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Investing.com -- Estee Lauder (NYSE:EL) saw its shares slide more than 4% on Wednesday after the cosmetics giant forecast annual profit below Wall Street expectations on Wednesday, citing ongoing weakness in demand in the U.S. and China as well as tariff uncertainty.
The company said it expects about $100 million in profitability headwinds in fiscal 2026, even after mitigation efforts.
"The company continues to closely monitor evolving trade policies and enacted tariffs, and its task force has been actively evaluating developments and mitigation strategies to reduce the potential impacts of tariffs," Estee said in the release.
Estee Lauder guided full-year adjusted earnings per share in a range of $1.90 to $2.10, short of analysts’ forecast of $2.21, according to LSEG data.
Organic net sales are expected to grow between 0% and 3% this year.
Morgan Stanley (NYSE:MS) analysts said the soft guide "is not too surprising with a likely conservative stance under a new CEO."
For its fiscal fourth quarter, Estée Lauder posted earnings per share (EPS) of $0.09, a penny ahead of estimates.
Revenue was $3.41 billion, slightly above the $3.39 billion consensus.
Organic net sales decreased 13%, led by weakness in Skin Care and Makeup.
"The lack of Q4 topline upside, and below consensus, although unsurprising (and tax impacted), FY26 guidance will likely be perceived negatively relative to a large recent stock run-up," Morgan Stanley analysts noted.
Net sales fell across all geographic regions, led by declines in the company’s global travel retail business and North America, the company said.
“Despite continued volatility in the external environment, we embarked on fiscal 2026 with signs of momentum and confidence in our outlook to deliver organic sales growth this year after three years of declines and to begin rebuilding operating profitability in pursuit of a solid double-digit adjusted operating margin over the next few years," said Stephane de La Faverie, President and CEO of Estee Lauder.
By segment, Skin Care sales declined 17% in the fourth quarter, driven by lower demand for Estée Lauder and La Mer.
Makeup revenue dropped 12%, Hair Care fell 15%, while Fragrance rose 2%.