Estee Lauder at Barclays Conference: Strategic Growth Focus

On Wednesday, 03 September 2025, Estee Lauder Companies Inc (NYSE:EL) presented at the Barclays 18th Annual Global Consumer Staples Conference 2025. The company outlined its strategic plan, "Beauty Reimagined," focusing on consumer-centricity and innovation. While strong in the U.S. and China, challenges persist in Europe due to slowing consumption.

Key Takeaways

• Estee Lauder aims for 0-3% sales growth and a 165 basis point margin improvement.
• The company is leveraging AI for innovation and expanding its presence on platforms like Amazon and TikTok.
• Emerging markets, particularly India and Southeast Asia, are key growth areas.
• Challenges include tariffs and subdued consumer confidence in Europe.

Financial Results

• Revenue Growth: Estee Lauder expects 0-3% net sales growth for the fiscal year.
• Market Performance: Gains in the U.S. and China, with concerns in Continental Europe due to economic slowdown.
• Profitability: Aims for a 165 basis point improvement in adjusted operating margin despite over $100 million in tariffs.
• Inventory Management: Rebalancing inventory in Travel Retail and addressing imbalances in North America.

Operational Updates

• Consumer Coverage: Expanded brand presence on Amazon, Shopee, and TikTok.
• Innovation: Plans to triple innovation output using AI to enhance product development.
• Pricing Strategy: Repositioning products with decreased prices and introducing smaller sizes to attract new consumers.
• Organizational Structure: Transitioning to a consumer-centric model for greater agility and efficiency.

Future Outlook

• Market Share: Aiming for consistent market share gains beyond the U.S. and China.
• Operating Model: Focus on agility and speed of execution to drive growth.
• Emerging Markets: Targeting mid-double-digit penetration, led by India.

Q&A Highlights

• China Growth: Low single-digit growth expected, with a focus on market share through a diversified portfolio.
• Competitive Environment: International brands outperforming local brands in China’s luxury tier.
• Emerging Markets Strategy: Expanding distribution in Latin America and India.
• M&A: Evaluating brand portfolio for alignment with the "Beauty Reimagined" strategy.
• Sales vs. Shipments: Retail strength due to inventory rebalancing.

Estee Lauder remains committed to its strategic goals despite external challenges. For more details, refer to the full transcript.

Full transcript - Barclays 18th Annual Global Consumer Staples Conference 2025:

Lauren, Analyst: Great. So Done. Everything is here. We’re done.

And now we break. Okay. Great. So thank you so much for being here. And one more thing I just wanted to reference is the forward looking statements disclosure, so everyone read this as we talk.

Okay. So Stephane, Amber, again, thanks so much for being here. The video just helped a lot with laying out the five pillars of Beauty Reimagined, which you first shared with everyone internally, anyway, in February. And a lot of these things have been on par with things that we’ve written about thinking this is what the company needs to do. It’s only been seven months, but I would love it if you could maybe offer some perspective on which of these pillars are kind of where you’re the furthest along, what maybe requires more time to see through.

And then Amber, I thought it would be cool if you could offer some perspective on what Beauty Reimagine means in the Americas organization. Yes.

Stephane, CEO, Estee Lauder: No. Thank you. Thank you for having us today to share the strategy. I think, look, I would start by saying we are entering fiscal twenty twenty six with momentum and somebody wrote a very smart headline at the beginning of the year saying, be your own activist. And this is what we have been doing since I moved into the position.

Joking aside, there was a lot of like saying, are we going to be as a team to just do the level of transformation that the estate of our company requires from a transformation? I’d say across the five pillars that we’ve made some progress. I think the first one, which is certainly the most part of, is the ability now to move where the consumer is moving. And the first thing has been the consumer coverage, making sure that we put our brands where the consumer is with his Amazon Premium Beauty store in The U. S, but now also in Canada, in The UK and in Mexico, more recently Shopee in Southeast Asia, TikTok shops around the world.

And that’s allowed us, frankly, to just really change the trajectory of our market share, especially in The U. S. And China. And that was the most important for me and the team to be able to say is the strategy working, is this ability after many, many years of market share loss in The Americas to turn that around and to be now in market share gain. And with the stabilization of China, not only stabilizing the business, but also going into market share gain.

The one that certainly will take a little bit more time that we are already seeing some green is innovation, because innovation, you don’t turn it around in two minutes. Even though we’ve been saying that we are going to triple the innovation bringing to market in less than a year, breakthrough takes time. It’s just like you can’t just like bring something like we’ve done for Estee Lauder with longevity in less than six months to market. So you’re going to see a lot more innovation on what I’ve committed for this fiscal year. We will be already north of 25% of the total business coming from innovation.

And what I would say also from an investment standpoint, I was very clear that we could have taken a very different position at the beginning, which should say, cut the investment, drop to the bottom line, improve the overall margin. But the important thing was for us to reignite growth, to just get long term sustainable growth and reignite solid double digit operating margin. So we are investing, but Amber will talk about it, we are investing a lot more efficiently that we’ve done it before and also making sure that it’s more balanced between the brand and the region, so making sure that we don’t rely only on one geography and few brands and few products around the world. And last but not least, PRGP, our transformation for the company is going in the right way. It is difficult.

It is transformative. It is the biggest operational transformation of the company’s history, but we are moving in the right direction. And I think we’re seeing a lot more simplification as the video is highlighting it and a lot more fast decision making throughout the organization.

Amber, Commercial Leader, North America, Estee Lauder: Yes. From an Americas perspective, I think consumer facing spend and investment as well as consumer coverage have been the two themes. We’re super excited that we have gained market share for the first time in a really long time, as Stephane and I keep saying. And I think the momentum of that is giving us confidence in the pillars of the Beauty Me Reimagined strategy. And I think launching on Amazon, we’ve been very public.

We have 11 brands on Amazon U. S. As Stephane mentioned, we’ve launched Amazon Mexico, Canada, U. K. And we’ve developed this playbook that now in The U.

S. Is being scaled across multiple different markets. And the stat I just looked up over the weekend as I was preparing is our launches in The U. S. At the pace we were launching, we launched a new brand every five weeks.

And so we’ve gotten really good at this, and we’ve gotten to understand the platform. And the other KPI that I would share is really giving us confidence in this decision is the brand halo impact that it is having not just on the Amazon channel but our business in other channels of FMC department stores, etcetera. And so it’s having this all boats rise impact in terms of the market. Moving a little bit to our media model, we have been very drastic with the changes we’ve made there, I’ll be quite honest. It needed a bit of a revolution in how we were thinking about it.

And we broke the funnel the traditional funnel up into two parts, demand generation and demand capture. I think in the past, we were really good at demand capture and focusing on the ROI that we could get there, but we really maybe took our eye off the ball from a demand capture perspective. And so not only launching on Amazon from a megaphone perspective and it being the world’s largest media platform, it’s also allowed us to sort of think differently about how we create demand generation for our brands, not only from just a voice but narrative and equity and new product launches. The other interesting stat I’ll share is the two brands we launched on TikTok Shop a couple of weeks ago, both MAC and Clinique. Our search term of Clinique doubled on Amazon within ten days of launching on TikTok Shop.

And so there’s this very different ecosystem that is now really in this market around how you have to think about distribution decisions but then also the media amplification that all of those can drive. It’s not just did you launch in a certain store or a certain outlet. And so we’ve really harnessed, I think, the power of both TikTok Shop and Amazon to reinvent our media model in a way that’s allowing us to acquire new consumers and then also have a really big halo impact on our total business, not just our Amazon business. Okay.

Lauren, Analyst: Great. Let’s keep going on innovation. So in beauty, like you said, it takes time to build an innovation pipeline. But at the same time, everything you’ve been talking about is about the need to be faster, generally. So how do you ensure you aren’t cutting corners in the important area of new product development, breakthrough innovation?

And one of the things that we think about and have heard about from other beauty players is that there just hasn’t been a lot of breakthrough innovation, real molecule technology in beauty in a very long time.

Stephane, CEO, Estee Lauder: Yes. I think the first thing that we have to say like cut first of all, we don’t cut costs. We’re finding some efficiencies, because one thing we’ll never mortgage is quality and performance of the innovation that we’re going to bring to market. To a certain extent, I agree with you, there’s been like a lack of true innovation coming to market. There’s been a lot of renovation of known product with some enhancement to it.

But I think recently when you look at what we’ve done with Estee Lauder and Renutriv surfing on the wellness trend and bringing the first true longevity beauty product that has had like a resounding success in many places around the world. And we intend to we look at innovation in two buckets, one, which is really the big breakthrough breakthrough innovation and which requires a lot more investment from R and D and time to development, which I call almost the advanced technology. And then there’s the on trend innovation. You need to be there where the conversation is happening at a moment in time. And for that, what we found actually the efficiency we’ve built through AI have been absolutely amazing.

When I say that we’re going to triple the innovation that we bring to market, it’s less than a year, it’s not by cutting corners, it’s by simply building efficiency. Just to give you two really important stats. On product, you need stability. You need roughly six months of stability. Now I can get six months of stability view in seventy two hours.

Now it’s not that I’m just not doing the six month stability, but after seventy two hours, I have a 95% plus guarantee of what is going to be the outcome. So I can trigger purchase of components or materials and etcetera, without taking risk, which allows to reduce the time of development. The second thing is also we’ve used AI to reduce the critical failure of engineering of new packaging, because we want to bring new packaging. It’s not only new molecule, but it’s also delivery form, new packaging, how you bring it. There’s a risk of packaging failure.

It exists in the industry. We’ve reduced by 94% the critical risk by simply using AI and doing it throughout the company. So cutting corner is not is actually building efficiency via AI that reduce the risk, increase the predictability of the result that allows us to just bring more product to market. And you’ve seen product like the new Clinique Moisture Glow that we are bringing or the Double Wear Concealer that has become the number one makeup launch this year by a brand that is turning 80 years old next year. So our ability to bring new innovation faster to market at a higher impact, you’re going to see more of that going forward.

Lauren, Analyst: Great. We’ve also noticed, and it was highlighted in the video, but an emphasis on more acceptable price points when it comes to products that you’ve launched, particularly over the last year. So how should we think about it? Is it about attracting new consumers to your brands? Or is there an element of repositioning some of your brands and given in the backdrop of a beauty market where you’ve had some high quality new entrants at different price points than was the case historically?

Stephane, CEO, Estee Lauder: I think it’s a fantastic question. I think it’s both, Lauren. I think the reality is that we in a post COVID era, I think a lot of like the beauty products have increased dramatically their price of brands around the world. So in some instances, allow us and the decision we’re taking this year is to reposition some product. You’ve seen the new foundation of Mac Studio Fix that we’ve decreased the price.

We’ve relaunched the DML with a new SPF product in Europe, where we decreased also the price. And we’re seeing the moment we do that a lot more consumer that we are reengaging with the brand. I think on this one is more like lapsed consumer. But new innovation, we are also conscious that there’s a lot of pressure on the consumers around the world, that it is in China or in The U. S, in Europe, in the emerging market, being able to bring small sizes or innovation at the right price point allows us to win.

Again, the example that I used earlier of the Clinique Moisture Glow at less than $50 position in the right channel has allowed us to just like bring back a lot of consumers to the brand and position Clinique to consistently be in market share growth. So you’re going to see we have a strategy, clear strategy of where the growth exists by price band today, by category, subcategory, brand. And I’m very clear with the team, unless we play in 70% to 80% to 90% of where the growth is at the right price point, we don’t go. And the other KPI which we’ve put in place, all innovation that we’re bringing to market needs to be accretive to the category or the brand that we are going to play in. So it’s the right price point with the right accretiveness to recruit new consumer and to reengage lapsed consumers that we may have lost over the years.

Lauren, Analyst: Okay, great. Time to talk about China. We made it fifteen minutes. So both just over the next twelve months and also medium to long term. So first, just a very simple question, and then we’ll get into maybe a bit more interesting.

But you’ve talked about the maturing of China, making it a more predictable market. Just want to know what you’re assuming for growth for China in the medium term beyond the mid single digits you’ve talked about for the fiscal year kind of what underpins that assumption?

Stephane, CEO, Estee Lauder: I think, look, like you said, we just guided to mid single digit for us. We want to gain market share. So I believe like the Chinese market is maturing and is stabilizing to a low single digit for the market in the moment where we are. Obviously, predicting what will happen in the next two to three years in China in the current context before even the new program of President Xi Jinping that will be announced in March is a little bit presumptuous like to do it. But what I’m really encouraged is our ability quarter over quarter to gain market share and do it in a way that is more balanced.

Again, it is not just the Estee Lauder brand and the La Mer brand. La Mer continues to be market share gain. La Mer is back into positive, but we are seeing Tom Ford in makeup, Joe Malone and Le Labo has been absolutely a runaway success. And lately, in big a few months ago, we’ve launched The Ordinary in exclusivity with Sephora that is already a top 10 brand in Sephora in China. And now we are rolling out a new platform like Tmall.

So we are diversifying our portfolio to be able to gain market share and to deploy at the top of the luxury, but also at the entry of prestige in China.

Lauren, Analyst: Okay. What can you tell us about the competitive environment currently in China, just local versus multinational brands and promotionality in the market?

Stephane, CEO, Estee Lauder: I think there’s been a lot of focus on like the disruption of the market, will the local brand disrupt like the work that the international brand. And I think it is true that in the post COVID era, we’ve seen a rapid acceleration of the local brand, which is not dissimilar to what we’ve experienced in Korea and in Japan or frankly, we are also experiencing in India as we speak. But the difference is it’s interesting in the last six months, the international brands are growing faster than the local brands. And they’re growing faster through the top tier of like the luxury, meaning like Estee Lauder, Reneutriv, La Mer, Le Labo, but also Clinique now, which we haven’t talked a lot in China, is in double digit growth, thanks to some product that we’ve tailored and designed for the market. So I think you have a rebalancing of the market, where depending on the data anywhere between 30% to 40% of the market is in the end of the local brand, which still basically leaves anywhere between like 50%, 60% plus in the end of the international brand.

The exciting data also in China, there’s still excess of 100,000,000 to 200,000,000 consumers that are going to graduate to the middle class between now and 02/1930. And our ability to capture this consumer having been in China for more than thirty years is high. We have the credibility. We know how the market works. 99 -plus of my team in China is Chinese, knows the ecosystem that is becoming increasingly complex.

And I think we have the right tool to win the market now.

Lauren, Analyst: Okay, great. You mentioned a few other emerging markets in that answer. So I’m curious to talk about your strategy for accelerating growth in those other emerging markets. Where areas of particular are focused? And how should we think about the profitability of these markets and investment needs?

Like where do you have significant scale that you’re already quite profitable and others where it’s more of a time to build?

Stephane, CEO, Estee Lauder: I think we can tag Tim with Amber on this one, having her part of like Latin America and the emerging market. But I would say the emerging market is critical and central to our strategy. And I’ve been very vocal on the fact that I’m not yet happy of what is the penetration of emerging market in the total, about 10% of our global business is in emerging market, the largest market being India and obviously, Southeast Asia is growing very fast, but still very small. We are nurturing this market. I want at least in the foreseeable future, but the sum of the emerging market to be at least mid double digit, like 15%, 16% penetration to the total business, led by India.

Now you’ve asked the question of profitability. This market tends to be very profitable, a lot of growth from accretive from a growth and from the bottom line. But they require a lot more investment. They require different strategy. For instance, in India, one of the winning strategy has been the deployment of small sizes across our brands, like it’s a small Double Wear, a small A and R, a small DDML because the ability for consumer to get access to a luxury product is still limited.

In India, 90% of the market is still mass, 10% is prestige. Prestige is growing faster, but it’s very limited the number of consumer. So our ability to bring the luxury product at a more affordable price point, the future innovation is going to be critical for us, like to win in the market. But we are committed. We just approved a massive investment in India to really accelerate the market because the market has tremendous momentum.

And as you may know also, we have a minority in Forest Essential in India, which is one of the largest brand, at least from a DTC standpoint, it is actually the largest prestige brand in India. And we are working with our partners there to just continue to expand that presence. So a lot of potential equally in Latin America.

Amber, Commercial Leader, North America, Estee Lauder: Yes. From a Latin America perspective, it’s really about sort of where the consumer is from a distribution standpoint. So looking at both Mexico and Brazil, MercadoLibre, Amazon, Ulta is entering the Mexico market. And so we’re really encouraged by the early signals we’ve seen both from an Amazon Mexico perspective but then also some of the new platforms that have emerged that our brands are already on. So overall, I think it’s a great growth engine that I think we’re excited to invest in.

Okay.

Lauren, Analyst: Let’s sorry, one more question. So looking at your outlook for the company, Stefan, over the next twelve months, what market, categories, channels, where do you feel the most confident versus where do you think there’s risk to your outlook as it stands today?

Stephane, CEO, Estee Lauder: It’s a very good question because the world is not growing at the same speed of all the category at the same speed. What I’m really encouraged is how robust The U. S. Market is in this moment in time, not only us being able to gain market share, but the market continues to be very strong. And I think it’s linked to the fact that beauty, especially luxury beauty is still affordable luxury, and a lot of people are gravitating towards it, while they may not be able to just buy new homes or new cars because interest rates are still very high.

But like this little luxury, the famous thing that Leonhard Loder used to call the lipstick index, in this moment of high or subdued consumer confidence, I think Luxury Beauty tends to perform greater than many other consumer goods category or luxury goods company. China, I’m encouraged about the stabilization. If we can just get as an industry and us as a company to continue to gain market share. And the early signal of July and August are extremely strong about our performance in China. So we’re very excited about it.

Where I think there’s a little bit more risk is Continental Europe and especially Northern Europe, think about France, Germany, The UK. There is a rapid slowdown of like consumption. I think consumer confidence is also very subdued. We have a lot more work also to do as a company. And the playbook that we’ve created for The U.

S. And China, we are in the process of deploying it in this market because the truth is that when you understand the ecosystem that now we are creating and operating under in The U. S. With Amazon, TikTok, the department store specialty multi, it’s not dissimilar to what is happening in The UK and in many of the Continental Europe market. But we need to make sure that we deploy it, we invest, we’re consistent.

But the consumer confidence is a little bit worrying. On the other hand, you have also markets like Japan that have been absolutely a bright spot of the luxury industry, and we’ve been gaining market share. But Japan has basically very quickly reduced. The yen gets stronger. There’s less basically tourism happening.

Was also some phenomenon this summer, where there was like rumors of earthquake and etcetera, which frankly, we’ve seen a traumatic reduction of the tourism in Japan, which have hurt a little bit like consumption. So I think it’s overall rebalancing, positive on The U. S. And China, which happens to be the two largest beauty market in the world, which is good, but some challenges in more Continental Europe and more mature market in Asia, which we still have

Lauren, Analyst: some work to do. Okay. In your guidance, at the lower end of the range, you’d be below market. So I’m just curious, is that being part of the guidance range? Is that about share loss?

Or is it about shipments versus consumption and continued destock? Just

Stephane, CEO, Estee Lauder: Yes. I want for everybody here to differentiate, especially in this year of transition because still fiscal twenty twenty six is a year of transition for us. And I want to disconnect share loss that is a retail KPI versus what we guide, which is net sales. We’ve guided zero to three, but our retail is stronger than our net because we’re still rebalancing a little bit of the retail to growth to net by optimizing inventory. Remember, the first big commitment that Akhil and the team made to all of you is like rebalancing the inventory in Travel Retail.

And that was the commitment that I made in February at the first call and say by the end of the fiscal year, we will be back to the right level of inventory. Promise made, promise kept. We are like in the right place, and we’ve reduced dramatically the penetration of Travel Retail. That being said, we still have pockets around the world, especially in North America, where the inventory, we’re still working through it and create a bit of a disconnect between the retail and the net. But our commitment is to gain share in retail and hopefully, by time, reducing the gap between the retail and the net to just be able to make sure that the retail and the net are a reflection of our market share gain.

Lauren, Analyst: Okay. Great. Amber, I wanted to talk about channel mix in North America, both sales and margin. But sales online, I think, are roughly onethree of North America, but slower growth and less profitable channels still account for the majority of sales in the market. So I guess, what are the implications of these smaller but higher margin online businesses growing faster, is it net accretive to growth?

I mean and profitability anytime soon? Just sort of time line for thinking about the drag from department stores and other channels that are similarly challenged versus the really dynamic nature of the online business?

Amber, Commercial Leader, North America, Estee Lauder: Yes. From a growth perspective, I think there’s still a very real customer that loves our department store business, and we want to protect that experience for her. Of course, then I think the expansion of our brands into other channels that are faster growing that I think are acquiring a younger consumer has been part of the mix that has also been missing in the past that we’ve since shored up. From a profitability standpoint, it’s in line with other channels. Our new distribution and our more faster growing ones, I would say, is in line.

So we from a profitability standpoint, are fine. The thing I think is so interesting is there’s obviously going to be a natural migration of consumers finding these different platforms as they emerge, right? Five years ago, no one was buying anything on TikTok, and here we all are. So I think there’s going to be a slow drip of the mix channel. It’s not going to be something overnight that all of a sudden you’re reengineering things to have to respond to it.

But I think it’s important for us to still remember that how do we continue to optimize and be efficient with our department store channel that is very important and big for us while also investing in these emerging channels that are still providing a new consumer outlook for us. Okay.

Lauren, Analyst: So but as we look forward, I mean, it two years before North America reported can be into growth mode just because of the weight of the decline, protecting and respecting the customer that wants to shop in department This is also just a reality of the department store industry.

Amber, Commercial Leader, North America, Estee Lauder: Yes. I’m not prepared to give a sort of exact time line, but I think we are encouraged by the total market growth we are seeing at a retail level, to Stephane’s point, on market share gains that is giving us optimism that I think that it’s balancing out.

Stephane, CEO, Estee Lauder: July, I’m sure some of you have access to Surcana was very strong. The market was strong and we were even stronger. And the one data point that I will remind everybody we’ve guided is outside of China and Travel Retail, we say the rest of the world will have sequential improvement and end up in positive low single digit growth by the end of the fiscal year. And from there, we continue to just like beyond on strikes.

Lauren, Analyst: Yes. Perfect. Okay. Amber, I wanted to go back to one of the five pillars is reimagining the way we work. Could you talk a little bit or just give some examples of how the new organization structure in The Americas makes the business more agile?

Amber, Commercial Leader, North America, Estee Lauder: Yes. I’ll use the Amazon example as a sort of fresh one. The way that we were structured before was lots of different brands that were sort of siloed and making independent decisions. And when you launch a platform like Amazon, it becomes really hard to look at how the platform is operating and not inherently compete with yourself across different brands because you might have one brand bidding on a search term and another at the same and blindly not knowing that they’re sort of bidding or bringing cost per clicks up. And so when we built the team, we were very intentional about saying we still very much hold to our core brand led as a core part of who we are.

But we have to look channel agnostic as well to make sure that we are leaning into the strengths of how we do that and then also creating agility and speed and empowering the team that’s running that business to not have to trip over each individual brand to get decisions. And so I would say, one, the way that we built that team was a key difference. It’s the only team in our organization that is sort of channel vertically necessarily than brand. And second, the amount of pass off taxes that we have gotten rid of with just the elimination of the coordination, I think it’s really refreshing. And we were saying in another meeting before, there’s obviously a hard part of the layoffs that have been very real on a human level.

But I think the momentum the team is feeling of just the like, I’m empowered to make decisions and the speed in which they’ve then been able to do that has been really, really great. Another silly example is Taylor clearly announced a new album and she’s in her orange era and many of our brands wanted to respond. And before, we would have had to get creative and approval and who’s posting what, and it would have taken us weeks. And within a matter of days, brands had post up on social media on the Clinique Happy brand, the cute little thing on our orange era. And so there’s just that’s a real example that in the last two weeks, we’ve been able to really just say, no, like the North America region is going to respond to cultural moments.

And having the team agility and structure has really allowed us to do that.

Stephane, CEO, Estee Lauder: I think, Laurent, one thing to not underestimate the change that we’ve made by the beginning of this fiscal year of the accountability of where the P and L is in the organization has made tremendous changes. Moving the P and L reps and profitability from the brand, we were a brand led organization, now we’re consumer centric, and moving the P and L closer to where the business where it’s happening allow Amber and Tara in North America or the rest of the commercial leader to be able to flex and to move resources, frankly, at a speed of what the consumer is asking Before, for I was always joking, like it’s not fair to ask the Estee Lauder brand to be able to just decide how to allocate the fund in India from New York City. It’s just like impossible to date. Now the more you put the resources closer to the consumer, the more agility and efficiency you create. And at the same time, you re center the brand to create the best innovation, the best commercial activation and so on and to pass it on to the just region to execute with excellence.

Lauren, Analyst: Okay. Excellent. M and A. So Stephane, sorry. Curious to I’m hear your perspective.

On the fourth quarter call, you did talk about engaging external advisers to review the portfolio. Just a little clarity, are we looking at culling products? Are we thinking about getting into new categories? Are we thinking about divesting brands? But maybe to frame a little bit for us what this is about.

Stephane, CEO, Estee Lauder: So like to your question, I think I just want to clarify a little bit when we said like external advisers, they are bankers that we like hire to just help us to just like look at our portfolio. And I’ve been very clear even in February in my first call that we are in every year in a cycle where we are looking at the strategy of the brand. Will this given brand fit with the new beauty reimagine strategy? Is this brand in the right channel? Do they have the right innovation, the right investment and so on and so forth?

And I’m really committed to continue to invest in the highest return for the company on the Gego. And I think we need to recognize that portfolio have to evolve. Within the brand, the portfolio of product needs to evolve. But that I think we’ve been very good over time. And we’ve demonstrated with the improvement in gross margin and the systematic reduction of inventory has also come from the rationalization of product and SKUs, where you don’t have the profitability or the return, we just cut and we move on and we bring new innovation.

But the truth is that we may have to do some evolution. And so once we have more detail, we’ll obviously like make it public and we’ll announce it. But this is like the process where we are in this moment in time.

Lauren, Analyst: Okay, great. Margins and reinvestment. So also on the last call, you were very clear that within the PRGP, G stands for growth. We quoted you in our note. I almost made it the title.

Almost. Almost. It was a debate. But you’re going to focus on reinvesting to fuel growth, eventually ahead of the market, but that requires investment. So how are you just balancing this or how do you achieve the healthy balance between investing to reinvest and reinvigorate top line, but at the same time, to be restoring and building margin?

Stephane, CEO, Estee Lauder: Look, What we are trying to do at like this moment in time, think about in fiscal twenty twenty five, we’ve declined by 8%, three years of constant decline on margin erosion. We’ve guided zero to three. The math is simple. We need this eight point to 11 swing into one fiscal year. And at the midpoint from adjusted operating margin, we said we were going to improve by 165 basis points.

And that’s after absorbing more than $100,000,000 of tariff and mitigating more than half of that before that. So there’s a lot of things that we’re going to do at the same time. So but it was important that the G was very clear there was no over path, but to invest in just market share gain than putting really our brand at the forefront, frankly, of like the consumer mind. Because when you look at it objectively, from a brand health and brand desirability, most of our brand, if not all of them, are very top rank in many markets around the world. The visibility of some of them because we had mortgaged investment on the top of the funnel or the what we call now the demand generation was not sufficient.

We were very good in China. We were not good enough in The U. S, not good enough in Europe. So we had to just put the investment. Now what you’re seeing from us with the improvement of gross margin, with the efficiency that we are trying to we are building with the PRGP and continue position to start building a lot more leverage.

So while it was a necessary thing to just put more investment, you’re going to see us now going more into a mood of creating more efficiency in the investment that we are having rather than necessarily saying we need to just like continue to invest ahead of the sales, which we may have to do in some pocket and in some geographies like the emerging market. I really believe that we need to fuel the market there to just propel our the acceleration in this market. But it is important, but think about now the P and L of the Astellas company this year and going forward is going to be built for a lot more leverage going forward. Once the market resume, we have a more steady and better growth than what it is today, and we will be in a consistent market share gain.

Lauren, Analyst: Okay, great. So just to wrap up, hopefully, you both come back next year. So we’ll It’s pleasure, Ashwin. We’re sitting here. You’ll be invited, trust me.

And so when so after you put this date in your calendar, just what would you say success looks like for you? One or two things that might derail where you stand in the turnaround, but what do you think we’ll be talking about a year from now?

Stephane, CEO, Estee Lauder: I think in the year from now, we’ll be able to just like prove more consistently market share gain beyond The U. S. And China. I think with the consolidation of the great work we’ve done, obviously, they’re continuing to gain market share in Japan, even though there’s a slowdown in the market. I want to turn around the over mature market, the acceleration of the emerging market, we’ve talked about it.

But I think ultimately, what I’m laser focused on with the team is to create operating model that is give us the agility, the speed of execution and the maximum potential leverage for growth and to build solid double digit operating margin for the years to come. The few things that could derail all of that are more external factors. There’s not a day, we were just talking about it at the beginning of the conference, where there’s no new the amount of volatility, If I’d known that my first position as CEO had to deal with so much volatility in the world, we’ll still have taken the job. But it is just like mind blowing what is happening from different geographic consumers and etcetera. And we are facing that with determination.

But frankly, like today, yesterday, the tariff was not a thing, then it became a thing that now they may be challenged again. So just managing all of that is actually the only thing that takes your ball off just driving the business. And we are conscious about it, but we are operating in this new environment, which I think is the new norm. So we just have to just get used to it and just like move forward. And I think Beauty or Imagine have all the confidence, this is the right strategy to just put back the company in the rightful place that it deserves, which is at the top.

Lauren, Analyst: Okay, great. Perfect place to end. Thank you so much for joining us. Join me in thanking us today.

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