Officer, The Estée Lauder Companies Inc. Ronald S. Lauder Chairman, Clinique Laboratories, LLC William P. Lauder Executive Chairman, The Estée Lauder Companies Inc. Arturo Nuñez Founder and Chief Executive Officer of AIE Creative, a branding and marketing firm Richard D.
Lauder Managing Director, Lauder Partners LLC, a venture capital firm Jane Lauder Former Executive Vice President, Enterprise Marketing and Chief Data Officer, The Estée Lauder Companies Inc. William P. Lauder Chair of the Board, The Estée Lauder Companies Inc. Arturo Nuñez Founder and Chief Executive Officer of AIE Creative, a branding and marketing firm Barry S.
We recognize the importance of female representation, and, as of June 30, 2024, approximately 80% of our employees were female and approximately 60% of our employees at the level of Vice President and above were female. We have no employees in the United States that are covered by a collective bargaining agreement.
As of June 30, 2025, approximately 80% of our employees were female and 20% were male, and approximately 61% of our employees at the level of Vice President and above were female and 39% were male. We have no employees in the United States that are covered by a collective bargaining agreement.
Our human capital management includes the following strategic areas: Inclusion, Diversity and Equity We continue to evolve our inclusion, diversity and equity strategy as we remain committed to supporting an inclusive and diverse workplace for all of our employees that better enables us to create innovative products and services as we continually strive to meet the evolving needs of our diverse global consumers.
Our human capital management includes the following strategic areas: Building a Strong and Inclusive Culture We remain committed to our values and supporting an inclusive environment for all of our employees that better enables us to create innovative products and services as we continually strive to meet the evolving needs of our global consumers.
At June 30, 2024, approximately 71% of our global employees were full-time, approximately 16% were temporary and approximately 13% were part-time employees, with approximately 27% of our global employees located in the United States and approximately 73% located outside of the United States.
At June 30, 2025, approximately 71% of our global employees were full-time, approximately 15% were temporary and approximately 14% were part-time employees, with approximately 25% of our global employees located in the United States and approximately 75% located outside of the United States.
Mr. Canevari joined the Company in 2021; previously, from July 2019 to April 2021, he served as Executive Vice President, Supply Chain, Europe, at Unilever PLC, a consumer goods company, and from September 2012 to June 2019, he was Chief Supply Chain Officer at Burberry Group PLC, a global luxury brand. Ms.
Mr. Canevari joined the Company in 2021 as Executive Vice President, Global Supply Chain, and his responsibilities and title changed to Executive Vice President, Chief Value Chain Officer, effective April 2025. Previously, from July 2019 to April 2021, he served as Executive Vice President, Supply Chain, Europe, at Unilever PLC, a consumer goods company. Ms.
Our objective in creating an environment of inclusion, diversity and equity is to enhance our ability to attract and retain the best talent globally and promote a sense of belonging. We continuously encourage a culture of fairness, equal access to opportunities, including positions of leadership, and transparency in employment matters.
Our objective in creating a culture of belonging is to enhance our ability to attract and retain the best talent globally and promote an environment where employees are motivated to succeed. We continuously encourage a culture of fairness, equal access to opportunities, including positions of leadership, and ongoing learning and growth.
We continue to evaluate our manufacturing facilities and processes and identify sourcing opportunities to improve innovation, increase efficiencies, minimize our impact on the environment, ensure supply sufficiency and reduce costs. Our plants are modern, and our manufacturing processes are substantially automated. In fiscal 2024, we completed the construction of our new manufacturing facility in Japan, near Tokyo.
We continue to evaluate our manufacturing facilities and processes and identify sourcing opportunities to improve innovation, increase efficiencies, minimize our impact on the environment, ensure supply sufficiency, reduce costs and adjust our operations to respond to external challenges. Our plants are modern, and our manufacturing processes are substantially automated.
Government Regulation We and our products are subject to regulation by the Food and Drug Administration and the Federal Trade Commission in the United States, as well as by various other federal, state, local and international regulatory authorities and the regulatory authorities in the countries in which our products are produced or sold.
Government Regulation We and our products are subject to regulation by numerous federal, state, local and international regulatory authorities and the regulatory authorities in the countries in which our products are produced or sold.
To support the health and well-being of our employees, our competitive benefit packages may include, depending upon position and location, pension and post-retirement benefit plans, health and wellness benefits, flexible working arrangements, parental (maternal and paternal) leave and support programs, adoption assistance and education-related benefits.
To support the health and well-being of our employees, our competitive benefit packages may include, depending upon position and location, pension and post-retirement benefit plans, health and wellness benefits, flexible working arrangements, parental (maternal and paternal) leave and support programs, adoption assistance and education-related benefits. 13 Table of Contents Volunteerism and Community Engagement We support volunteer efforts by our employees as our long-term success can benefit from the vitality of the communities where we have a presence.
Brand recognition, product quality and effectiveness, distribution channels, accessibility, and price point are some of the factors that impact consumers’ choices among competing products and brands.
Competition There is significant competition within each market where our skin care, makeup, fragrance and hair care products are sold. Brand recognition, product quality and effectiveness, distribution channels, accessibility, and price point are some of the factors that impact consumers’ choices among competing products and brands.
From time to time, we may experience supply disruptions on a short-term basis, but we currently believe we have adequate resources of supply and our portfolio of suppliers has the resources and facilities to overcome most unforeseen interruptions of supply. 11 Table of Contents We are continually benchmarking the performance of our supply chain, and we augment our supply base and adjust our distribution networks and manufacturing plants and networks based upon the changing needs of the business.
From time to time, we may experience supply disruptions on a short-term basis, but we currently believe we have adequate resources of supply and our portfolio of suppliers has the resources and facilities to overcome most unforeseen interruptions of supply.
There continues to be increased interest and awareness from our customers and consumers in responsibly-sourced ingredients and environmentally sustainable products, and we believe we are well-positioned to benefit from the resulting change in consumer preferences due to our social impact and sustainability efforts.
There continues to be interest and awareness from our customers and consumers in responsibly-sourced ingredients and environmentally sustainable products, and we believe we are well-positioned to benefit from these preferences due to our social impact and sustainability efforts. Marketing, merchandising, in-store and online experiences and demonstrations, and new product innovations also have an impact on consumers’ purchasing decisions.
Travis 62 Executive Vice President and Chief Financial Officer Meridith Webster 48 Executive Vice President – Global Communications and Public Affairs *As of August 12, 2024. See below for information regarding expected changes. All of the executive officers named above have been employees of the Company for more than five years, with the exception of Roberto Canevari and Meridith Webster.
Lauder 81 Chairman of Clinique Laboratories, LLC Akhil Shrivastava 52 Executive Vice President and Chief Financial Officer Meridith Webster 49 Executive Vice President, Global Communications and Public Affairs *As of August 13, 2025 All of the executive officers named above have been employees of the Company for more than five years, with the exception of Roberto Canevari, Meridith Webster and Rashida La Lande.
Shrivastava has been an employee of the Company for more than five years. 15 Table of Contents Information about our Board of Directors* Name Principal Occupation or Employment Charlene Barshefsky Chair, Parkside Global Advisors, a consulting firm Angela Wei Dong Global Vice President and General Manager of Greater China, NIKE, Inc., a company that designs and develops, and markets and sells worldwide, athletic footwear, equipment, accessories and services Fabrizio Freda President and Chief Executive Officer, The Estée Lauder Companies Inc.
Previously, he was Senior Vice President, Corporate Controller from July 2024 to October 2024; Senior Vice President and Treasurer from December 2020 to June 2024; and Senior Vice President, Global Finance and Strategy Global Brand Cluster from January 2019 to November 2020. 15 Table of Contents Information about our Board of Directors* Name Principal Occupation or Employment Charlene Barshefsky Chair, Parkside Global Advisors, a consulting firm Angela Wei Dong Chairman and CEO of NIKE Greater China and All Conditions Gear (ACG), NIKE, Inc., a company that designs and develops, and markets and sells worldwide, athletic footwear, equipment, accessories and services Stéphane de La Faverie President and Chief Executive Officer, The Estée Lauder Companies Inc.
Some of our competitors are large, well-known, multinational manufacturers and marketers of skin care, makeup, fragrance and hair care products, most of which market and sell their products under multiple brand names. Our competitors include L’Oreal S.A.; Unilever; Procter & Gamble; LVMH Moët Hennessey Louis Vuitton; Chanel S.A.; Beiersdorf; Shiseido Company, Ltd.; Natura & Co. and Coty Inc.
We compete against a number of global and local companies. Some of our competitors are large, well-known, multinational manufacturers and marketers of skin care, makeup, fragrance and hair care products, most of which market and sell their products under multiple brand names.
We view human capital management and the strength of our employees as integral to the long-term success and resilience of our business. Our Board of Directors and its committees provide oversight to management on a range of human capital matters, including inclusion and diversity, health and safety, pay equity and compensation and benefits.
We view human capital management and the strength of our employees as integral to the long-term success and resilience of our business.
We also face competition from a number of independent brands, some of which are backed by private-equity investors, as well as some retailers that have their own beauty brands. Certain of our competitors also have ownership interests in retailers that are customers of ours.
Our competitors include L’Oreal S.A.; Unilever; Procter & Gamble; LVMH Moët Hennessey Louis Vuitton; Chanel S.A.; Beiersdorf; Shiseido Company, Ltd.; Coty Inc.; and Puig. We also face competition from a number of independent brands (“Indie Brands”), some of which are backed by private-equity investors, as well as some retailers that have their own beauty brands.
Our investments include providing programs to ensure our employees are equipped with the right skillsets and knowledge, as well as opportunities to transfer to other functions or regions through short-term and long-term assignments. We believe these programs and opportunities create a pipeline of talent and leadership, necessary to drive and deliver on our long-term strategy in an ever-changing business environment.
We believe these programs and opportunities create a pipeline of talent and leadership, necessary to drive and deliver on our long-term strategy in an ever-changing business environment. To enhance our culture and measure our human capital efforts, we regularly engage with our employees and provide several mechanisms for our employees to provide their feedback.
As of June 30, 2024 and 2023, we had approximately 62,000 employees worldwide, including demonstrators at points of sale who are employed by us.
Our Board of Directors and its committees provide oversight to management on a range of human capital matters, including inclusion, health and safety, and compensation and benefits. 12 Table of Contents As of June 30, 2025 and 2024, we had approximately 57,000 and 62,000 employees worldwide, respectively, including approximately 35,000 and 37,000 demonstrators at points of sale who are employed by us as of June 30, 2025 and 2024, respectively.
We are proud of our history of driving awareness and acceptance around the world and for standing up for the rights of individuals in the workplace and beyond. We remain resolute in our commitments to racial equity, with a focus on U.S. operations, including programs related to listening and learning, talent and opportunity, representation, suppliers and investing in change.
We are proud of our history of driving awareness and acceptance around the world and for standing up for the rights of individuals in the workplace and beyond. Talent Recruitment, Retention, Learning and Development Hiring, retaining and developing the best talent globally is key to our success.
Parsons Chairman, Equity Alliance, a firm that invests in diverse, emerging venture capital fund managers, and co-founder and partner, Imagination Capital LLC, a venture capital firm Lynn Forester de Rothschild Chief Executive Officer and Chair E.L. Rothschild LLC, a private investment company Barry S.
Lynn Forester de Rothschild Chief Executive Officer and Chair E.L. Rothschild LLC, a private investment company Paul J.
As previously reported on August 7, 2024, Rashida La Lande, age 50, is expected to become Executive Vice President and General Counsel effective August 19, 2024. Ms. La Lande joins the Company from The Kraft Heinz Company, a manufacturer and marketer of food and beverage products, where she was for more than five years.
Previously, from December 2023 to August 2024, she served as Executive Vice President and Chief Legal and Corporate Affairs Officer, at The Kraft Heinz Company, a manufacturer and marketer of food and beverage products. Ms.
One example is our Talent Marketplace, (called ELC Grow), which enables employees to explore personalized roles, projects, and networking opportunities that can empower employees to grow their skills and career. 13 Table of Contents To enhance innovation, productivity and our speed to market, we aim to foster an environment of curiosity and to create a workplace that encourages continuous learning and development.
One example is our Talent Marketplace (called ELC Grow), which enables employees to explore roles, projects, and networking opportunities which align to their skills and career aspirations; empowering employees to take deliberate actions toward their growth and development. Health and Safety We are committed to providing a healthy and safe workplace for our employees.
As we integrate acquired brands, we continually seek new ways to leverage our production and sourcing capabilities to improve our overall supply chain performance. Competition There is significant competition within each market where our skin care, makeup, fragrance and hair care products are sold.
Additionally, in connection with our Profit Recovery and Growth Plan (“PRGP”), we have, and are continuing to focus on our levels of excess inventory and obsolescence and cost efficiencies within our global supply chain network. As we integrate acquired brands, we continually seek new ways to leverage our production and sourcing capabilities to improve our overall supply chain performance.
We offer training and development programs that are focused on strengthening leadership and professional skills at various stages of an employee’s career. Our programs are offered through in-person, online or virtual learning experiences. Health and Safety We are committed to providing a healthy and safe workplace for our employees.
Our investments include providing programs to equip our employees with the right skillsets and knowledge, including through training and development programs that are focused on strengthening leadership and professional skills at various stages of an employee's career, as well as opportunities to gain experience through cross-organization short-term and long-term projects in partnership with other brands, functions or regions.
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Marketing, merchandising, in-store and online experiences and demonstrations, and new product innovations also have an impact on consumers’ purchasing decisions.
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We are continually benchmarking the performance of our supply chain, and we augment our supply base and adjust our distribution networks and manufacturing plants and networks based upon the changing needs of the business.
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With our portfolio of diverse brands sold in a variety of channels, we are one of the world’s leading manufacturers, marketers and sellers of skin care, makeup, fragrance and hair care products, and are a steward of luxury and prestige brands globally. We compete against a number of global and local companies.
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Certain of our competitors also have ownership interests in retailers that are customers of ours.
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We are also committed to gender equity and equitable pay practices, having made significant progress in this respect, and also continue to prioritize cross-generational inclusion and diversity to help cultivate talent within our workforce. Talent Recruitment, Retention, Learning and Development Hiring, retaining and developing the best talent globally is key to our success.
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La Lande also served in a variety of roles at The Kraft Heinz Company, including as Executive Vice President, Global General Counsel, and Chief Sustainability and Corporate Affairs Officer from December 2021 to December 2023; Corporate Secretary from 2018 to May 2022; and as Senior Vice President, Global General Counsel and Head of ESG and Government Affairs from 2018 to December 2021.
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To enhance our culture and measure our human capital efforts, we regularly engage with our employees and provide several mechanisms for our employees to provide their feedback. Key topics covered during employee engagement include inclusion, diversity and equity, learning and development, work-life structure, leadership effectiveness, and employee benefits and well-being.
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The following individuals were appointed as executive officers or have assumed new roles or responsibilities in fiscal 2025: Mr. Bowes was appointed Executive Vice President, Chief People Officer, effective April 2025. Previously, he was Senior Vice President, Global Talent from July 2019 to March 2025. Mr. de La Faverie was appointed President and Chief Executive Officer, effective January 2025.
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Volunteerism and Community Engagement We support volunteer efforts by our employees as our long-term success can benefit from the vitality of the communities where we have a presence.
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Previously, he was Executive Group President from September 2022 to December 2024; and Group President, The Estée Lauder Companies and Global President Estée Lauder and AERIN Beauty from July 2020 to August 2022. Ms. Hertzmark Hudis’s responsibilities and title changed to Executive Vice President, Chief Brand Officer, effective April 2025.
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Information about our Executive Officers* Name Age Position(s) Held Roberto Canevari 58 Executive Vice President – Global Supply Chain Stéphane de La Faverie 50 Executive Group President Fabrizio Freda 66 President, Chief Executive Officer and a Director Carl Haney 61 Executive Vice President, Global Research Product and Innovation Officer Jane Hertzmark Hudis 64 Executive Group President Peter Jueptner 61 President, International Jane Lauder 51 Executive Vice President, Enterprise Marketing and Chief Data Officer and a Director Leonard A.
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Previously, she was Executive Group President from July 2020 to March 2025. Mr. Shrivastava was appointed Executive Vice President and Chief Financial Officer, effective November 2024.
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Lauder 91 Chairman Emeritus Ronald S. Lauder 80 Chairman of Clinique Laboratories, LLC and a Director William P. Lauder 64 Executive Chairman and a Director Michael O’Hare 56 Executive Vice President – Global Human Resources Tracey T.
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Zinterhofer Founding Partner of Searchlight Capital Partners, L.P., a private equity firm *As of August 13, 2025 16 Table of Contents
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Webster was Managing Director for Public Affairs at Emerson Collective, an organization focused on a wide range of initiatives including education, immigration, climate, and cancer research and treatment; and from 2011 to 2017, she served at Bloomberg L.P., a provider of business and financial information and news, in a variety of roles, including the Global Head of Public Affairs.
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Prior to that, she was a partner at the law firm of Gibson, Dunn & Crutcher. As previously reported on July 23, 2024, Akhil Shrivastava, age 51, is expected to become Executive Vice President and Chief Financial Officer on November 1, 2024, succeeding Tracey T. Travis in that role. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRESULTS OF OPERATIONS We manufacture, market and sell beauty products including those in the skin care, makeup, fragrance and hair care categories, which are distributed in approximately 150 countries and territories. The following table is a comparative summary of operating results for fiscal 2024, 2023 and 2022 and reflects the basis of presentation described in
Biggest changeRESULTS OF OPERATIONS We manufacture, market and sell beauty products including those in the skin care, makeup, fragrance and hair care categories, which are distributed in approximately 150 countries and territories.
We may resume such repurchases in the future. 26 Table of Contents Performance Graph The following graph compares the cumulative five-year total stockholder return (stock price appreciation plus dividends) on the Company’s Class A Common Stock with the cumulative total return of the S&P 500 Index and the S&P 500 Consumer Staples Index.
We may resume such repurchases in the future. 27 Table of Contents Performance Graph The following graph compares the cumulative five-year total stockholder return (stock price appreciation plus dividends) on the Company’s Class A Common Stock with the cumulative total return of the S&P 500 Index and the S&P 500 Consumer Staples Index.
The returns are calculated by assuming an investment of $100 in the Class A Common Stock and in each index on June 30, 2019. Item 6. [Reserved] 27 Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The returns are calculated by assuming an investment of $100 in the Class A Common Stock and in each index on June 30, 2020. Item 6. [Reserved] 28 Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As of August 12, 2024, there were 3,431 record holders of Class A Common Stock and 13 record holders of Class B Common Stock. Share Repurchase Program We are authorized by the Board of Directors to repurchase shares of our Class A Common Stock in the open market or in privately negotiated transactions, depending on market conditions and other factors.
As of August 13, 2025, there were 3,262 record holders of Class A Common Stock and 13 record holders of Class B Common Stock. Share Repurchase Program We are authorized by the Board of Directors to repurchase shares of our Class A Common Stock in the open market or in privately negotiated transactions, depending on market conditions and other factors.
The dividend is payable in cash on September 16, 2024 to stockholders of record at the close of business on August 30, 2024. We expect to continue the payment of cash dividends in the future, but there can be no assurance as to the amounts of any dividends declared or that the Board of Directors will continue to declare them.
The dividend is payable in cash on September 16, 2025 to stockholders of record at the close of business on September 2, 2025. We expect to continue the payment of cash dividends in the future, but there can be no assurance as to the amounts of any dividends declared or that the Board of Directors will continue to declare them.
Market for Registrant’s Common Equity and Related Stockholder Matters Our Class A Common Stock is publicly traded on the New York Stock Exchange under the symbol “EL.” On August 16, 2024, a dividend was declared in the amount of $.66 per share on our Class A and Class B Common Stock.
Market for Registrant’s Common Equity and Related Stockholder Matters Our Class A Common Stock is publicly traded on the New York Stock Exchange under the symbol “EL.” On August 19, 2025, a dividend was declared in the amount of $.35 per share on our Class A and Class B Common Stock.
The following table provides information relating to our repurchase of Class A Common Stock during the referenced periods: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number of Shares that May Yet Be Purchased Under the Program (2) April 2024 843 $ 144.47 — 25,073,242 May 2024 1,601 136.32 — 25,073,242 June 2024 3,117 107.36 — 25,073,242 5,561 121.32 — (1) Represents shares that were repurchased by the Company to satisfy tax withholding obligations upon the payout of certain stock-based compensation arrangements.
The following table provides information relating to our repurchase of Class A Common Stock during the referenced periods: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number of Shares that May Yet Be Purchased Under the Program (2) April 2025 — $ — — 25,073,242 May 2025 3,865 64.84 — 25,073,242 June 2025 — — — 25,073,242 3,865 64.84 — (1) Represents shares that were repurchased by the Company to satisfy tax withholding obligations upon the payout of certain stock-based compensation arrangements.
Added
Year Ended June 30, 2025 2024 2023 ($ in millions) $ % $ % $ % Net sales $ 14,326 100.0 % $ 15,608 100.0 % $ 15,910 100.0 % Cost of sales 3,729 26.0 4,424 28.3 4,564 28.7 Gross profit 10,597 74.0 11,184 71.7 11,346 71.3 Operating expenses: Selling, general and administrative 9,456 66.0 9,621 61.6 9,575 60.2 Restructuring and other charges 481 3.4 122 0.8 55 0.3 Goodwill impairment 13 0.1 291 1.9 — — Impairment of other intangible assets 1,273 8.9 180 1.2 207 1.3 Talcum litigation settlement agreements 159 1.1 — — — — Total operating expenses 11,382 79.4 10,214 65.4 9,837 61.8 Operating (loss) income (785) (5.5) 970 6.2 1,509 9.5 Interest expense 357 2.5 378 2.4 255 1.6 Interest income and investment income, net 114 0.8 167 1.1 131 0.8 Other components of net periodic benefit cost 12 0.1 (13) (0.1) (12) (0.1) (Loss) earnings before income taxes (1,040) (7.3) 772 4.9 1,397 8.8 Provision for income taxes 93 0.6 363 2.3 387 2.4 Net (loss) earnings (1,133) (7.9) 409 2.6 1,010 6.3 Net earnings attributable to redeemable noncontrolling interest — — (19) (0.1) (4) — Net (loss) earnings attributable to The Estée Lauder Companies Inc. $ (1,133) (7.9) % $ 390 2.5 % $ 1,006 6.3 % Percentages not adjusted for differences caused by rounding 29 Table of Contents The following table is a comparative summary of operating results for fiscal 2025, 2024 and 2023, for our product categories and geographic regions and reflects the basis of presentation described in

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

90 edited+34 added−48 removed35 unchanged
Biggest changeYear Ended June 30 % Change % Change in Constant Currency ($ in millions, except per share data) 2024 2023 Variance Net sales, as reported $ 15,608 $ 15,910 $ (302) (2) % (1) % Returns associated with restructuring and other activities 1 27 (26) Net sales, as adjusted $ 15,609 $ 15,937 $ (328) (2) % (1) % Operating income, as reported $ 970 $ 1,509 $ (539) (36) % (34) % Charges associated with restructuring and other activities 124 85 39 Goodwill and other intangible asset impairments 471 207 264 Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax 23 22 1 Operating income, as adjusted $ 1,588 $ 1,823 $ (235) (13) % (10) % Diluted net earnings per common share, as reported $ 1.08 $ 2.79 $ (1.71) (61) % (60) % Charges associated with restructuring and other activities .27 .18 .09 Goodwill and other intangible asset impairments 1.19 .44 .75 Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax (less portion attributable to redeemable noncontrolling interest) .05 .05 — Diluted net earnings per common share, as adjusted $ 2.59 $ 3.46 $ (.87) (25) % (22) % As diluted net earnings per common share, as adjusted, is used as a measure of the Company’s performance, we consider the impact of current and deferred income taxes when calculating the per-share impact of each of the reconciling items. 46 Table of Contents The following table reconciles the change in net sales by product category and geographic region, as reported, to the change in net sales excluding the effects of foreign currency translation: As Reported Year Ended June 30 ($ in millions) 2024 2023 Variance Impact of foreign currency translation Variance, in constant currency % Change, as reported % Change, in constant currency By Product Category: Skin Care $ 7,908 $ 8,249 $ (341) $ 79 $ (262) (4) % (3) % Makeup 4,470 4,532 (62) 14 (48) (1) (1) Fragrance 2,487 2,451 36 12 48 1 2 Hair Care 629 652 (23) — (23) (4) (4) Other 115 53 62 — 62 100+ 100+ 15,609 15,937 (328) 105 (223) (2) (1) Returns associated with restructuring and other activities (1) (27) 26 — 26 Total $ 15,608 $ 15,910 $ (302) $ 105 $ (197) (2) % (1) % By Region: The Americas $ 4,581 $ 4,518 $ 63 $ 4 $ 67 1 % 1 % Europe, the Middle East & Africa 6,140 6,225 (85) (54) (139) (1) (2) Asia/Pacific 4,888 5,194 (306) 155 (151) (6) (3) 15,609 15,937 (328) 105 (223) (2) (1) Returns associated with restructuring and other activities (1) (27) 26 — 26 Total $ 15,608 $ 15,910 $ (302) $ 105 $ (197) (2) % (1) % 47 Table of Contents The following tables reconcile the change in operating results by product category and geographic region, as reported, to the change in operating income excluding the impact of goodwill and other intangible asset impairments and the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax: As Reported Add: Changes in Goodwill and other intangible asset impairments Add: Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax Variance, as adjusted % Change, as reported % Change, as adjusted Year Ended June 30 ($ in millions) 2024 2023 Variance By Product Category: Skin Care $ 735 $ 1,277 $ (542) $ 371 $ 1 $ (170) (42)% (12)% Makeup 93 (21) 114 (107) — 7 100+ 8 Fragrance 265 370 (105) — — (105) (28) (28) Hair Care (52) (36) (16) — — (16) (44) (44) Other 53 4 49 — — 49 100+ 100+ 1,094 1,594 $ (500) $ 264 $ 1 $ (235) (31)% (13)% Charges associated with restructuring and other activities (124) (85) Total $ 970 $ 1,509 By Region: The Americas $ 34 $ (73) $ 107 $ (107) $ (8) $ (8) 100+% (14)% Europe, the Middle East & Africa 836 843 (7) — 9 2 (1) — Asia/Pacific 224 824 (600) 371 — (229) (73) (25) 1,094 1,594 $ (500) $ 264 $ 1 $ (235) (31)% (13)% Charges associated with restructuring and other activities (124) (85) Total $ 970 $ 1,509 48 Table of Contents FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of funds historically have been cash flows from operations, borrowings pursuant to our commercial paper program, borrowings from the issuance of long-term debt and committed and uncommitted credit lines provided by banks and other lenders in the United States and abroad.
Biggest changeGAAP measures. 47 Table of Contents Year Ended June 30, % Change % Change in Constant Currency ($ in millions, except per share data) 2025 2024 Variance Net sales, as reported $ 14,326 $ 15,608 $ (1,282) (8) % (8) % Returns associated with restructuring and other activities (3) 1 (4) Net sales, as adjusted $ 14,323 $ 15,609 $ (1,286) (8) % (8) % Operating (loss) income, as reported $ (785) $ 970 $ (1,755) (100+)% (100+)% Charges associated with restructuring and other activities 486 124 362 Goodwill impairment 13 291 (278) Impairment of other intangible assets 1,273 180 1,093 Talcum litigation settlement agreements 159 — 159 Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax — 23 (23) Operating income, as adjusted $ 1,146 $ 1,588 $ (442) (28) % (27) % Provision for income taxes, as reported $ 93 $ 363 $ (270) (74) % (73) % Effective rate for income taxes, as reported (8.9) % 47.0 % Charges associated with restructuring and other activities 105 27 78 Goodwill and other intangible asset impairments 285 41 244 U.S. deferred tax asset valuation allowance adjustment (172) — (172) Talcum litigation settlement agreements 35 — 35 Provision for income taxes, as adjusted $ 346 $ 431 $ (85) (20) % (19) % Effective rate for income taxes, as adjusted 38.8 % 31.0 % Diluted net (loss) earnings per common share, as reported $ (3.15) $ 1.08 $ (4.23) (100+)% (100+)% Charges associated with restructuring and other activities 1.06 .27 .79 Goodwill and other intangible asset impairments 2.78 1.19 1.59 U.S. deferred tax asset valuation allowance adjustment .48 — .48 Talcum litigation settlement agreements .34 — .34 Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax (less portion attributable to redeemable noncontrolling interest) — .05 (.05) Diluted net earnings per common share, as adjusted $ 1.51 $ 2.59 $ (1.08) (42) % (41) % As diluted net earnings per common share, as adjusted, is used as a measure of the Company’s performance, we consider the impact of current and deferred income taxes when calculating the per-share impact of each of the reconciling items. 48 Table of Contents The following table reconciles the change in net sales by product category and geographic region, as reported, to the change in net sales excluding the effects of foreign currency translation: As Reported Year Ended June 30, ($ in millions) 2025 2024 Variance Impact of foreign currency translation Variance, in constant currency % Change, as reported % Change, in constant currency By Product Category: Skin Care $ 6,962 $ 7,908 $ (946) $ 2 $ (944) (12) % (12) % Makeup 4,205 4,470 (265) 20 (245) (6) (5) Fragrance 2,491 2,487 4 4 8 — — Hair Care 565 629 (64) 2 (62) (10) (10) Other 100 115 (15) — (15) (13) (13) 14,323 15,609 (1,286) 28 (1,258) (8) (8) Returns associated with restructuring and other activities 3 (1) 4 — 4 Total $ 14,326 $ 15,608 $ (1,282) $ 28 $ (1,254) (8) % (8) % By Geographic Region: The Americas $ 4,411 $ 4,581 $ (170) $ 50 $ (120) (4) % (3) % Europe, the Middle East & Africa 5,375 6,140 (765) (27) (792) (12) (13) Asia/Pacific 4,537 4,888 (351) 5 (346) (7) (7) 14,323 15,609 (1,286) 28 (1,258) (8) (8) Returns associated with restructuring and other activities 3 (1) 4 — 4 Total $ 14,326 $ 15,608 $ (1,282) $ 28 $ (1,254) (8) % (8) % 49 Table of Contents The following table reconciles the change in operating results by product category and geographic region, as reported, to the change in operating results excluding the impact of goodwill and other intangible asset impairments, talcum litigation settlement agreements and the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax: As Reported Add: Changes in goodwill and other intangible asset impairments Add: Talcum litigation settlement agreements Add: Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax Variance, as adjusted % Change, as reported % Change, as adjusted Year Ended June 30, ($ in millions) 2025 2024 Variance By Product Category: Skin Care $ 574 $ 735 $ (161) $ (96) $ — $ (23) $ (280) (22)% (23)% Makeup (441) 93 (534) 308 159 — (67) (100+) (72) Fragrance (378) 265 (643) 549 — — (94) (100+) (35) Hair Care (41) (52) 11 — — — 11 21 21 Other (13) 53 (66) 54 — — (12) (100+) (23) (299) 1,094 $ (1,393) $ 815 $ 159 $ (23) $ (442) (100+)% (28)% Charges associated with restructuring and other activities (486) (124) Total $ (785) $ 970 By Geographic Region: The Americas $ (918) $ 34 $ (952) $ 911 $ 159 $ (14) $ 104 (100+)% 100+% Europe, the Middle East & Africa 610 836 (226) — (9) (235) (27) (28) Asia/Pacific 9 224 (215) (96) — — (311) (96) (45) (299) 1,094 $ (1,393) $ 815 $ 159 $ (23) $ (442) (100+)% (28)% Charges associated with restructuring and other activities (486) (124) Total $ (785) $ 970 50 Table of Contents FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of funds historically have been cash flows from operations, borrowings pursuant to our commercial paper program, borrowings from the issuance of long-term debt and committed and uncommitted credit lines provided by banks and other lenders in the United States and abroad.
The following tables provide reconciliations between these non-GAAP financial measures and the most directly comparable U.S. GAAP measures.
The following tables provide reconciliations between these non-GAAP financial measures and the most directly comparable U.S.
We considered macroeconomic factors including the global economic growth, general macroeconomic trends for the markets in which the reporting units operate and the intangible assets are employed, and the growth of the global prestige beauty industry.
We considered macroeconomic factors including global economic growth, general macroeconomic trends for the markets in which the reporting units operate and the intangible assets are employed, and the growth of the global prestige beauty industry.
Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies , Note 6 – Goodwill and Other Intangible Assets . Income Taxes We calculate and provide for income taxes in each tax jurisdiction in which we operate.
Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies and Note 6 – Goodwill and Other Intangible Assets . Income Taxes We calculate and provide for income taxes in each tax jurisdiction in which we operate.
Factors that could cause actual results to differ from expectations include, without limitation: (1) increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses; (2) our ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in our business; (3) consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell our products, an increase in the ownership concentration within the retail industry, ownership of retailers by our competitors or ownership of competitors by our customers that are retailers and our inability to collect receivables; (4) destocking and tighter working capital management by retailers; 53 Table of Contents (5) the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs; (6) shifts in the preferences of consumers as to where and how they shop; (7) social, political and economic risks to our foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States; (8) changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, our business, including those relating to our products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result; (9) foreign currency fluctuations affecting our results of operations and the value of our foreign assets, the relative prices at which we and our foreign competitors sell products in the same markets and our operating and manufacturing costs outside of the United States; (10) changes in global or local conditions, including those due to volatility in the global credit and equity markets, natural or man-made disasters, real or perceived epidemics, supply chain challenges, inflation, or increased energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase our products while traveling, the financial strength of our customers, suppliers or other contract counterparties, our operations, the cost and availability of capital which we may need for new equipment, facilities or acquisitions, the returns that we are able to generate on our pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying our critical accounting estimates; (11) shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture our products or at our distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings; (12) real estate rates and availability, which may affect our ability to increase or maintain the number of retail locations at which we sell our products and the costs associated with our other facilities; (13) changes in product mix to products which are less profitable; (14) our ability to acquire, develop or implement new information technology, including operational technology and websites, on a timely basis and within our cost estimates; to maintain continuous operations of our new and existing information technology; and to secure the data and other information that may be stored in such technologies or other systems or media; (15) our ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom; (16) consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation; (17) the timing and impact of acquisitions, investments and divestitures; and (18) additional factors as described in our filings with the Securities and Exchange Commission, including this Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Factors that could cause actual results to differ from expectations include, without limitation: (1) increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses; (2) our ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in our business; (3) consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell our products, an increase in the ownership concentration within the retail industry, ownership of retailers by our competitors or ownership of competitors by our customers that are retailers and our inability to collect receivables; (4) destocking and tighter working capital management by retailers; (5) the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs; (6) shifts in the preferences of consumers as to how they perceive value and where and how they shop; (7) social, political and economic risks to our foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States; (8) changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, our business, including those relating to our products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result; (9) foreign currency fluctuations affecting our results of operations and the value of our foreign assets, the relative prices at which we and our foreign competitors sell products in the same markets and our operating and manufacturing costs outside of the United States; (10) changes in global or local conditions, including those due to volatility in the global credit and equity markets, government economic policies, natural or man-made disasters, real or perceived epidemics, supply chain challenges, inflation, or increased energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase our products while traveling, the financial strength of our customers, suppliers or other contract counterparties, our operations, the cost and availability of capital which we may need for new equipment, facilities or acquisitions, the returns that we are able to generate on our pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying our critical accounting estimates; (11) shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture our products or at our distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings; 56 Table of Contents (12) real estate rates and availability, which may affect our ability to increase or maintain the number of retail locations at which we sell our products and the costs associated with our other facilities; (13) changes in product mix to products which are less profitable; (14) our ability to acquire, develop or implement new information technology, including operational technology and websites, on a timely basis and within our cost estimates; to maintain continuous operations of our new and existing information technology; and to secure the data and other information that may be stored in such technologies or other systems or media; (15) our ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom; (16) consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation; (17) the timing and impact of acquisitions, investments and divestitures; and (18) additional factors as described in our filings with the Securities and Exchange Commission, including this Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Under the market approach, we utilized market multiples from publicly traded companies with similar operating and investment characteristics as the reporting unit. The significant assumptions used in these two approaches include revenue growth rates and profit margins, terminal value, the weighted average cost of capital used to discount future cash flows and comparable market multiples.
Under the market approach, we utilized market multiples from publicly traded companies with similar operating and investment characteristics as the reporting unit. The significant assumptions used in these two approaches include revenue growth rates and profit margins, terminal value, weighted average cost of capital used to discount future cash flows and comparable market multiples for the reporting unit.
When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.
When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.
Under the income approach, we determined fair value using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflected the relative risk of the cash flows.
Under the income approach, we determined the estimated fair value using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflected the relative risk of the cash flows.
The quantitative impairment test for other indefinite-lived intangible assets encompasses calculating the fair value of an other indefinite-lived intangible asset and comparing the fair value to its carrying value. If the carrying value exceeds the fair value, an impairment charge is recorded.
The quantitative impairment test for other indefinite-lived intangible assets encompasses calculating the estimated fair value of an other indefinite-lived intangible asset and comparing the estimated fair value to its carrying value. If the carrying value exceeds the estimated fair value, an impairment charge is recorded.
Inflation impacted our operating results during fiscal 2024 and we expect it to continue. Generally, we have plans to introduce new products at higher prices, increase prices and implement other operating efficiencies which we expect to offset some of these cost increases. Credit Ratings Changes in our credit ratings will likely result in changes in our borrowing costs.
Inflation impacted our operating results during fiscal 2025 and we expect it to continue. Generally, we have plans to introduce new products at higher prices, increase prices and implement other operating efficiencies which we expect to offset some of these cost increases. Credit Ratings Changes in our credit ratings will likely result in changes in our borrowing costs.
Qualified Plan, we maintain an investment strategy of matching the duration of a substantial portion of the plan assets with the duration of the underlying plan liabilities. This strategy assists us in maintaining our overall funded ratio. For fiscal 2024 and 2023, we met or exceeded all contribution requirements under ERISA regulations for the U.S. Qualified Plan.
Qualified Plan, we maintain an investment strategy of matching the duration of a substantial portion of the plan assets with the duration of the underlying plan liabilities. This strategy assists us in maintaining our overall funded ratio. For fiscal 2025 and 2024, we met or exceeded all contribution requirements under ERISA regulations for the U.S. Qualified Plan.
Although the outcome relating to these exposures is uncertain, in our opinion adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. If actual outcomes differ materially from these estimates, they could have a material impact on our consolidated net earnings. For further discussion of Income Taxes, see Item 8.
Although the outcome relating to these exposures is uncertain, in our opinion adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. If actual outcomes differ materially from these estimates, they could have a material impact on our consolidated net earnings. 55 Table of Contents For further discussion of Income Taxes, see Item 8.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for the fiscal 2023 to fiscal 2022 comparative discussions.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 for the fiscal 2024 to fiscal 2023 comparative discussions.
Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies for discussion regarding the impact of accounting standards that were recently issued but not yet effective, on our consolidated financial statements. 51 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The discussion and analysis of our financial condition at June 30, 2024 and our results of operations for the three fiscal years ended June 30, 2024 are based upon our consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles (“U.S.
Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies for discussion regarding the impact of accounting standards that were recently issued but not yet effective, on our consolidated financial statements. 53 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The discussion and analysis of our financial condition at June 30, 2025 and our results of operations for the three fiscal years ended June 30, 2025 are based upon our consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles (“U.S.
Our credit ratings also impact the cost of our revolving credit facility. Downgrades in our credit ratings may reduce our ability to issue commercial paper and/or long-term debt and would likely increase the relative costs of borrowing.
Our credit ratings also impact the cost of our revolving credit facilities. Downgrades in our credit ratings may reduce our ability to issue commercial paper and/or long-term debt and would likely increase the relative costs of borrowing.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for the fiscal 2023 to fiscal 2022 comparative discussion.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 for the fiscal 2024 to fiscal 2023 comparative discussion.
GAAP measures. 45 Table of Contents RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business.
GAAP measures. 46 Table of Contents RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business.
Our effective tax rate will change from year-to-year based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, tax reserve adjustments, the tax impact of stock-based compensation, the interaction of various global tax strategies and the impact from certain acquisitions.
Our effective tax rate will change from year to year based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, tax reserve adjustments, the tax impact of stock-based compensation, changes to valuation allowance, the interaction of various global tax strategies and the impact from certain acquisitions.
A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our portfolio would have resulted in a net decrease in the fair value of our portfolio of approximately $371 million and $265 million as of June 30, 2024 and 2023, respectively. This potential change does not consider our underlying foreign currency exposures.
A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our portfolio would have resulted in a net decrease in the fair value of our portfolio of approximately $223 million and $371 million as of June 30, 2025 and 2024, respectively. This potential change does not consider our underlying foreign currency exposures.
Financial Statements and Supplementary Data – Note 17 – Commitments and Contingencies . 50 Table of Contents Contractual Obligations For a discussion of our contractual obligations, see Item 8. Financial Statements and Supplementary Data – Note 17 – Commitments and Contingencies (Contractual Obligations) .
Financial Statements and Supplementary Data – Note 17 – Commitments and Contingencies . 52 Table of Contents Contractual Obligations For a discussion of our contractual obligations, see Item 8. Financial Statements and Supplementary Data – Note 17 – Commitments and Contingencies (Contractual Obligations) .
A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our cross-currency swap contracts would have resulted in a net decrease in the fair value of our cross-currency swap contracts of approximately $49 million as of June 30, 2024 and 2023.
A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our cross-currency swap contracts would have resulted in a net decrease in the fair value of our cross-currency swap contracts of approximately $85 million and $49 million as of June 30, 2025 and 2024, respectively.
Dividends For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock during the year ended June 30, 2024 and through August 16, 2024, see Item 8. Financial Statements and Supplementary Data – Note 18 – Common Stock .
Dividends For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock during the year ended June 30, 2025 and through August 13, 2025, see Item 8. Financial Statements and Supplementary Data – Note 18 – Common Stock .
Returns associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select areas of the business.
Charges associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.
Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $48 million and $55 million as of June 30, 2024 and 2023, respectively.
Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $43 million and $48 million as of June 30, 2025 and 2024, respectively.
The following table summarizes actual and expected benefit payments and contributions for our other pension and post-retirement plans: Year Ended June 30 (In millions) Expected 2025 2024 2023 Non-qualified domestic noncontributory pension plan benefit payments $ 28 $ 8 $ 14 International defined benefit pension plan contributions $ 29 $ 24 $ 35 Post-retirement plan benefit payments $ 13 $ 13 $ 13 Commitments and Contingencies For a discussion of our contingencies, see to Item 8.
The following table summarizes actual and expected benefit payments and contributions for our other pension and post-retirement plans: Year Ended June 30, (In millions) Expected 2026 2025 2024 Non-qualified domestic noncontributory pension plan benefit payments $ 30 $ 9 $ 8 International defined benefit pension plan contributions $ 32 $ 35 $ 24 Post-retirement plan benefit payments $ 9 $ 14 $ 13 Commitments and Contingencies For a discussion of our commitments and contingencies, see Item 8.
Market Risk We address certain financial exposures through a controlled program of market risk management that includes the use of foreign currency forward contracts to reduce the effects of fluctuating foreign currency exchange rates and to mitigate the change in fair value of specific assets and liabilities on the balance sheet.
Market Risk We address certain financial exposures through a controlled program of market risk management that includes the use of foreign currency forward contracts to reduce the effects of fluctuating foreign currency exchange rates and to mitigate the change in fair value of specific assets and liabilities on the balance sheet, anticipated transactions and receivables and payables and the net investment in certain foreign operations.
The effective rate differs from the federal statutory rate primarily due to the effect of state and local income taxes, the tax impact of stock-based compensation, the taxation of foreign income and income tax reserve adjustments, which represent changes in our net liability for unrecognized tax benefits including tax settlements and lapses of the applicable statutes of limitations.
The effective rate differs from the federal statutory rate primarily due to the effect of state and local income taxes, the tax impact of stock-based compensation, the taxation of foreign income and income tax reserve adjustments, which represent changes in our net liability for unrecognized tax benefits including tax settlements and lapses of the applicable statutes of limitations, as well as changes to valuation allowance based on our assessment of the realizability of deferred tax assets.
In addition, we enter into interest rate derivatives to manage the effects of interest rate movements on our aggregate liability portfolio, including future debt issuances.
In addition, we enter into interest rate derivatives to manage the effects of interest rate movements on our funded indebtedness, including future debt issuances.
Fiscal 2024 as Compared with Fiscal 2023 NET SALES Year Ended June 30 ($ in millions) 2024 2023 As Reported: Net sales $ 15,608 $ 15,910 $ Change from prior year (302) (1,827) % Change from prior year (2) % (10) % Non-GAAP Financial Measure (1) : % Change from prior year in constant currency (1) % (7) % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
Fiscal 2025 as Compared with Fiscal 2024 NET SALES Year Ended June 30, ($ in millions) 2025 2024 As Reported: Net sales $ 14,326 $ 15,608 $ Change from prior year (1,282) (302) % Change from prior year (8) % (2) % Non-GAAP Financial Measure (1) : % Change from prior year in constant currency (8) % (1) % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 47 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
As of August 12, 2024, our long-term debt is rated A with a negative outlook by Standard & Poor’s and A1 with a negative outlook by Moody’s. Debt and Access to Liquidity Total debt as a percent of total capitalization was 59% at June 30, 2024 and 2023.
As of August 13, 2025, our long-term debt is rated A- with a negative outlook by Standard & Poor’s and A3 with a negative outlook by Moody’s. Debt and Access to Liquidity Total debt as a percent of total capitalization was 65% and 59% at June 30, 2025 and 2024, respectively.
At June 30, 2024, we had cash and cash equivalents of $3,395 million compared with $4,029 million at June 30, 2023. Our cash and cash equivalents are maintained at a number of financial institutions.
At June 30, 2025, we had cash and cash equivalents of $2,921 million compared with $3,395 million at June 30, 2024. Our cash and cash equivalents are maintained at a number of financial institutions.
The Tax Cuts and Jobs Act (the "TCJA") resulted in the Transition Tax on unrepatriated earnings of our foreign subsidiaries and changed the tax law in ways that present opportunities to repatriate cash without additional U.S. federal income tax.
The Tax Cuts and Jobs Act resulted in the Transition Tax on unrepatriated earnings of our foreign subsidiaries and changed the tax law in ways that present opportunities to repatriate cash without additional U.S. federal income tax. We continue to analyze the indefinite reinvestment assertion on our remaining applicable foreign earnings.
(25) % (52) % (1) See “Reconciliations of Non-GAAP Financial Measures” below for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
(42) % (25) % (1) See “Reconciliations of Non-GAAP Financial Measures” on page 47 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
The following tables present Net sales, Operating income and Diluted net earnings per common share adjusted to exclude the impact of charges associated with restructuring and other activities; goodwill and other intangible asset impairments; the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax; and the effects of foreign currency translation.
The following tables present Net sales, Operating (loss) income, Provision for income taxes and Diluted net (loss) earnings per common share adjusted to exclude the impact of charges associated with restructuring and other activities; goodwill and other intangible asset impairments; U.S. deferred tax asset valuation allowance adjustment; talcum litigation settlement agreements; the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax; and the effects of foreign currency translation.
Reported skin care net sales decreased 4% in fiscal 2024, driven by the decrease from volume of 11% and the unfavorable impact from foreign currency translation of 1%. Partially offsetting these decreases was an increase from pricing of 8%, due to the favorable impact from strategic pricing actions and changes in mix.
Reported net sales in The Americas decreased 4% in fiscal 2025, driven by the decrease from volume of 8% and the unfavorable impact from foreign currency translation of 1%. These decreases were partially offset by an increase from pricing of 6%, due to the favorable impact of strategic pricing actions and changes in mix.
We also enter into cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt.
We also enter into cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt and to hedge a portion of the net investment in certain foreign operations.
We consider accounting estimates to be critical if the accounting estimate both (i) involves a significant level of estimation uncertainty, and (ii) has had or is reasonably likely to have a material impact on the Company's financial condition or results of operations. Our critical accounting policies relate to Goodwill and Other Indefinite-lived Intangible Assets - Impairment Assessment and Income Taxes.
We consider accounting estimates to be critical if the accounting estimate both (i) involves a significant level of estimation uncertainty, and (ii) has had or is reasonably likely to have a material impact on the Company's financial condition or results of operations.
This decrease was partially offset by an increase from pricing of 9%, due to the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 1%.
Partially offsetting this decrease was an increase from pricing of 3%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Year Ended June 30 ($ in millions, except per share data) 2024 2023 As Reported: Net earnings attributable to The Estée Lauder Companies Inc. $ 390 $ 1,006 $ Change from prior year (616) (1,384) % Change from prior year (61) % (58) % Diluted net earnings per common share $ 1.08 $ 2.79 % Change from prior year (61) % (57) % Non-GAAP Financial Measure (1) : % Change in diluted net earnings per common share from the prior year adjusting for the impact of charges associated with restructuring and other activities, goodwill and other intangible asset impairments and the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax.
Year Ended June 30, ($ in millions, except per share data) 2025 2024 As Reported: Net (loss) earnings attributable to The Estée Lauder Companies Inc. $ (1,133) $ 390 $ Change from prior year (1,523) (616) % Change from prior year (100+)% (61) % Diluted net (loss) earnings per common share $ (3.15) $ 1.08 % Change from prior year (100+)% (61) % Non-GAAP Financial Measure (1) : % Change in diluted net (loss) earnings per common share from the prior year adjusting for the impact of charges associated with restructuring and other activities, goodwill and other intangible asset impairments, U.S. deferred tax asset valuation allowance adjustment, talcum litigation settlement agreements and the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax.
Year Ended June 30 ($ in millions) 2024 2023 Earnings before income taxes: $ 772 $ 1,397 As Reported: Effective rate for income taxes 47.0 % 27.7 % Basis-point change from prior year 1,930 700 Non-GAAP Financial Measure (1) : Effective rate for income taxes 31.0 % 26.5 % (1) Excludes the net impact on the effective tax rates of charges associated with restructuring and other activities, goodwill and other intangible asset impairments and changes in the fair value of DECIEM acquisition-related stock options inclusive of payroll tax.
Year Ended June 30, ($ in millions) 2025 2024 (Loss) earnings before income taxes: $ (1,040) $ 772 As Reported: Effective rate for income taxes (8.9) % 47.0 % Basis-point change from prior year (5,590) 1,930 Non-GAAP Financial Measure (1) : Effective rate for income taxes 38.8 % 31.0 % (1) Excludes the net impact on the effective tax rates of charges associated with restructuring and other activities, goodwill and other intangible asset impairments, U.S. deferred tax asset valuation allowance adjustment and talcum litigation settlement agreements for fiscal 2025 and charges associated with restructuring and other activities, goodwill and other intangible asset impairments and changes in the fair value of DECIEM acquisition-related stock options inclusive of payroll tax for fiscal 2024.
For fiscal 2024 and 2023, we elected to perform the qualitative assessment for the goodwill in certain of our reporting units and other indefinite-lived intangible assets. This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors to determine if it was more-likely-than-not that the fair values of its reporting units were below carrying value.
This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors to determine if it was more-likely-than-not that the estimated fair values of the reporting units and other indefinite-lived intangible assets were below their carrying values.
In addition to these macroeconomic factors, among other things, we considered the reporting units’ current results and forecasts, any changes in the nature of the business, any significant legal, regulatory, contractual, political or other business climate factors, changes in the industry/competitive environment, changes in the composition or carrying amount of net assets and its intention to sell or dispose of a reporting unit or cease the use of a trademark.
In addition to these macroeconomic factors, among other things, we considered the reporting units’ current results and forecasts, any changes in the nature of the business, any significant legal, regulatory, contractual, political or other business climate factors, changes in the industry/competitive environment, changes in the composition or carrying amount of net assets and the Company's intention to sell or dispose of a reporting unit or cease the use of a trademark. 54 Table of Contents For fiscal 2025 and 2024, a quantitative assessment was performed for the goodwill in certain of our reporting units and other indefinite-lived intangible assets.
Reported makeup net sales decreased 1% in fiscal 2024, driven by the decrease from volume of 6%, partially offset by an increase from pricing of 5%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Reported skin care net sales decreased 12% in fiscal 2025, driven by the decrease from volume of 13%. Partially offsetting this decrease was an increase from pricing of 1%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.
Partially offsetting these decreases was an increase from pricing of 8%, due to the favorable impact from strategic pricing actions and changes in mix. GROSS MARGIN Gross margin in fiscal 2024 increased to 71.7% as compared with 71.3% in fiscal 2023. Fiscal 2024 vs.
Partially offsetting this decrease was an increase from pricing of 5%, due to the favorable impact from strategic pricing actions and changes in mix. 39 Table of Contents GROSS MARGIN Gross margin in fiscal 2025 increased to 74.0% as compared with 71.7% in fiscal 2024. Fiscal 2025 vs.
The decrease in operating income from Clinique was primarily driven by a decrease in net sales. Operating income from Estée Lauder decreased, primarily driven by a decrease in net sales, partially offset by disciplined advertising and promotional expense management.
Operating income from M·A·C decreased, primarily driven by a decrease in net sales, partially offset by lower cost of sales and disciplined advertising and promotional expense management.
Reported hair care net sales decreased 4% in fiscal 2024, driven by the decrease from volume of 11%, partially offset by an increase from pricing of 7%, due to the favorable impact from strategic pricing actions and changes in mix.
Reported fragrance net sales increased slightly in fiscal 2025, driven by an increase from pricing of 6%, due to the favorable impact from strategic pricing actions and changes in mix, largely offset by the decrease from volume of 6%.
Accordingly, the following discussions of Operating income by Product Categories and Geographic Regions exclude the fiscal 2024 and 2023 impact of charges associated with restructuring and other activities of $124 million, or approximately 1% of net sales and $85 million, or approximately 1% of net sales, respectively.
Accordingly, the following discussions of Net sales by Product Categories and Geographic Regions exclude the fiscal 2025 and fiscal 2024 impacts of returns/(return adjustments) associated with restructuring and other activities of approximately $(3) million and $1 million, respectively.
OPERATING RESULTS Year Ended June 30 ($ in millions) 2024 2023 As Reported: Operating income $ 970 $ 1,509 $ Change from prior year (539) (1,661) % Change from prior year (36) % (52) % Operating Margin 6.2 % 9.5 % Non-GAAP Financial Measure (1) : % Change in operating income from the prior year adjusting for the impact of charges associated with restructuring and other activities, goodwill and other intangible asset impairments and the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax (13) % (48) % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
Additionally, general and administrative expenses declined reflecting benefits from the above noted disciplined expense management, however also reflected the year-over-year unfavorable impact of a change in policy related to local government subsidies in China. 41 Table of Contents OPERATING RESULTS Year Ended June 30, ($ in millions) 2025 2024 As Reported: Operating (loss) income $ (785) $ 970 $ Change from prior year (1,755) (539) % Change from prior year (100+)% (36) % Operating Margin (5.5) % 6.2 % Non-GAAP Financial Measure (1) : % Change in operating (loss) income from the prior year adjusting for the impact of charges associated with restructuring and other activities, goodwill and other intangible asset impairments, talcum litigation settlement agreements and the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax (28) % (13) % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 47 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
GAAP measures. Reported skin care net sales decreased in fiscal 2024, reflecting lower net sales from Estée Lauder, Clinique and Dr.Jart+, combined, of approximately $514 million, primarily driven by declines in mainland China and in our Asia travel retail business. In mainland China, net sales declined, primarily driven by ongoing softness in overall prestige beauty.
GAAP measures. Skin Care Reported skin care net sales decreased $946 million, or 12%, in fiscal 2025, reflecting lower net sales from Estée Lauder and La Mer, combined, of approximately $829 million, primarily driven by declines in our Asia travel retail business.
We use a single quantitative step when determining the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit.
The quantitative impairment test for goodwill encompasses calculating the estimated fair value of a reporting unit and comparing the estimated fair value to its carrying value. If the carrying value exceeds the estimated fair value, an impairment charge is recorded, up to the total amount of goodwill allocated to that reporting unit.
Our management has discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of our Board of Directors. Goodwill and Other Indefinite-lived Intangible Assets – Impairment Assessment Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets.
Our critical accounting policies relate to Goodwill and Other Indefinite-lived Intangible Assets – Impairment Assessment, Dr.Jart+ Other Intangible Asset – Impairment and Income Taxes. Our management has discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of our Board of Directors.
GAAP measures. Reported net sales decreased in fiscal 2024, primarily reflecting a decrease in skin care, and to a lesser extent, decreases in makeup and hair care, partially offset by an increase in fragrance.
GAAP measures. Reported net sales decreased in fiscal 2025, primarily reflecting a decrease in skin care, and to a lesser extent, decreases in makeup and hair care. The decrease in skin care net sales was primarily driven by lower net sales from Estée Lauder and La Mer.
The increase was primarily attributable to the impact of nondeductible goodwill impairment charges associated with the our Dr.Jart+ reporting unit of approximately 790 basis points, as well as a higher effective tax rate on the our foreign operations of approximately 730 basis points, due to the our geographical mix of earnings for fiscal 2024, and an unfavorable impact associated with previously issued stock-based compensation of approximately 380 basis points.
The decrease was primarily attributable to the higher effective tax rate on income from our foreign operations of approximately 2,630 basis points, due to our geographical mix of earnings for fiscal 2025, establishment of a valuation allowance against general foreign tax credit and research and development tax credit carryforwards of approximately 1,651 basis points, the impact of nondeductible goodwill impairment charges associated with the Too Faced reporting unit of approximately 800 basis points and the unfavorable impact associated with previously issued stock-based compensation of approximately 640 basis points.
Fiscal 2023 Favorable (Unfavorable) Basis Points As Reported: Mix of business 155 Obsolescence charges 45 Manufacturing costs and other (95) Foreign exchange transactions (75) Returns and charges associated with restructuring and other activities 10 As Reported Gross Margin Basis Point Variance 40 Non-GAAP Financial Measure Adjustments: Returns and charges associated with restructuring and other activities (10) Non-GAAP Gross Margin Basis Point Variance 30 As reported, the increase in gross margin for fiscal 2024 reflected a favorable impact from our mix of business, reflecting the benefits of strategic pricing actions and changes in brand mix.
Fiscal 2024 Favorable (Unfavorable) Basis Points As Reported: Mix of business (30) Obsolescence charges 125 Manufacturing costs and other 145 Foreign exchange transactions (10) Returns and charges associated with restructuring and other activities — As Reported Gross Margin Basis Point Variance 230 Non-GAAP Financial Measure Adjustments: Returns and charges associated with restructuring and other activities — Non-GAAP Gross Margin Basis Point Variance 230 The increase in gross margin in fiscal 2025 includes net benefits from the PRGP which drove overall favorability year-over-year, including the favorability within manufacturing costs and other and obsolescence charges.
Also contributing to the increase in interest expense was higher interest rates compared to the prior year. Interest income and investment income, net increased, primarily reflecting higher interest rates compared to the prior year. 44 Table of Contents PROVISION FOR INCOME TAXES The provision for income taxes represents U.S. federal, foreign, state and local income taxes.
Interest income and investment income, net decreased in fiscal 2025, primarily reflecting a lower average cash balance and lower interest rates compared to the prior year. PROVISION FOR INCOME TAXES The provision for income taxes represents U.S. federal, foreign, state and local income taxes.
The increase in operating income from La Mer was primarily driven by an increase in net sales and a decrease in cost of sales, partially offset by an increase in advertising and promotional expenses to support growth of the business as well as higher selling costs due to an increase in demonstration expenses compared to the prior year and targeted expanded consumer reach.
The decrease in operating income from Jo Malone London was primarily driven by higher selling expenses, including higher staffing costs to support key campaigns and targeted expanded consumer reach, higher advertising and promotional activities to support key campaigns and higher store operating costs to support targeted expanded consumer reach, partially offset by an increase in net sales.
The reported operating margin for fiscal 2024 decreased from the prior year, primarily driven by the decreases in net sales and operating expense margin, partially offset by an increase in gross margin, as discussed above. 40 Table of Contents Charges associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.
Partially offsetting this decrease was an increase from pricing of 2%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix. 36 Table of Contents Returns associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select areas of the business.
GAAP measures. Reported operating income decreased in Asia/Pacific in fiscal 2024, primarily driven by Korea, led by the Dr.Jart+ travel retail business in Korea, and lower results in mainland China, combined, of approximately $562 million.
GAAP measures. The decrease in reported operating results in fiscal 2025 was primarily driven by lower operating results in North America, and to a lesser extent, a decrease in operating income in mainland China and in our travel retail business, combined, of approximately $1,273 million.
The change in net cash flows provided by (used for) financing activities primarily reflected an unfavorable impact from the issuance and redemption of long-term debt compared to the prior year, repayments of commercial paper during fiscal 2024 as compared to the proceeds from the issuance of commercial paper in the prior year, and payments associated with the purchase of the remaining interest in DECIEM during the fiscal 2024 fourth quarter, partially offset by lower treasury stock repurchases compared to the prior year.
The change in net cash flows used for investing activities was primarily driven by a favorable year-over-year impact from capital expenditure payments made relating to the manufacturing facility in Japan, near Tokyo, in the prior year. 51 Table of Contents The change in net cash flows used for financing activities primarily reflected the favorable year-over-year impacts of repayments of commercial paper in the prior year, payments associated with the purchase of the remaining interest in DECIEM during fiscal 2024 and a decrease in dividends paid to stockholders in the current year, partially offset by the unfavorable year-over-year impact of the repayment of long-term debt in the current year and issuance of long-term debt in the prior year.
To determine the estimated fair value of the reporting units, we used an equal weighting of the income and market approaches.
We engaged third-party valuation specialists and used industry accepted valuation models and criteria that were reviewed and approved by various levels of management. To determine the estimated fair value of the reporting units, we used an equal weighting of the income and market approaches.
GAAP measures. 38 Table of Contents Reported net sales decreased in Asia/Pacific in fiscal 2024, reflecting lower net sales from mainland China, and to a lesser extent Korea, combined, of approximately $401 million. The decrease in net sales from mainland China was primarily driven by ongoing softness in overall prestige beauty.
GAAP measures. 38 Table of Contents Reported net sales decreased in fiscal 2025 across all geographic regions, primarily driven by lower net sales in our travel retail business, and to a lesser extent, in mainland China, North America and Korea, combined, of approximately $1,150 million.
Operating income from Estée Lauder and Clinique decreased, primarily driven by decreases in net sales, partially offset by disciplined advertising and promotional expense management and lower shipping expenses due to the decreases in net sales.
The decrease in operating income from Estée Lauder was primarily driven by lower net sales and an increase in advertising and promotional activities to support new product launches, partially offset by lower cost of sales.
The decrease in operating income in mainland China was primarily driven by a decrease in net sales, partially offset by disciplined advertising and promotional expense management.
The decrease in operating income from La Mer was primarily driven by a decrease in net sales, partially offset by lower cost of sales.
Reported net sales decreased 2% in fiscal 2024, driven by the decrease from volume of 8% and the unfavorable impact from foreign currency translation of 1%. Partially offsetting these decreases was an increase from pricing of 7%, due to the favorable impact from strategic pricing actions and changes in mix.
Reported hair care net sales decreased 10% in fiscal 2025, driven by the decrease from volume of 10%. The impact of pricing was flat year-over-year, due to the favorable impact of strategic pricing actions offset by changes in mix.
Fiscal 2023 Favorable (Unfavorable) Basis Points As Reported: General and administrative expenses (10) Advertising, merchandising, sampling and product development (20) Selling (50) Shipping 20 Store operating costs (60) Stock-based compensation (40) Foreign exchange transactions 30 Charges associated with restructuring and other activities (50) Goodwill and other intangible asset impairments (180) As Reported Operating Expense Margin Basis Point Variance (360) Non-GAAP Financial Measure Adjustments: Impact of restructuring and other activities 20 Goodwill and other intangible asset impairments 180 Non-GAAP Operating Expense Margin Basis Point Variance (160) Higher store operating costs and selling expenses in fiscal 2024 reflect our continued investments in our business including through targeted expanded consumer reach and increased demonstration expenses.
Fiscal 2024 Favorable (Unfavorable) Basis Points As Reported: General and administrative expenses (90) Advertising, marketing, promotion and product development (1) (180) Selling (140) Shipping 10 Store operating costs (50) Stock-based compensation — Foreign exchange transactions — Charges associated with restructuring and other activities (260) Goodwill and other intangible asset impairments (590) Talcum litigation settlement agreements (110) Changes in fair value of DECIEM acquisition-related stock options 10 As Reported Operating Expense Margin Basis Point Variance (1,400) Non-GAAP Financial Measure Adjustments: Impact of restructuring and other activities 260 Goodwill and other intangible asset impairments 590 Talcum litigation settlement agreements 110 Changes in fair value of DECIEM acquisition-related stock options (10) Non-GAAP Operating Expense Margin Basis Point Variance (450) (1) Referred to as "advertising and promotional" within the Product Category and Geographic Region Operating Results disclosures below.
GAAP measures. 35 Table of Contents Reported makeup net sales decreased slightly in fiscal 2024, reflecting lower net sales primarily from M·A·C, and to a lesser extent, TOM FORD and La Mer, combined, of approximately $127 million.
Makeup Reported makeup net sales decreased $265 million, or 6%, in fiscal 2025, reflecting lower net sales primarily from M·A·C, and to a lesser extent, Estée Lauder, Too Faced and Bobbi Brown, combined, of approximately $241 million.
Net sales from Le Labo increased in every geographic region, led by Asia/Pacific and primarily reflected growth of hero products, including the successful City Exclusive collection, targeted expanded consumer reach, including the brand's launch in mainland China during the fiscal 2023 fourth quarter, and new product launches.
Net sales from Le Labo increased, reflecting growth from hero products, including growth through targeted expanded consumer reach, and new product launches. The increase in net sales from KILIAN PARIS primarily reflected the success of new product launches.
The net sales decrease in Asia/Pacific included approximately $155 million of unfavorable foreign currency translation. Reported net sales in Asia/Pacific decreased 6% in fiscal 2024, driven by the decrease from volume of 11% and the unfavorable impact from foreign currency translation of 3%.
Reported net sales in Asia/Pacific decreased 7% in fiscal 2025, driven by the decrease from volume of 12%.
Accordingly, the following discussions of Net sales by Product Categories and Geographic Regions exclude the fiscal 2024 and fiscal 2023 impacts of returns associated with restructuring and other activities of approximately $1 million and $27 million, respectively. 34 Table of Contents Product Categories Skin Care Year Ended June 30 ($ in millions) 2024 2023 As Reported: Net sales $ 7,908 $ 8,249 $ Change from prior year (341) (1,653) % Change from prior year (4) % (17) % Non-GAAP Financial Measure (1) : % Change from prior year in constant currency (3) % (13) % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
Product Categories Reported net sales for our product categories for the years ended June 30, 2025 and 2024 were as follows: Year Ended June 30, ($ in millions) 2025 2024 $ Change % Change % Change in Constant Currency (1) Skin Care $ 6,962 $ 7,908 $ (946) (12) % (12) % Makeup 4,205 4,470 (265) (6) (5) Fragrance 2,491 2,487 4 — — Hair Care 565 629 (64) (10) (10) Other 100 115 (15) (13) (13) 14,323 15,609 (1,286) (8) (8) Returns associated with restructuring and other activities 3 (1) 4 100+ 100+ Net sales $ 14,326 $ 15,608 $ (1,282) (8) % (8) % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 47 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
Asia/Pacific Year Ended June 30 ($ in millions) 2024 2023 As Reported: Net sales $ 4,888 $ 5,194 $ Change from prior year (306) (243) % Change from prior year (6) % (4) % Non-GAAP Financial Measure (1) : % Change from prior year in constant currency (3) % 4 % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
Geographic Regions Reported net sales by geographic region for the years ended June 30, 2025 and 2024 were as follows: Year Ended June 30, ($ in millions) 2025 2024 $ Change % Change % Change in Constant Currency (1) The Americas $ 4,411 $ 4,581 $ (170) (4) % (3) % Europe, the Middle East & Africa 5,375 6,140 (765) (12) (13) Asia/Pacific 4,537 4,888 (351) (7) (7) 14,323 15,609 (1,286) (8) (8) Returns associated with restructuring and other activities 3 (1) 4 100+ 100+ Net sales $ 14,326 $ 15,608 $ (1,282) (8) % (8) % (1) See “ Reconciliations of Non-GAAP Financial Measures” beginning on page 47 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
The decrease in skin care net sales was primarily driven by lower net sales from Estée Lauder, Clinique and Dr.Jart+, partially offset by higher net sales from La Mer and The Ordinary.
The decrease in net sales from Estée Lauder was primarily driven by lower net sales from the Estée Lauder Beautiful and Estée Lauder Pleasures franchises. Net sales from Clinique decreased, primarily driven by lower net sales from the Clinique Happy franchise line of products.
Europe, the Middle East & Africa Year Ended June 30 ($ in millions) 2024 2023 As Reported: Operating income $ 836 $ 843 $ Change from prior year (7) (517) % Change from prior year (1) % (38) % Non-GAAP Financial Measure (1) : % Change in operating income from the prior year adjusting for the impact of the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax — % (38) % (1) See “Reconciliations of Non-GAAP Financial Measures” beginning on page 46 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
Geographic Regions Year Ended June 30, ($ in millions) 2025 2024 $ Change % Change (As Reported) % Change (Non-GAAP) (1) Non-GAAP Financial Measure (1) The Americas $ (918) $ 34 $ (952) (100+)% 100+% Adjusted for the impact of goodwill and other intangible asset impairments, talcum litigation settlement agreements and change in fair value of DECIEM acquisition-related stock options Europe, the Middle East & Africa 610 836 (226) (27) (28) Asia/Pacific 9 224 (215) (96) (45) Adjusted for the impact of goodwill and other intangible asset impairments (299) 1,094 (1,393) (100+) (28) Charges associated with restructuring and other activities (486) (124) (362) (100+) (100+) Operating (loss) income $ (785) $ 970 $ (1,755) (100+)% (100+)% (1) See “Reconciliations of Non-GAAP Financial Measures” beginning on page 47 for reconciliations between non-GAAP financial measures and the most directly comparable U.S.
Net sales from TOM FORD decreased, primarily driven by lower net sales from the lip subcategory.
Net sales from Too Faced decreased, driven by North America, primarily reflecting lower net sales in the lip and eye subcategories. Bobbi Brown net sales decreased, primarily driven by lower net sales in the face subcategory.
Reported net sales in The Americas increased 1% in fiscal 2024, driven by an increase from pricing of 2% due to the favorable impact of strategic pricing actions, partially offset by changes in mix, and the impact from the royalty revenue from the fiscal 2023 fourth quarter acquisition of the TOM FORD brand of 1%.
Reported net sales in Europe, the Middle East & Africa decreased 12% in fiscal 2025, driven by the decrease from volume of 10% and a decrease from pricing of 3%. The decrease from pricing is due to changes in mix, partially offset by the favorable impact from strategic pricing actions.
GAAP measures. Reported skin care operating income decreased in fiscal 2024, reflecting lower operating results from Dr.Jart+, Estée Lauder and Clinique, combined, of approximately $580 million. The decrease in operating income from Dr.Jart+ was primarily driven by the unfavorable year-over-year impact of goodwill and other intangible asset impairments of $371 million as well as a decrease in net sales.
The reported operating margin for fiscal 2025 decreased from the prior year, driven by the decrease in net sales as well as an increase in our operating expense margin, reflecting the unfavorable year-over-year impact of goodwill and other intangible asset impairments relating to TOM FORD, Dr.Jart+ and Too Faced, combined, of $1,286 million in fiscal 2025 compared with goodwill and other intangible asset impairments relating to Dr.Jart+ of $471 million in fiscal 2024, partially offset by an increase in gross margin, as discussed above.
INTEREST AND INVESTMENT INCOME Year Ended June 30 (In millions) 2024 2023 Interest expense $ 378 $ 255 Interest income and investment income, net $ 167 $ 131 Interest expense increased for fiscal 2024, primarily reflecting a higher debt balance, due in part to the financing of our acquisition of the TOM FORD brand, including the issuance of Senior Notes in May 2023, as well as the issuance of Senior Notes in February 2024.
INTEREST AND INVESTMENT INCOME Year Ended June 30, (In millions) 2025 2024 Interest expense $ 357 $ 378 Interest income and investment income, net $ 114 $ 167 Interest expense decreased in fiscal 2025, primarily reflecting a lower average debt balance compared to the prior year.
The significant assumptions used in this approach include revenue growth rates, terminal value, the weighted average cost of capital used to discount future cash flows and royalty rate. 52 Table of Contents For further discussion of the methods used and factors considered in our estimates as part of the impairment testing for Goodwill and Other Indefinite-lived Intangible Assets, see Item 8.
As a result of the estimated fair values, the impairment charge was allocated entirely to the Dr.Jart+ customer list intangible asset. For further discussion of the methods used and factors considered in our estimates as part of the impairment testing for goodwill and other indefinite-lived intangible assets and impairment of the Dr.Jart+ customer list intangible asset, see Item 8.
The decrease in operating income from TOM FORD was primarily driven by higher cost of sales, due in part to an increase in promotional items, higher selling expenses due to an increase in demonstration expenses compared to the prior year, higher advertising and promotional expenses and an increase in general and administrative expenses, as the brand continues to invest and support the growth of the business, partially offset by a decrease in royalty expense as a result of the fiscal 2023 fourth quarter acquisition of TOM FORD brand.
The decrease in operating results from TOM FORD was primarily driven by the fiscal 2025 other intangible asset impairment charge of $549 million, and to a lesser extent, a decline in net sales, as well as an increase in advertising and promotional activities and an increase in selling expenses to support sales, partially offset by lower cost of sales.
Other indefinite-lived intangible assets principally consist of trademarks. Goodwill and other indefinite-lived intangible assets are not amortized.
Goodwill and Other Indefinite-lived Intangible Assets – Impairment Assessment and Dr.Jart+ Other Intangible Asset – Impairment Goodwill is calculated as the excess of the cost of purchased businesses over the estimated fair value of their underlying net assets. Other indefinite-lived intangible assets principally consist of trademarks. Goodwill and other indefinite-lived intangible assets are not amortized.
GAAP measures. Reported fragrance net sales increased slightly in fiscal 2024, reflecting higher net sales from Le Labo and Jo Malone London, combined, of approximately $96 million.
Fragrance Reported fragrance net sales increased slightly in fiscal 2025, reflecting higher net sales from Le Labo and to a lesser extent, KILIAN PARIS combined, of approximately $87 million, largely offset by lower net sales from Estée Lauder, Clinique, and TOM FORD, combined, of approximately $82 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The information required by this item is set forth in Item 7 of this Annual Report on Form 10-K under the caption Liquidity and Capital Resources – Market Risk and is incorporated herein by reference. 54 Table of Contents Item 8. Financial Statements and Supplementary Data.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The information required by this item is set forth in Item 7 of this Annual Report on Form 10-K under the caption Liquidity and Capital Resources – Market Risk and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data.