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Corrected Transcript 1-877-FACTSET Total Pages:22 Copyright 2001-2025 FactSet CallStreet,LLC 20-Aug.
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767 Fifth AvenueNew York,NY 10153 NewsContact:Investors:Rainey MMedia:Brendan RTHE ESTE LAUDER COMPANIES REPORTS FISCAL 2025 RESULTS New Leadership Team Delivers Strategic Progress and Outlook in Fiscal 2025 Second Half Affirms Fiscal 2026 Outlook to Restore Positive Sales Growth and Improve Operating Profitability New York,August20,2025-The Este Lauder Companies Inc.(NYSE:EL)today reported its financial results for its fiscal year ended June30,2025.Stphane de La Faverie,President and CEO,said,“Having closed fiscal 2025 as expected,we remain wholly focused on continuing to execute our strategic vision of Beauty Reimagined with excellence.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.”FISCAL 2025 SELECT FINANCIAL RESULTS(unaudited)1,2Year EndedJune30PercentageChange($in millions,except per share data)20252024Net Sales$14,326$15,608 (8)%Organic Net Sales,Non-GAAP1$14,351$15,609 (8)%Other Financial Results:Gross Profit$10,597$11,184 (5)%Gross Margin 74.0q.7justed Gross Profit,Non-GAAP1,2$10,602$11,186 (5)justed Gross Margin,Non-GAAP1,2 74.0q.7%Operating(Loss)Income$(785)$970(100 )%Operating Margin(5.5)%6.2justed Operating Income,Non-GAAP1,2$1,146$1,588 (28)justed Operating Margin,Non-GAAP1,2 8.0.2%Diluted Net(Loss)Earnings Per Common Share$(3.15)$1.08(100 )justed Diluted Net Earnings Per Common Share,Non-GAAP1,2$1.51$2.59 (42)%Page 1 of 261See pages 22 and 23 for reconciliation between GAAP and Adjusted Non-GAAP measures.2Adjusted Non-GAAP measures are calculated based on Net Sales adjusted only for Returns associated with restructuring and other activities.As Reported and Organic Net sales decreased 8%.As Reported and Adjusted Gross margin expanded 230 basis points,to 74.0%,despite the decline in net sales,primarily driven by net benefits from the Companys Profit Recovery and Growth Plan(“PRGP”)through operational efficiencies,lower excess and obsolescence and benefits from our strategic pricing actions.Operating margin declined to(5.5)%from 6.2%in the prior year,primarily reflecting the year-over-year increase in both goodwill and other intangible asset impairment charges of$815 million and charges associated with restructuring and other activities of$362 million.The decline also includes$159 million of aggregate charges associated with the talcum litigation settlement agreements.Adjusted operating margin contracted 220 basis points,to 8.0%from 10.2%.This reflects the increase in consumer-facing investments3,along with sales volume deleverage in fiscal 2025.These impacts were partially offset by net benefits from the Companys PRGP that helped to reduce non-consumer-facing expenses.Effective tax rate was(8.9)%,a decrease compared to 47.0%in the prior year,reflecting the establishment of a valuation allowance against general foreign tax credit and research and development tax credit carryforwards,based on the Companys assessment of the realizability of these deferred tax assets,as well as the tax impacts associated with the charges noted above.Adjusted effective tax rate was 38.8%compared with 31.0%,reflecting a higher effective tax rate on the Companys foreign operations due to its geographical mix of earnings and the unfavorable impact associated with previously issued stock-based compensation.Diluted net(loss)earnings per common share decreased to a net loss of$(3.15)in fiscal 2025,compared with net earnings of$1.08 in the prior year,including impacts from the charges noted above.Adjusted diluted net earnings per common share decreased to$1.51,compared with$2.59.For the year ended June 30,2025:Net cash flows provided by operating activities decreased to$1.27 billion,compared with$2.36 billion in the prior year,primarily reflecting lower pre-tax earnings,excluding non-cash items,as well as the unfavorable change in operating assets and liabilities.This includes the impact from the significant reduction in inventory in the prior year that drove strong net cash flows in fiscal 2024.The decrease also reflects the increase in restructuring payments.Capital expenditures decreased to$602 million from$919 million in the prior year,primarily due to the prior-year payments relating to the manufacturing facility in Japan.This level of expenditures reflects the Companys efforts in fiscal 2025 to optimize capital expenditures to improve free cash flow.The Company paid dividends of$618 million compared to$947 million in the prior year,reflecting the Companys fiscal 2025 second quarter decision to reduce its dividend to a more appropriate payout ratio.Page 2 of 263Consumer-facing investments includes co-operative advertising,selling,advertising and promotional expenses,as well as store operating costs.BEAUTY GAINS AND OPERATIONAL HIGHLIGHTSAchieved prestige beauty share gains in some key markets:In mainland China,share gains continued in the fiscal 2025 fourth quarter driven by every category and channel,led by La Mer and TOM FORD.For the full year,the Company also achieved share gains in every category,driven by La Mer and Le Labo In Japan,gained share in every quarter of fiscal 2025,and continued to strengthen#1 rank in Fragrance in the fourth quarter driven by Le Labo,Jo Malone London and KILIAN PARIS In the U.S.4,made significant improvement in the Companys share trends in fiscal 2025,gaining share in the second halfled by The Ordinary,Clinique and Este Lauderdespite a modest loss in the fourth quarterRanked highly during fiscal 2025 key shopping moments in mainland China:11.11 Global Shopping Festival:Este Lauder and La Mer ranked either#1 or#2 in Prestige Beauty and Luxury and Jo Malone London ranked either#1 or#2 in Fragrance across Douyin,JD and Tmall 618 Shopping Festival:on Douyin and Tmall,Este Lauder and La Mer ranked either#1 or#2 in Prestige Beauty and Luxury and Jo Malone London ranked either#1 or#2 in Prestige Fragrance,while MAC ranked#1 in Artistry Makeup on Douyin Launched breakthrough,on-trend and commercial innovations in fiscal 2025:Extended halos of beloved franchises,including(i)Este Lauder Re-Nutriv Ultimate Diamond Age Reversal Eye Creme and Double Wear Stay-in-Place 24-Hour Concealer,and(ii)fiscal 2025 fourth-quarter launches,such as La Mer The New Balancing Treatment Lotion and Clinique Almost Lipstick in Nude Honey Elevated nighttime usage occasions within the moisturizer and serum subcategories with La Mer The Night Recovery Concentrate and The New Rejuvenating Night Cream Captured and drove trends,including the MAC Nudes Collection and MACximal Sleek Satin Lipstick,Le Labo Eucalyptus 20 and Jo Malone London Hinoki and Cedarwood,as well as fiscal 2025 fourth-quarter launches,including MAC Lipglass Air,TOM FORD Architecture Soft Matte Blurring Cushion Foundation and The Ordinary UV Filters SPF 45 Serum Priced strategically for new consumer acquisition,including Clinique Moisture Surge Active Glow Serum,The Ordinary GF 15%Solution,MAC Studio Fix Powder Plus Foundation,TOM FORD Slim Lip Color Shine lipstick and Jo Malone London Hand Creams,as well as the fiscal 2025 fourth-quarter launch of Clinique Dramatically Different Moisturizing Lotion Broad Spectrum SPFExpanded consumer coverage:Launched eight brands in Amazons U.S.Premium Beauty store in fiscal 2025,including Aveda and Origins in the fiscal 2025 fourth quarter Launched three brands in the Amazon.ca(Canada)Premium Beauty store in fiscal 2025 with Clinique,as well as Este Lauder and Aveda in the fiscal 2025 fourth quarter Expanded online distribution in Southeast Asia,launching 14 additional stores on Shopee and four on TikTok Shop in fiscal 2025 Scaled distribution of The Ordinary in fiscal 2025,including launches in Amazons U.S.Premium Beauty store and on TikTok Shop in the U.K.,along with geographic expansion in Page 3 of 264Source:Circana,LLC,US Prestige Beauty Total Department/Specialty,Dollar Share Growth of Corporation,six-months ended June 2025.Thailand,mainland China,Turkey,and,in the fourth quarter,in Brazil.The brand continues to expand in fiscal 2026,with the Companys first launch in Amazons U.K.Premium Beauty store and its launch on Tmall in July 2026.Broadened Fragrance distribution,including approximately 40 net new freestanding stores opened globally in fiscal 2025led by Jo Malone London and Le Laboincluding six in the fourth quarterLe Labo continued to fuel Fragrance growth with strong double-digit year-over-year net sales increases in each fiscal 2025 quarter,expanding its footprint by 90 new points of distribution,including two new flagship storesone in Beijing and the other in Seoul,its first in Koreaand its geographic expansion in Brazil Clinique continues to expand in fiscal 2026,with its August 2025 launch in A.mx(Mexico)Premium Beauty storeFunded consumer-facing investments to fuel growth Increased consumer-facing investments by approximately 400 basis points as a percentage of sales in fiscal 2025 and approximately 580 basis points in the fourth quarterequivalent to a 3%increase in both periods.These investments were funded by net benefits from PRGP initiatives,which reduced non-consumer-facing costs by 6%in fiscal 2025,with continued progress in the fourth quarter.Other fiscal 2025 highlights:Jo Malone London partnered with GQ for the Men of Year Awards 2024KILIAN PARIS hosted an event during the Cannes Film Festival in May 2025,honoring its hero fragrance,Angels Share,and debuting Angels Share Paradis;with over 400 million impressions,the event generated over$20 million in earned media valueAnnounced Fragrance Atelier location in Paris,France;slated to open in the fiscal 2026 second quarterOpened a new BioTech Hub in Belgium in December 2024 and established a collaboration with the Massachusetts Institute of Technology in January 2025,further accelerating the Companys cutting-edge biotechnology innovationsRecognized for investments and expanded strategic AI partnerships to drive operational efficiencies:Featured on Microsofts AI Work list as an“Agent of Change”,highlighting the Companys dedication and leadership in AI integration across business functions Announced a strategic partnership with Adobe to integrate Firefly generative AI into the Companys existing Creative Cloud workflows,designed to drive efficiency,accelerate execution and empower creative teams to recapture time and focus on ideating and creating new artistic conceptsEnhanced the Companys supply chain processes,with additional initiatives underway to further drive manufacturing efficiencies,enhance speed-to-market and ensure quality throughout the product lifecycleReinforced the Companys presence in dermatological science through new skin care clinical and scientific research presented by Este Lauder,Clinique and La Mer at the 20th annual Symposium for Cosmetic Advances&Laser Education(SCALE)Recognized by CDP for the Companys 2024 disclosures on its environmental impact,achieving an A for Climate,A-for Water and B for ForestsPage 4 of 26FISCAL 2025 RESULTS BY PRODUCT CATEGORY AND BY REGIONResults by Product Category(Unaudited)Year Ended June 30Net SalesPercentage Change1 Operating(Loss)IncomePercentageChange($in millions)20252024ReportedBasisImpact of Foreign Currency TranslationOrganic Net Sales(Non-GAAP)20252024ReportedBasisSkin Care$6,962$7,908 (12)%(12)%$574$735 (22)%Makeup 4,205 4,470 (6)(5)(441)93(100 )Fragrance 2,491 2,487 (378)265(100 )Hair Care 565 629 (10)(10)(41)(52)21 Other 100 115 (13)(13)(13)53(100 )Subtotal$14,323$15,609 (8)%(8)%$(299)$1,094(100 )%Returns/charges associated with restructuring and other activities 3 (1)(486)(124)Total$14,326$15,608 (8)%(8)%$(785)$970(100 )%Non-GAAP Adjustments to As Reported Operating(Loss)Income:Returns/charges associated with restructuring and other activities 486 124 Skin Care-Goodwill and other intangible asset impairments 375 471 Makeup-Goodwill and other intangible asset impairments 308 Fragrance-Other intangible asset impairment 549 Other-Other intangible asset impairment 54 Makeup-Talcum litigation settlement agreements 159 Skin Care-Change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax 23 Adjusted Operating Income-Non-GAAP$1,146$1,588 (28)%1Percentages are calculated on an individual basis.The product category net sales commentary below reflects organic net sales,excluding the impacts from foreign currency translation.In addition to the Operational Highlights above,below are the drivers of the Companys performance.Skin CareSkin Care net sales decreased 12%,primarily due to declines from Este Lauder and La Mer,including:Lower net sales from the Companys Asia travel retail business reflecting:Ongoing subdued sentiment and lower conversion from Chinese consumers;Page 5 of 26The difficult comparison to the prior year due to the Companys resumption of replenishment orders in the fiscal 2024 third quarter and the Companys strategic decision to reduce its exposure to reseller activity;andRetailer shifts in strategies toward more profitable duty free business models in both Korea and mainland China,which led to lower replenishment orders.The net sales decline from Este Lauder in mainland China,primarily driven by the impacts from an overall challenging retail environment,including subdued consumer sentiment.This was partially offset by net sales growth from La Mer due to momentum in the second half of fiscal 2025,benefiting from the success of innovation such as The Night Recovery Concentrate and The New Balancing Treatment Lotion.Mid-single-digit growth from The Ordinary,partially offsetting the above noted declines,fueled by targeted expanded consumer reach,including the brands fiscal 2025 launch in Amazons U.S.Premium Beauty Store,and innovation.Skin Care operating income decreased,primarily due to lower net sales,partially offset by the reduction in cost of sales and non-consumer-facing expenses,including net benefits from the PRGP.This also includes the year-over-year decrease of$96 million in goodwill and other intangible asset impairment charges relating to Dr.Jart ,with the charges recorded in the fourth quarter in both fiscal years.In the fiscal 2025 fourth quarter,the Company recorded other intangible asset impairment charges totaling$375 million relating to Dr.Jart ,reflecting lower-than-expected results in Korea and mainland China.The charges are reflected in Asia/Pacific operating income.MakeupMakeup net sales decreased 5%,primarily driven by:The decline from MAC,reflecting lower net sales in the face subcategory and retail softness for the brand,which led to elevated inventory levels and retailer destocking.This was partially offset by the benefit from new product launches,including the MAC Nudes Collection and MACximal Sleek Satin Lipstick.The decrease from Este Lauder,primarily driven by the decline in the face subcategory,reflecting the challenges in the Companys Asia travel retail business,as noted abovedespite sequential improvement in year-over-year net sales growth in the rest of the business in the fiscal 2025 fourth quarter.This decline more than offset the benefit from new product launches,including Double Wear Stay-in-Place 24-Hour Concealer and Double Wear Stay-in-Place Matte Powder Foundation.Declines in the lip and eye subcategories from Too Faced and face subcategory from Bobbi Brown,reflecting retail softness for the brands.Partially offsetting these declines,Cliniques net sales growth across all geographic regions,led by the face and lip subcategories,benefiting from its fiscal 2024 third quarter launch in Amazons U.S.Premium Beauty store as well as innovation such as Even Better Clinical Vitamin Makeup and the expansion of the Almost Lipstick product franchise.Page 6 of 26Makeup operating income declined,primarily due to the(i)impairment charges recorded in fiscal 2025 totaling$308 million,consisting of the other intangible asset impairment relating to TOM FORD as well as the goodwill and other intangible asset impairments relating to Too Faced and(ii)$159 million of aggregate charges recorded in fiscal 2025 associated with the talcum litigation settlement agreements.The decline also reflects lower net sales,partially offset by the reduction in cost of sales,including net benefits from the PRGP.In the fiscal 2025 fourth quarter,the Company recorded an other intangible asset impairment charge of$50 million relating to Too Faced reflecting lower-than-expected results in key geographic regions and channels.The charge is reflected in the operating results of The Americas.FragranceFragrance net sales were flat,primarily driven by:The mid-single-digit increase from the Companys Luxury Brands5,fueled by strong double-digit growth from Le Labo and,to a lesser extent,KILIAN PARIS.Le Labos performance was driven by its Classic Collection and City Exclusives,both of which benefited from innovation such as Eucalyptus 20 and Osmanthus 19,respectively,as well as targeted expanded consumer reach.This growth was partially offset by the decline from TOM FORD,primarily driven by retail softness for the brand in North America.Declines from Este Lauders Pleasures and Beautiful product franchises and from the Clinique Happy product franchise.Fragrance operating results decreased,primarily due to the$549 million other intangible asset impairment charge recorded in fiscal 2025 relating to TOM FORD as well as the increase in consumer-facing investments.Hair CareHair Care net sales decreased 10%,primarily driven by:The decline from Aveda,reflecting continued softness in brick-and-mortar channels as well as freestanding store closures.This more than offset online growth,owing to the brands fiscal 2025 fourth-quarter launch in Amazons U.S.Premium Beauty store.Lower net sales from The Ordinary.In addition,net sales declined from Bumble and bumble,primarily driven by softness in the specialty-multi and salon channels,partially offset by online growth from the brands fiscal 2024 fourth-quarter launch in Amazons U.S.Premium Beauty store.Hair Care operating results improved,reflecting disciplined expense management and lower cost of sales,partially offset by the decline in net sales.Page 7 of 265In fiscal 2025,the Company expanded its Luxury fragrance brand portfolio with the launch of BALMAIN Beauty.Results by Geographic Region(Unaudited)Year Ended June 30Net SalesPercentage Change1Operating(Loss)IncomePercentageChange($in millions)20252024ReportedBasisImpact of Foreign Currency TranslationOrganic Net Sales (Non-GAAP)20252024ReportedBasisThe Americas$4,411$4,581 (4)%1%(3)%$(918)$34(100 )%Europe,the Middle East&Africa 5,375 6,140 (12)(13)610 836 (27)Asia/Pacific 4,537 4,888 (7)(7)9 224 (96)Subtotal$14,323$15,609 (8)%(8)%$(299)$1,094(100 )%Returns/charges associated with restructuring and other activities 3 (1)(486)(124)Total$14,326$15,608 (8)%(8)%$(785)$970(100 )%Non-GAAP Adjustments to As Reported Operating(Loss)Income:Returns/charges associated with restructuring and other activities 486 124 The Americas-Goodwill and other intangible asset impairments 911 Asia/Pacific-Goodwill and other intangible asset impairments 375 471 The Americas-Talcum litigation settlement agreements 159 The Americas-Changes in fair value of DECIEM acquisition-related stock options inclusive of payroll tax 14 Europe,the Middle East&Africa-Changes in fair value of DECIEM acquisition-related stock options inclusive of payroll tax 9 Adjusted Operating Income-Non-GAAP$1,146$1,588 (28)%1Percentages are calculated on an individual basis.The geographic region net sales commentary below reflects organic net sales,excluding the negative impact from foreign currency translation that is reflected in the preceding table.In addition to the Operational Highlights above,below are the drivers of the Companys performance.Organic Net Sales-decreased 8%,reflecting declines across all geographic regions and driven by:The strong double-digit net sales decline from the Companys global travel retail business,which is included in Europe,the Middle East&Africa(“EMEA”),driven by lower net sales in Asia travel retail reflecting:Ongoing subdued sentiment and lower conversion from Chinese consumers;The difficult comparison to the prior year due to the Companys resumption of replenishment orders in the fiscal 2024 third quarter and the Companys strategic decision to reduce its exposure to reseller activity;andPage 8 of 26Retailer shifts in strategies toward more profitable duty free business models in both Korea and mainland China,which led to lower replenishment orders.Mid-single-digit net sales decline in mainland China,primarily due to the impacts from an overall challenging retail environment,including subdued consumer sentiment.The net sales decrease in the first half of fiscal 2025 more than offset growth in the second half driven by innovation,targeted expanded consumer reach and success during key shopping moments.Low-single-digit net sales decline in North America,reflecting:Ongoing retail softness for some brands as well as pressures from subdued consumer confidence and sentiment in the second half of fiscal 2025,which led to elevated levels of inventory and destocking at certain retailers,along with the timing of shipments compared to the prior year.Partially offsetting these pressures was the benefit of expanding to eleven brands in Amazons U.S.Premium Beauty store from three in the prior year,as well as launching three brands in the Amazon.ca(Canada)Premium Beauty store in fiscal 2025.Operating Results-decreased,reflecting declines across all geographic regions,primarily driven by:The decrease in operating results in The Americas,primarily due to:Goodwill and other intangible asset impairment charges recorded in fiscal 2025 totaling$911 million,consisting of the other intangible asset impairment relating to TOM FORD and the goodwill and other intangible asset impairments relating to Too Faced.The unfavorable year-over-year impact of net intercompany activity,including$334 million of lower intercompany royalty income due to the decline in income from the Companys global travel retail business.Additional drivers,including lower net sales,$159 million of aggregate charges in fiscal 2025 associated with the talcum litigation settlement agreements and an increase in consumer-facing investments.The partial offsets from the reductions in cost of sales and non-consumer-facing expenses both of which included net benefits from the PRGP.The decline in operating income in EMEA,primarily reflecting the decrease in net sales and,to a lesser extent,the increase in consumer-facing investments,partially offset by the reduction in cost of sales,including net benefits from the PRGP,and the favorable year-over-year impact of net intercompany activity,including$334 million of lower intercompany royalty expense due to the decline in income from the Companys global travel retail business.The decline in operating income in Asia/Pacific,primarily driven by lower net sales and the unfavorable year-over-year impact of a change in policy related to local government subsidies in China.These were partially offset by the year-over-year decrease of$96 million in goodwill and other intangible asset impairment charges relating to Dr.Jart .Page 9 of 26Fourth Quarter ResultsResults by Product Category(Unaudited)Three Months Ended June 30Net SalesPercentage Change1 Operating(Loss)IncomePercentageChange($in millions)20252024ReportedBasisImpact of Foreign Currency TranslationOrganic Net Sales(Non-GAAP)20252024ReportedBasisSkin Care$1,705$2,035 (16)%(1)%(17)%$(210)$(185)(14)%Makeup 982 1,105 (11)(1)(12)(59)37(100 )Fragrance 560 539 4 (1)2 (24)(2)(100 )Hair Care 141 165 (15)(15)(7)(2)(100 )Other 20 27 (26)(26)12 15 (20)Subtotal$3,408$3,871 (12)%(1)%(13)%$(288)$(137)(100 %)Returns/charges associated with restructuring and other activities 3 (102)(96)Total$3,411$3,871 (12)%(1)%(13)%$(390)$(233)(67)%Non-GAAP Adjustments to As Reported Operating Loss:Returns/charges associated with restructuring and other activities 102 96 Skin Care-Goodwill and other intangible asset impairments 375 471 Makeup-Other intangible asset impairment 50 Skin Care-Changes in fair value of DECIEM acquisition-related stock options inclusive of payroll tax 15 Adjusted Operating Income-Non-GAAP$137$349 (61)%1Percentages are calculated on an individual basis.Page 10 of 26Results by Geographic Region(Unaudited)Three Months Ended June 30Net SalesPercentage Change1 Operating(Loss)IncomePercentageChange($in millions)20252024ReportedBasisImpact of Foreign Currency TranslationOrganic Net Sales(Non-GAAP)20252024ReportedBasisThe Americas$949$1,014 (6)%1%(5)%$65$277 (77)%Europe,the Middle East&Africa 1,293 1,652 (22)(2)(24)(35)11(100 )Asia/Pacific 1,166 1,205 (3)(1)(4)(318)(425)25 Subtotal$3,408$3,871 (12)%(1)%(13)%$(288)$(137)(100 %)Returns/charges associated with restructuring and other activities 3 (102)(96)Total$3,411$3,871 (12)%(1)%(13)%$(390)$(233)(67)%Non-GAAP Adjustments to As Reported Operating Loss:Returns/charges associated with restructuring and other activities 102 96 The Americas-Other intangible asset impairments 50 Asia/Pacific-Goodwill and other intangible asset impairments 375 471 The Americas-Changes in fair value of DECIEM acquisition-related stock options inclusive of payroll tax 6 Europe,the Middle East&Africa-Changes in fair value of DECIEM acquisition-related stock options inclusive of payroll tax 9 Adjusted Operating Income-Non-GAAP$137$349 (61)%1Percentages are calculated on an individual basis.For the three months ended June 30,2025,reported and organic net sales decreased 12%and 13%,respectively,compared to the prior-year period,reflecting declines across all product categories,except Fragrance,and all geographic regions.Organic net sales decreased 13%,led by Skin Care and Makeup.Net sales fell 17%in Skin Care,primarily driven by Este Lauder and La Mer,reflecting the challenges in the Companys Asia travel retail business,as previously discussed.Makeup net sales decreased 12%,primarily reflecting(i)lower net sales from Este Lauder,due to the challenges in the Companys Asia travel retail business,(ii)declines across all geographic regions from MAC and(iii)lower net sales in North America,led by Too Faced,primarily due to retail softness for some brands as well as the timing of shipments.Fragrance net sales increased 2%,fueled by the Companys Luxury fragrance brands,led by Le Labo and Jo Malone London,driven by the success of hero product franchises,benefits from innovation,targeted expanded consumer reach throughout fiscal 2025 and the increase in consumer-facing investments.Page 11 of 26Net sales declined 15%in Hair Care,primarily due to ongoing brick-and-mortar challenges in North America,which more than offset the benefit from the fiscal 2025 fourth-quarter launch of Aveda in Amazons U.S.Premium Beauty store.Net sales declined in all geographic regions,primarily driven by the declines in the Companys global travel retail business and North America,as discussed above.Despite improvements in certain areas of the business,the sequential deterioration in the Companys fiscal 2025 fourth quarter net sales results primarily reflected the stronger double-digit decline in its global travel retail business,along with softness in mainland China from ongoing subdued consumer sentiment and tighter inventory management by some retailers.Operating loss was$390 million,compared to$233 million in the prior-year period.Excluding returns and charges associated with restructuring and other activities,operating loss was$288 million,compared to$137 million in the prior-year period,reflecting declines across all product categories and geographic regions,except Asia/Pacific.Skin Care operating loss increased,primarily reflecting lower net sales,partially offset by the reduction in non-consumer-facing expenses,the year-over-year decrease of$96 million in goodwill and other intangible asset impairment charges relating to Dr.Jart and lower cost of sales.Operating results in Makeup decreased,primarily due to the decline in net sales and the fiscal 2025 other intangible asset impairment charge of$50 million relating to Too Faced,partially offset by lower cost of sales.Fragrance operating loss increased,primarily driven by the increase in consumer-facing expenses,partially offset by the increase in net sales.Operating loss increased in Hair Care,reflecting lower net sales,partially offset by the reduction in cost of sales.The decline in operating income in The Americas was primarily driven by(i)the unfavorable year-over-year impact of net intercompany activity,including$145 million of lower intercompany royalty income due to the decline in income from the Companys global travel retail business,(ii)lower net sales and(iii)the fiscal 2025 other intangible asset impairment charge of$50 million relating to Too Faced,partially offset by the decrease in non-consumer-facing expenses and cost of sales.Operating results in EMEA declined,primarily due to lower net sales,partially offset by the favorable year-over-year impact of net intercompany activity,including lower royalty expense due to the decline in income from the Companys global travel retail business,as noted above.The reduction in cost of sales,including net benefits from the PRGP,also partially offset the decline in net sales.Operating loss in Asia/Pacific improved,primarily reflecting the year-over-year decrease of$96 million in goodwill and other intangible asset impairment charges relating to Dr.Jart ,the decrease in non-consumer-facing expenses and a favorable year-over-year impact associated with the timing of recognition of local government subsidies in China,partially offset by lower net sales.Net loss was$546 million and diluted net loss per common share was$1.51,compared to$284 million and$.79,respectively,in the prior-year period.Page 12 of 26During the three months ended June 30,2025,the Company recorded restructuring and other charges and other intangible asset impairment charges that,combined,resulted in an unfavorable impact of$527 million($408 million net of tax),equal to$1.12 per diluted share.In addition,the Company recorded a U.S.deferred tax asset valuation allowance adjustment of$172 million,equal to$.48 per diluted share.The prior-year period results include restructuring and other charges and adjustments that,combined,resulted in an unfavorable impact of$582 million($516 million6 less the portion attributable to redeemable noncontrolling interest and net of tax),equal to$1.43 per diluted share.See page 23 for details.Excluding restructuring and other charges and adjustments referred to in the previous bullet,adjusted diluted net earnings per common share for the three months ended June 30,2025 was$.09,a decrease from$.64 in the prior-year period.Adjusted diluted net earnings per common share was$.09 in constant currency.QUARTERLY DIVIDENDToday,the Company announced a quarterly dividend of$.35 per share on its Class A and Class B Common Stock,payable in cash on September16,2025 to stockholders of record at the close of business on September2,2025.PROFIT RECOVERY AND GROWTH PLAN(“PRGP”)In February 2025,the Company announced the expansion of its PRGP,including the restructuring program.While the Company realized more net benefits under the PRGP in fiscal 2025 than expected,these benefits were more than offset by sales volume deleverage,investments to restore sustainable growth and inflation.Actions under the plan are expected to be substantially completed in fiscal 2027,with a majority of the full run-rate benefits expected to be realized during fiscal 2027.The plan is designed to further transform the Companys operating model to fund a return to sales growth in fiscal 2026 and restore a solid double-digit adjusted operating margin over the next few years,and continue to mitigate impacts from external volatility.The Company has made meaningful progress in the execution of its PRGP,as evidenced by adjusted gross margin expansion,the advancement of planned initiatives,internally and with external partners,and cumulative actions under its restructuring program.The Company delivered over 200 basis points of adjusted gross margin expansion in fiscal 2025,despite pressure from its sales volume declines,through initiatives designed to(i)enhance operational efficiencies;(ii)reduce excess inventory;and(iii)improve the realization of net strategic pricing actions by reducing discounts and promotions.This reflects over 300 basis points of expansion in each of the first three quarters,and relatively flat adjusted gross margin in the fourth quarterdespite being the quarter with the largest sales volume decline of fiscal 2025.In addition,the Company reduced its non-consumer-facing expenses by 6%in fiscal 2025,with continued progress in the fourth quarter,to help fund consumer-facing investments,through initiatives designed to(i)reduce employee-related costs,(ii)optimize vendor management and(iii)reduce third-party labor-related costs.Page 13 of 266Refer to Page 23 for details on the earnings and related tax impacts associated with the fiscal 2024 non-GAAP adjustments.For fiscal 2024,this also includes the impact of redeemable noncontrolling interest of$4 million.Restructuring Program Component of the PRGPRelating specifically to the restructuring program component of the PRGP,once fully implemented,the Company expects to take restructuring and other charges of between$1.2 billion and$1.6 billion,before taxes,consisting of employee-related costs,asset-related costs,contract terminations and other costs associated with implementing these initiatives.The restructuring program is expected to yield annual gross benefits of between$0.8 billion and$1.0 billion,before taxes,to help restore operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth.The Company estimates a net reduction in positions of 5,800 to 7,000,including approvals to date.This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.Approvals for specific initiatives under this restructuring program,in total,are expected to be completed by the end of fiscal 2026.The restructuring programs focus includes the(i)reorganization and rightsizing of certain areas,(ii)simplification and acceleration of processes,(iii)outsourcing of select services and(iv)evolution of go-to-market footprint and selling models.As of June 30,2025,the Company has recognized total cumulative charges under the restructuring component of the PRGP of$610 million,consisting primarily of employee-related costs.As of August13,2025,the Company has approved initiatives totaling cumulative charges of$747 million and a net reduction of over 3,200 positions.Inclusive of approvals through August 2025 and relative to the high end of the total expected ranges,the Company has approved initiatives that account for over 60%of the expected gross benefits and nearly 50%of both the expected charges and net reduction in positions.OUTLOOK FOR FISCAL 2026 FULL YEARAs the Company has done historically,it continues to develop its strategy,assess performance and allocate resources by product category and will continue to report results by product category.To enhance accountability and streamline operations within the organization,as well as to align with its recently announced leadership changes,the Company has reorganized its geographic regions.Beginning with the fiscal 2026 first quarter,the Company will be reporting its fiscal 2026 and comparable fiscal 2025 results by geographic region under the new regional structure.The Companys four new geographic regions are:The Americas,including North America and Latin AmericaEurope,the United Kingdom and Ireland and Emerging Markets(“EUKEM”),including the markets of the Companys previously reported EMEA region,as well as the Southeast Asian Emerging Markets,which were previously reported in its Asia/Pacific regionIndonesia,Malaysia,the Philippines,Thailand,and VietnamAsia/Pacific,including the Companys global travel retail business,which was previously reported in the EMEA region Mainland China,which was previously reported in the Companys Asia/Pacific region,will now be reported as a separate regionPage 14 of 26See page 26 for fiscal 2025 and 2024 full-year and fourth quarter net sales results presented under the new regional structure.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.The Company has implemented a range of actions,including leveraging available trade programs and further optimizing its regional manufacturing footprint to bring production closer to the consumerincluding through its facility in Japan.These efforts,combined with increased supply chain agility,are helping to offset more than half of the expected impacts and better position the Company to adapt quickly as trade policies continue to evolve.Based on current information and net of planned mitigation actions,the Company expects tariff-related headwinds to impact fiscal 2026 profitability by approximately$100 million.The Company continues to evaluate additional strategies,including further PRGP initiatives and potential pricing actions.In terms of recently enacted tariffs,the Companys assumption reflects the following incremental rates on its most material flow of goods:For U.S.imports:(i)from Switzerland a 39%rate,(ii)from Canada a 35%rate,(iii)from China a 30%rate,(iv)from Mexico a 25%rate,(v)from both the European Union and Japan a 15%rate and(vi)from the U.K.a 10%rate For Canada imports from the U.S.,a 25%rateFor China imports from the U.S.,a 10%rateBeginning with fiscal 2026,the Company is providing only an annual outlook.This approach gives the Company more agility and flexibility to navigate ongoing volatility while better aligning with its long-term value creation and strategic priorities.Reconciliation between GAAP and Non-GAAP-Net Sales Growth(Unaudited)Twelve Months EndingJune 30,2026(F)As Reported-GAAP2%-5%Impact of foreign currency translation 2 Returns associated with restructuring and other activities(1)Organic,Non-GAAP0%-3%(F)Represents forecast,using spot rates as of June 30,2025.(1)The net sales growth impact of returns associated with restructuring and other activities includes approvals to date.Additional returns associated with restructuring and other activities are anticipated as initiatives are approved in fiscal 2026.Page 15 of 26Reconciliation between GAAP and Non-GAAP-Diluted Net Earnings(Loss)Per Common Share(“EPS”)(Unaudited)Twelve Months EndingJune 302026(F)2025GrowthForecasted/As Reported EPS-GAAP$1.63-$1.87$(3.15)100 %Non-GAAPRestructuring and other charges(1).23-.27 1.06 Goodwill and other intangible asset impairments 2.78 U.S.deferred tax asset valuation allowance adjustment.48 Talcum litigation settlement agreements(2).34 Forecasted/Adjusted EPS-Non-GAAP$1.90-$2.10$1.51 26%-39%Impact of foreign currency translation(.03)Forecasted/Adjusted Constant Currency EPS-Non-GAAP$1.87-$2.07$1.51 24%-37%(F)Represents forecast,using spot rates as of June 30,2025.(1)The diluted net earnings per common share impact of restructuring and other charges includes approvals to date.Additional restructuring and other charges are anticipated as initiatives are approved in fiscal 2026.(2)No assumptions included in the fiscal 2026 forecast.The Company has reflected the following assumptions in its fiscal 2026 full-year outlook:Global prestige beauty growth between 2%and 3%Organic net sales assumptions:Tighter monitoring of inventory in trade and a significant reduction in discounts,reflecting the Companys planned actions to better align its retail and net sales growthMid-single-digit return to growth in mainland China,reflecting early signs of stabilizationAt the mid-point of the outlook range,a return to modest growth in the Companys global travel retail business,with a wider second-half fiscal 2026 outlook range,reflecting:An improvement in shipments compared to fiscal 2025,particularly in the first half of fiscal 2026,in Asia travel retail as the Company anniversaries the impacts of actions taken to improve retailer inventory levels and the Companys strategic decision to reduce its exposure to reseller activity;Offset to some extent by the ongoing volatility in Asia travel retailincluding weak conversionLow-single-digit growth in the Companys marketsexcluding mainland Chinareflecting improvements in year-over-year growth rates in most markets compared to growth rates in fiscal 2025Low-single-digit decline to slightly positive in the fiscal 2026 first quarter.This reflects high-single-digit growth in the Companys global travel retail business,while maintaining the Companys strategic initiative to keep the mix of business in line with industry norms.In addition,the Company anticipates,a return to solid growth in mainland China and a more moderate decline in the remainder of the business.As of August 13,2025,an unfavorable impact of approximately$100 million on profitability from currently enacted incremental tariffs,net of the Companys planned mitigation strategiesPage 16 of 26Adjusted operating margin of 9.4%to 9.9%,reflecting greater expansion in the second half of fiscal 2026 as PRGP benefits are expected to build sequentially each quarterAn adjusted effective tax rate of approximately 36%,reflecting the Companys estimated geographical mix of earnings and a higher rate in the fiscal 2026 first quarter of approximately 40%,with improvement expected as profitability builds throughout the year.The Company is monitoring certain provisions in global tax regulations that may expire during fiscal 2026,which,if not extended,could increase its effective tax rate.Net cash flows provided by operating activities to be between$1.0 billion and$1.1 billion,representing a decline from fiscal 2025 and reflecting higher restructuring payments that are expected to peak in fiscal 2026,partially offset by the Companys continued focus on managing working capitalCapital expenditures to be approximately 4%of projected sales,reflecting a more efficient and normalized level of expenditures,along with the Companys focus on optimizing its investments overall as it prioritizes consumer-facing investments to fuel growthincluding upgrades to existing brick-and-mortar and online distribution channels,along with targeted expanded consumer reachNo deterioration in the geopolitical landscape or related impacts,including tariffs and consumer sentimentThe Company continues to monitor the effects of the global macro environment,including the risk of recession;currency volatility;inflationary pressures;supply chain challenges;social and political issues;competitive pressures;legal and regulatory matters,including the imposition of tariffs and sanctions;geopolitical tensions;and global security issues.The Company is also mindful of inflationary pressures(including those caused by tariffs)on its cost base and is monitoring the impact on consumer preferences,the impact of changes being made in the organization,including those related to Beauty Reimagined and the PRGP,as well as the potential impact of changes expected to be made as part of the PRGP on suppliers,retailers and others,and challenges relating to successfully outsourcing select services.CONFERENCE CALL AND WEBCAST DETAILSThe Este Lauder Companies will host a conference call at 8:30 a.m.(ET)today,August20,2025 to discuss its results for fiscal 2025.The dial-in number for the call is 877-883-0383 in the U.S.or 412-902-6506 internationally(conference ID number:9963609).The call will also be webcast live at http:/ and will be available for replay until September 3,2025.CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSStatements in this press release,in particular those in“Outlook,”as well as remarks by the CEO and other members of management,may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.Such statements may address the Companys expectations regarding sales,earnings or other future financial performance and liquidity,other performance measures,product introductions,entry into new geographic regions,information technology initiatives,new methods of sale,the Companys long-term strategy,restructuring and Page 17 of 26other charges and resulting cost savings,and future operations or operating results.These statements may contain words like“expect,”“will,”“will likely result,”“would,”“believe,”“estimate,”“planned,”“plans,”“intends,”“may,”“should,”“could,”“anticipate,”“estimate,”“project,”“projected,”“forecast,”and“forecasted”or similar expressions.Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations,actual results may differ materially from the Companys expectations.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)the Companys ability to develop,produce and market new products on which future operating results may depend and to successfully address challenges in the Companys business;(3)consolidations,restructurings,bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell the Companys products,an increase in the ownership concentration within the retail industry,ownership of retailers by the Companys competitors or ownership of competitors by the Companys customers that are retailers and the Companys 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 the Companys 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,the Companys business,including those relating to its 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 the Company may take as a result;(9)foreign currency fluctuations affecting the Companys results of operations and the value of its foreign assets,the relative prices at which the Company and its foreign competitors sell products in the same markets and the Companys 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 the Companys products while traveling,the financial strength of the Companys customers,suppliers or other contract counterparties,the Companys operations,the cost and availability of capital which the Company may need for new equipment,facilities or acquisitions,the returns that the Company is able to generate on its pension assets and the resulting impact on funding obligations,the cost and availability of raw materials and the assumptions underlying the Companys critical accounting estimates;Page 18 of 26(11)shipment delays,commodity pricing,depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture the Companys products or at the Companys 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 the Companys ability to increase or maintain the number of retail locations at which the Company sells its products and the costs associated with the Companys other facilities;(13)changes in product mix to products which are less profitable;(14)the Companys ability to acquire,develop or implement new information technology,including operational technology and websites,on a timely basis and within the Companys cost estimates;to maintain continuous operations of its 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)the Companys 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 the Companys filings with the Securities and Exchange Commission,including its Annual Report on Form 10-K for the fiscal year ended June30,2024.The Company assumes no responsibility to update forward-looking statements made herein or otherwise.The Este Lauder Companies Inc.is one of the worlds 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.The Companys products are sold in approximately 150 countries and territories under brand names including:Este Lauder,Aramis,Clinique,Lab Series,Origins,MAC,La Mer,Bobbi Brown Cosmetics,Aveda,Jo Malone London,Bumble and bumble,Darphin Paris,TOM FORD,Smashbox,AERIN Beauty,Le Labo,Editions de Parfums Frdric Malle,GLAMGLOW,KILIAN PARIS,Too Faced,Dr.Jart ,and the DECIEM family of brands,including The Ordinary and NIOD.ELC-FELC-EPage 19 of 26CONSOLIDATED STATEMENT OF(LOSS)EARNINGS(Unaudited)Three Months Ended June 30Percentage ChangeYear Ended June 30Percentage Change($inmillions,exceptpersharedata)2025202420252024Net sales(A)$3,411$3,871 (12)%$14,326$15,608 (8)%Cost of sales(A)955 1,093 (13)3,729 4,424 (16)Gross profit 2,456 2,778 (12)10,597 11,184 (5)Gross margin 72.0q.8t.0q.7%Operating expensesSelling,general and administrative(B)2,315 2,444 (5)9,456 9,621 (2)Restructuring and other charges(A)106 96 10 481 122 100 Goodwill impairment(C)291 (100)13 291 (96)Impairment of other intangible assets(C)425 180 100 1,273 180 100 Talcum litigation settlement agreements(D)159 100 Total operating expenses 2,846 3,011 (5)11,382 10,214 11 Operating expense margin 83.4w.8y.4e.4%Operating(loss)income(390)(233)(67)(785)970(100 )Operating(loss)income margin(11.4)%(6.0)%(5.5)%6.2%Interest expense 88 91 (3)357 378 (6)Interest income and investment income,net 29 41 (29)114 167 (32)Other components of net periodic benefit cost 2 (4)100 12 (13)100 (Loss)earnings before income taxes(451)(279)(62)(1,040)772(100 )Provision for income taxes(E)95 7 100 93 363 (74)Net(loss)earnings(546)(286)(91)(1,133)409(100 )Net loss(earnings)attributable to redeemable noncontrolling interest 2 (100)(19)100 Net(loss)earnings attributable to The Este Lauder Companies Inc.$(546)$(284)(92)%$(1,133)$390(100 )%Net(loss)earnings attributable to The Este Lauder Companies Inc.per common shareBasic$(1.51)$(.79)(92)%$(3.15)$1.09(100 )%Diluted$(1.51)$(.79)(92)%$(3.15)$1.08(100 )%Weighted-average common shares outstandingBasic 360.7 359.4 360.1 359.0 Diluted 360.7 359.4 360.1 360.8 Page 20 of 26(A)Included in net sales,cost of sales and restructuring and other charges are the impacts of returns and charges associated with the restructuring program component of the PRGP and the Post-COVID Business Acceleration Program(the“PCBA Program”).As a component of the PRGP,communicated on November 1,2023,on February 5,2024,the Company announced a two-year restructuring program.The restructuring programs main focus included the reorganization and rightsizing of certain areas of the Companys business as well as simplification and acceleration of processes.The Company planned to substantially complete specific initiatives under the restructuring program through fiscal 2026.The Company expected that the restructuring program would result in restructuring and other charges totaling between$500 million and$700 million,before taxes,consisting of employee-related costs,asset-related costs,contract terminations and other costs associated with implementing these initiatives.After reviewing additional potential initiatives and the progress of previously approved initiatives,on February 3,2025,the Company committed to the expansion of the PRGP,including an expansion of the restructuring program.The expanded component of the restructuring program began during the Companys fiscal 2025 third quarter with all initiatives to be approved by the end of fiscal 2026.Specific initiatives under the expanded component of the restructuring program are expected to be substantially completed by the end of fiscal 2027.The now expanded restructuring programs focus includes(i)reorganization and rightsizing of certain areas and(ii)simplification and acceleration of processes,along with the newly added focus on(i)outsourcing of select services and(ii)evolution of go-to-market footprint and selling models.The Company expects that the restructuring program will result in restructuring and other charges totaling between$1.2 billion and$1.6 billion,before taxes,consisting of employee-related costs,asset-related costs,contract terminations and other costs associated with implementing these initiatives.Under the PCBA Program,the Company approved specific initiatives through fiscal 2022 and has substantially completed those initiatives through fiscal 2023.Additional information about the PCBA Program is included in the notes to consolidated financial statements in the Companys Annual Report on Form 10-K for the fiscal year ended June 30,2024.(B)For the three and twelve months ended June 30,2024,the Company recorded$15million($11 million,less the portion attributable to redeemable noncontrolling interest and net of tax,or$.03 per common share)and$23 million($18 million,less the portion attributable to redeemable noncontrolling interest and net of tax,or$.05 per common share),respectively,of expense related to the change in fair value of DECIEM acquisition-related stock options inclusive of payroll tax.(C)During the fiscal 2025 second quarter,the TOM FORD brand experienced lower-than-expected growth within key geographic regions and channels,including in mainland China,Asia travel retail and Hong Kong SAR.Also during the fiscal 2025 second quarter,the Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels.As a result,the Company made revisions to the internal forecasts relating to its TOM FORD brand and Too Faced reporting unit.Additionally,there were increases in the weighted average cost of capital for both the TOM FORD brand and Too Faced reporting unit as compared to the prior-year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1,2024.The Company concluded that the changes in circumstances in the TOM FORD brand and Too Faced reporting unit,along with increases in the weighted average cost of capital,triggered the need for interim impairment reviews of the TOM FORD trademark and the Too Faced trademark and goodwill.These changes in circumstances were also an indicator that the carrying amounts of Too Faceds long-lived assets,including customer lists,may not be recoverable.After performing the relevant impairment assessments,the Company recorded$773 million and$75 million of trademark intangible asset impairment charges for TOM FORD and Too Faced,respectively,as well as a$13 million goodwill impairment charge related to Too Faced.Based on the Companys annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1,2025,the Company determined that the carrying value of the Dr.Jart and Too Faced trademarks exceeded their estimated fair values.As it relates to Dr.Jart ,a decision was made in the prior year in the reporting units operating plan to exit the travel retail channel.A revised strategy was implemented that included increased direct investment in other areas of the business,including in mainland China,to support the brands future growth.However,given the lower-than-expected growth within key geographic regions in fiscal 2025,specifically within mainland China and Korea,it was determined that revisions to the internal forecasts were necessary which were finalized and approved in the fiscal 2025 fourth quarter in connection with the brands annual planning process,and reflected in the goodwill and other indefinite-lived intangible asset impairment testing as of April 1,2025.The Too Faced reporting unit continued to experience lower-than-expected results in key geographic regions and channels and as such,it was determined that revisions to the internal forecasts were necessary.These changes in circumstances were also indicators that the carrying amounts of their respective long-lived assets,including customer lists,may not be recoverable.After performing the relevant impairment assessments,the Company recorded$83 million and$50 million of trademark intangible asset impairment charges for Dr.Jart and Too Faced,respectively,and a$292 million impairment charge related to the customer list intangible asset for Dr.Jart .For the three months ended June 30,2025,other intangible asset impairment charges were$425 million($327 million,net of tax),with a combined impact of$.89 per common share.For the twelve months ended June 30,2025,goodwill impairment charges were$13 million and other intangible asset impairment charges were$1,273 million(combined$1,001 million,net of tax),with a combined impact of$2.78 per common share.Based on the Companys annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1,2024,the Company determined that the carrying value of the Dr.Jart reporting unit and trademark exceeded their estimated fair values.Given the lower-than-expected growth within key geographic regions,the reporting unit has made a strategic shift in its operating plan to exit the travel retail channel.This revised strategy also includes increased direct investment in other areas of the business,including in mainland China,to support the brands future growth.As a result of these changes in strategy,the Company made revisions to the internal forecasts relating to the Dr.Jart reporting unit which were finalized and approved in the fiscal 2024 fourth quarter,and reflected in the goodwill and other indefinite-lived intangible asset impairment testing as of April 1,2024.These changes in circumstances were also indicators that the carrying amounts of its respective long-lived assets may not be recoverable.After performing the relevant impairment assessments,the Company recorded a goodwill impairment charge of$291 million and a trademark intangible asset impairment charge of$180 million related to Dr.Jart (combined$430 million,net of tax),with a combined impact of$1.19 per common share,for the three and twelve months ended June 30,2024.Page 21 of 26(D)From the end of August 2024 through October 2024,the Company reached agreements with certain plaintiff law firms(collectively,the“talcum litigation settlement agreements”)for:(i)the resolution of pending cosmetic talcum powder matters handled by those firms as well as(ii)a process for resolving potential future cosmetic talcum powder claims expected to be brought on behalf of plaintiffs by those firms from January 1,2025 through December 31,2029,with annual capped amounts per year for each participating law firm.To account for the talcum litigation settlement agreements,the Company recorded a charge of$159 million in the fiscal 2025 first quarter for the amount agreed to settle the current claims and an estimated amount for potential future claims.(E)During fiscal 2025,the Company established a U.S.valuation allowance of$172 million against general foreign tax credit and research and development tax credit carryforwards as it was determined more-likely-than-not that these deferred tax assets would not be realized.This determination was driven by the Companys weighing of relevant evidence including lower U.S.taxable income in fiscal 2025 as compared to recent years,reflecting reduced income from its travel retail business,and the resulting uncertainty about the ability to realize the carryforwards prior to expiration.This earnings release includes some non-GAAP financial measures relating to charges associated with restructuring and other activities and adjustments,as well as organic net sales.Included herein are reconciliations between the non-GAAP financial measures and the most directly comparable GAAP measures for certain consolidated statements of(loss)earnings accounts before and after these items.The Company uses certain non-GAAP financial measures,among other financial measures,to evaluate its operating performance,which represent the manner in which the Company conducts and views its business.Management believes that excluding certain items that are not comparable from period-to-period,or do not reflect the Companys underlying ongoing business,provides transparency for such items and helps investors and others compare and analyze operating performance from period-to-period.In the future,the Company expects to incur charges or adjustments similar in nature to those presented herein;however,the impact to the Companys results in a given period may be highly variable and difficult to predict.The Companys non-GAAP financial measures may not be comparable to similarly titled measures used by,or determined in a manner consistent with,other companies.While the Company considers the non-GAAP measures useful in analyzing its results,they are not intended to replace,or act as a substitute for,any presentation included in the consolidated financial statements prepared in conformity with U.S.GAAP.The Company operates on a global basis,with the majority of its net sales generated outside the United States.Accordingly,fluctuations in foreign currency exchange rates can affect the Companys results of operations.Therefore,the Company presents certain net sales,operating results,provision for income taxes and diluted net(loss)earnings per common share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of its underlying business outside the United States.Constant currency information compares results between periods as if exchange rates had remained constant period-over-period.The Company calculates constant currency information by translating current-period results using prior-year period monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.Reconciliation between GAAP and Non-GAAP Net Sales(Unaudited)Three Months EndedJune30PercentageChangeTwelve Months Ended June30PercentageChange($in millions)2025202420252024Net Sales$3,411$3,871 (12)%$14,326$15,608 (8)%Non-GAAP AdjustmentsReturns associated with restructuring and other activities(3)(3)1 Adjusted Net Sales,Non-GAAP 3,408 3,871 14,323 15,609 Impact of foreign currency translation(27)(1%)28 (1%)Organic Net Sales,Non-GAAP1$3,381$3,871 (13)%$14,351$15,609 (8)%1Organic net sales represents net sales excluding returns associated with restructuring and other activities;non-comparable impacts of acquisitions,divestitures and brand closures;as well as the impact from foreign currency translation.The Company believes that the Non-GAAP measure of organic net sales growth provides year-over-year sales comparisons on a consistent basis.Page 22 of 26Reconciliation of Certain Consolidated Statements of(Loss)Earnings AccountsBefore and After Returns,Charges and Other Adjustments(Unaudited)1Three Months EndedJune30PercentageChangeTwelve Months EndedJune30PercentageChange($in millions,except per share data)2025202420252024Gross Profit$2,456$2,778 (12)%$10,597$11,184 (5)%Non-GAAP AdjustmentsRestructuring and other activities(4)5 2 Adjusted Gross Profit,Non-GAAP$2,452$2,778 (12)%$10,602$11,186 (5)%Gross Margin 72.0q.8t.0q.7%Non-GAAP AdjustmentsRestructuring and other activities(0.1)Adjusted Gross Margin,Non-GAAP 71.9q.8t.0q.7%Operating(Loss)Income$(390)$(233)(67)%$(785)$970(100 )%Non-GAAP AdjustmentsRestructuring and other charges 102 96 486 124 Goodwill and other intangible asset impairments 425 471 1,286 471 Talcum litigation settlement agreements 159 Change in fair value of DECIEM acquisition-related stock options 15 23 Adjusted Operating Income,Non-GAAP$137$349 (61)%$1,146$1,588 (28)%Operating Margin(11.4)%(6.0)%(5.5)%6.2%Non-GAAP AdjustmentsRestructuring and other charges 3.0 2.5 3.4 0.8 Goodwill and other intangible asset impairments 12.5 12.2 9.0 3.0 Talcum litigation settlement agreements 1.1 Change in fair value of DECIEM acquisition-related stock options 0.4 0.1 Adjusted Operating Margin,Non-GAAP 4.0%9.0%8.0.2%Provision for Income Taxes$95$7 100 %$93$363 (74)fective Tax Rate(ETR)(21.1)%(2.5)%(8.9)G.0%Tax Impact on Non-GAAP adjustmentsRestructuring and other charges 21 21 105 27 Goodwill and other intangible asset impairments 98 41 285 41 U.S.deferred tax asset valuation allowance adjustment(172)(172)Talcum litigation settlement agreements 35 Adjusted Provision for Income Taxes,Non-GAAP$42$69$346$431 Adjusted ETR,Non-GAAP 55.3.88.81.0%Diluted Net(Loss)Earnings Per Common Share$(1.51)$(.79)(92)%$(3.15)$1.08(100 )%Non-GAAP AdjustmentsRestructuring and other charges.23 .21 1.06 .27 Goodwill and other intangible asset impairments .89 1.19 2.78 1.19 U.S.deferred tax asset valuation allowance adjustment.48 .48 Talcum litigation settlement agreements .34 Change in fair value of DECIEM acquisition-related stock options(less the portion attributable to redeemable noncontrolling interest).03 .05 Adjusted Diluted Net Earnings Per Common Share,Non-GAAP2$.09$.64 (85)%$1.51$2.59 (42)%1Percentages are calculated on an individual basis.2For the three and twelve months ended June 30,2025 the effects of potentially dilutive stock options,performance share units,and restricted stock units of approximately 1.2 million shares were excluded from the computation of As Reported and adjustments to Non-GAAP diluted loss per common share as they were anti-dilutive due to the net loss incurred during the periods.These shares were added to the weighted-average common shares outstanding to calculate Non-GAAP diluted earnings per common share.Page 23 of 26CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited,except where noted)June 30,2025June 30,2024($in millions)(Audited)ASSETSCash and cash equivalents$2,921$3,395 Accounts receivable,net 1,530 1,727 Inventory and promotional merchandise 2,074 2,175 Prepaid expenses and other current assets 544 625 Total current assets 7,069 7,922 Property,plant and equipment,net 3,172 3,136 Operating lease right-of-use assets 1,952 1,833 Other assets 7,699 8,786 Total assets$19,892$21,677 LIABILITIES AND EQUITYCurrent debt$3$504 Accounts payable 1,497 1,440 Operating lease liabilities 406 354 Other accrued liabilities 3,529 3,404 Total current liabilities 5,435 5,702 Long-term debt 7,314 7,267 Long-term operating lease liabilities 1,744 1,701 Other noncurrent liabilities 1,534 1,693 Total noncurrent liabilities 10,592 10,661 Total equity 3,865 5,314 Total liabilities and equity$19,892$21,677 Page 24 of 26SELECT CASH FLOW DATA(Unaudited,except where noted)Twelve Months Ended June 30($in millions)20252024(Audited)Net(loss)earnings$(1,133)$409 Adjustments to reconcile net(loss)earnings to net cash flows from operating activities:Depreciation and amortization 829 825 Deferred income taxes(396)(265)Impairment of goodwill and other intangible assets 1,286 471 Other items 337 289 Changes in operating assets and liabilities:Decrease(increase)in accounts receivable,net 230 (285)Decrease in inventory and promotional merchandise 184 766(Increase)decrease in other assets,net(11)15(Decrease)increase in accounts payable and other liabilities(54)135 Net cash flows provided by operating activities$1,272$2,360 Other Investing and Financing Sources(Uses):Capital expenditures$(602)$(919)Repayments of current debt,net (215)Repayments of commercial paper(maturities after three months)(785)Proceeds from issuance of long-term debt,net 648 Repayments of long-term debt(505)(10)Dividends paid to stockholders(618)(947)Payments to acquire treasury stock(35)(35)Payments for acquisition of redeemable noncontrolling interest (745)Supplemental cash flow information:Cash paid for interest$353$359 Cash paid for income taxes 630 550 Page 25 of 26As referenced on page 14,beginning with the fiscal 2026 first quarter,the Company will be reporting its fiscal 2026 and comparable fiscal 2025 results by geographic region under the new regional structure.Presented below are the fiscal 2025 and 2024 full-year and fourth quarter net sales results by geographic region under this new regional structure:Results by Geographic Region(Unaudited)Year Ended June 30Net SalesPercentage Change1($in millions)20252024ReportedBasisImpact of Foreign Currency TranslationOrganic Net Sales (Non-GAAP)The Americas$4,410$4,579 (4)%1%(3)%EUKEM 3,566 3,539 1 (1)(1)Asia/Pacific 3,606 4,587 (21)1 (21)Mainland China 2,741 2,904 (6)(6)Subtotal$14,323$15,609 (8)%(8)%Returns/charges associated with restructuring and other activities 3 (1)Total$14,326$15,608 (8)%(8)%1Percentages are calculated on an individual basis.Three Months Ended June 30Net SalesPercentage Change1 ($in millions)20252024ReportedBasisImpact of Foreign Currency TranslationOrganic Net Sales(Non-GAAP)The Americas$941$994 (5)%1%(4)%EUKEM 828 814 2 (5)(3)Asia/Pacific 906 1,318 (31)(31)Mainland China 733 745 (2)(1)Subtotal$3,408$3,871 (12)%(1)%(13)%Returns/charges associated with restructuring and other activities 3 Total$3,411$3,871 (12)%(1)%(13)%1Percentages are calculated on an individual basis.#Page 26 of 26
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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30,2025ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-14064The Este Lauder Companies Inc.(Exact name of registrant as specified in its charter)Delaware11-2408943(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)767 Fifth Avenue,New York,New York10153(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code 212-572-4200Securities registered pursuant to Section 12(b)of the Act:Title of each classTradingSymbol(s)Name of each exchange on which registeredClass A Common Stock,$.01 par valueELNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required tofile such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorterperiod that the registrant was required to submit and post such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of theExchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market value of the registrants voting common equity held by non-affiliates of the registrant was approximately$17 billion at December 31,2024(the last business day of the registrants most recently completed second quarter).*At August 13,2025,234,347,415 shares of the registrants Class A Common Stock,$.01 par value,and 125,542,029 shares of the registrants Class B Common Stock,$.01 par value,were outstanding.Documents Incorporated by ReferenceDocumentWhere IncorporatedProxy Statement for Annual Meeting ofStockholders to be held November 13,2025Part III*Calculated by excluding all shares held by executive officers and directors of registrant and certain trusts without conceding that all such persons are“affiliates”of registrant for purposes of the Federal securities laws.Table of ContentsTHE ESTE LAUDER COMPANIES INC.INDEX TO ANNUAL REPORT ON FORM 10-K PagePart I:Item 1.Business2Item 1A.Risk Factors17Item 1B.Unresolved Staff Comments24Item 1C.Cybersecurity24Item 2.Properties25Item 3.Legal Proceedings25Item 4.Mine Safety Disclosures26Part II:Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities27Item 6.Reserved28Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations29Item 7A.Quantitative and Qualitative Disclosures About Market Risk57Item 8.Financial Statements and Supplementary Data57Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure57Item 9A.Controls and Procedures57Item 9B.Other Information58Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections58Part III:Item 10.Directors,Executive Officers and Corporate Governance59Item 11.Executive Compensation59Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters59Item 13.Certain Relationships and Related Transactions,and Director Independence60Item 14.Principal Accounting Fees and Services60Part IV:Item 15.Exhibits,Financial Statement Schedules61Item 16.Form 10-K Summary68Signatures 69Table of ContentsCautionary Note Regarding Forward-Looking Information and Risk FactorsThis Annual Report on Form 10-K includes“forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995.Such statements may address ourexpectations regarding sales,earnings or other future financial performance and liquidity,other performance measures,product introductions,entry into new geographic regions,informationtechnology initiatives,new methods of sale,our long-term strategy,restructuring and other charges and resulting cost savings,and future operations or operating results.Although we believe ourexpectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations,we cannot assure that actual results will not differ materially from ourexpectations.Factors that could cause actual results to differ from expectations are described herein;in particular,see“Item 7.Managements Discussion and Analysis of Financial Conditionand Results of Operations Cautionary Note Regarding Forward-Looking Information.”In addition,there is a discussion of risks associated with an investment in our securities,see“Item 1A.Risk Factors.”Unless the context requires otherwise,references to“we,”“us,”“our”and the“Company”refer to The Este Lauder Companies Inc.and its subsidiaries.PART IItem 1.Business.The Este Lauder Companies Inc.,founded in 1946 by Este and Joseph Lauder,is one of the worlds leading manufacturers,marketers and sellers of quality skin care,makeup,fragrance and hair careproducts.We are a steward of over 20 luxury and prestige brands globally.Since the initial launch of the Este Lauder brand in the United States,we have significantly expanded our consumer reachto approximately 150 countries and territories.We operate as a wholesaler,with our products sold in brick-and-mortar locations and on various e-commerce platforms,including those operated bydepartment 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-consumerbusiness across freestanding stores,our brands websites and third-party online platforms.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.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 Companys Class A Common Stock and Class B Common Stock having approximately 84%of the outstanding voting power of the CommonStock.2Table of ContentsProductsSkin Care-Our broad range of skin care products address various skin care needs.These products include moisturizers,serums,cleansers,toners,eye care,body care,exfoliators,acne and oilcorrectors,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,lipliners and lip glosses,and mascaras,eyeshadows and eyeliners.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.Hair Care-Our hair care products include shampoos,conditioners,styling products,treatment,finishing sprays and hair color products.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 fromancillary products and services that do not fit within the definitions of skin care,makeup,fragrance,and hair care.3Table of ContentsOur BrandsGiven 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 ourproducts through distinctive brands seeking to address broad preferences and tastes.Each brand has a single global image that is promoted with consistent logos,packaging and advertising designed toenhance its image and differentiate it from other brands in the market.Beauty brands are differentiated by numerous factors,including quality,performance,a particular lifestyle,where they aredistributed(e.g.,prestige or mass)and price point.Below is a chart showing brands we sell and how we view them based on lifestyle and price point:4Table of Contents Este Lauder brand products,which have been sold since 1946,have a reputation for innovation,sophistication andsuperior quality.Este Lauder is one of the worlds most renowned beauty brands,producing iconic skin care,makeupand fragrances.We pioneered the marketing of prestige mens fragrance,grooming and skin care products with the introduction ofAramis products in 1964.Introduced in 1968,Clinique skin care and makeup products are all allergy tested and 100%fragrance free and havebeen designed to address individual skin types and needs.Clinique also offers select fragrances.The skin care andmakeup 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 toimprove the look and feel of mens skin.Introduced in 1990,Origins is known for high-performance natural skin care that is“powered by nature and proven byscience”and also sells fragrance products.Origins has a license agreement to develop and sell beauty products using thename of Dr.Andrew Weil.MAC,the leading brand of professional cosmetics,was created in Toronto,Canada.After having acquired a majorityinterest in 1994,we completed our acquisition of MAC in 1998.The brands popularity has grown through a traditionof word-of-mouth endorsement from professional makeup artists,models,photographers and journalists around theworld.Acquired in 1995,Bobbi Brown Cosmetics is a global prestige beauty brand known for its high quality and undertone-correct makeup and skin care products that celebrate individual beauty and confidence.Reflecting its artistry roots,thebrand is focused on creating a teaching and learning community of women around the world.5Table of Contents Acquired in 1995,La Mer is a leading global luxury skin care brand that is available in limited distribution worldwide.The brand is known for its iconic Crme de la Mer moisturizer,serums and lotions,as well as other skin care andfoundation products that are created around the original“Miracle Broth.”Acquired in 1997,Aveda sells high-performance,naturally-derived hair care products,as well as skin care,makeup andfragrance.The brand is known for its innovative plant-based products and its commitment to environmentalsustainability and corporate responsibility.It is distributed primarily through top-tier hair salons and direct-to-consumer,via online and Aveda stores.Acquired in 1999,Jo Malone London is a scented British lifestyle brand with understated elegance,offering enchantedstory-telling and“High-Touch”boutique services.The brands famous colognes are perfect alone or artfully layered.JoMalone 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 haircare brand that creates high-quality hair care and styling products.The brand is distributed primarily through top-tiersalons,including Bumble and bumbles own flagship salons,specialty-multi retailers and online.Acquired in 2003,Darphin is a Paris-based,prestige skin care brand known for its high-performance botanical skin care.The brand is distributed primarily through high-end independent pharmacies and online brand and retailer channels.In 2005,we entered into a license agreement under the TOM FORD brand name and developed,manufactured anddistributed luxury fragrances and beauty products.In fiscal 2023,we acquired the TOM FORD brand and relatedintellectual property.The TOM FORD brand is a luxury brand created in 2005,encompassing fashion,fragrance,eyewear and other accessories.As the current owner and steward of the brand,we are continuing with the beautyproducts and have licensed the fashion brand and operations and eyewear to third parties.Consistent with the fashionbrand,our products exude seductive modern-day glamour and include luxury fragrance,color cosmetics,mensgrooming products and skin care products for discerning consumers globally.Acquired in 2010,Smashbox Cosmetics is a Los Angeles-based,photo studio-inspired makeup brand with highperformance products created for our consumers everyday life in the spotlight.6Table of Contents Launched in 2012,AERIN is a luxury lifestyle beauty and fragrance brand inspired by the signature style of its founder,Aerin Lauder.Acquired in 2014,Le Labo is a sensory and experiential lifestyle brand,deeply rooted in the craft of slow perfumery.Born in Grasse,France and raised in downtown NYC,it offers hand-crafted and personalized fragrances,as well asalternative and genuine experiences celebrating craftsmanship.Acquired in 2015,Les Editions de Parfums Frdric Malle is a collection of exclusive,sophisticated,ultraluxuryfragrances crafted by some of the worlds most talented perfumers and published by the brand.Acquired in 2015,GLAMGLOW started as a behind-the-scenes Hollywood secret to instant glow.The brand is knownfor bold,sensorial products that deliver instant results,and its unconventional philosophy that high performance skincare should also be fun and sexy.Acquired in 2016,KILIAN PARIS is a prestige fragrance brand that embodies timeless sophistication and modernluxury.Acquired in 2016,Too Faced is a serious makeup brand that knows how to have fun.The brand is unabashedly pink,pretty and feminine with a playful wink that is beloved for its high-quality formulas,cheeky product names anddistinctive packaging.Acquired in 2019,Dr.Jart is a Seoul-based,global skin care brand known for its innovative formulations and uniquecombination of dermatological science and art.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 integratedmulti-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.BALMAIN Beauty was established in 2022 through a license from the fashion house Balmain Paris“to celebrate all thebeauties of the world,no exceptions.”Building upon an exceptional fashion and fragrance legacy,BALMAIN Beautylaunched its first fragrances in fiscal 2025.7Table of ContentsFrom 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 incubationarm of our Company.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 companybased 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 Frdric Malle,KILIAN PARIS and BALMAIN Beauty.Our luxury portfolio alsoincludes Este Lauders Re-Nutriv product franchise.Our“Large Brands”are Este Lauder,La Mer,Clinique and MAC.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 Frdric Malle,Smashbox,Darphin Paris,Lab Series,AERIN Beauty,NIOD,Aramis,BALMAIN Beauty and GLAMGLOW.Social Impact and SustainabilityWe 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 acrossthe 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;employee health and safety;and social investments.We have set goals ormade 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.The Nominating and ESG Committee of our Board of Directors has oversight responsibility for our Companys environmental,social and governance(“ESG”)activities and practices,includingcitizenship and sustainability matters.Our social impact and sustainability efforts are led by our President and Chief Executive Officer.Other members of senior management,along with employeesacross 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 .DistributionWe 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 brandswebsites and third-party online platforms.Our general practice is to accept returns of our products from customers if properly requested and approved.Our online sites,including our sites as well as those operated by authorized retailers and through third-party online platforms are in approximately 50 countries,with a majority of theseonline sales generated in mainland China,the United States and the United Kingdom.During fiscal 2025,we closed freestanding stores in underperforming areas of our business and opened newfreestanding 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 brandname,such as MAC,Jo Malone London and Le Labo.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.In certaincountries,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 salesby geographic region,see Item 8.Financial Statements and Supplementary Data Note 15 Revenue Recognition.8Table of ContentsAs 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.To enhanceaccountability 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 thefiscal 2026 first quarter,we will be reporting our fiscal 2026 and comparative fiscal 2025 results by geographic region under the new regional structure.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;andMainland China,previously reported in our Asia/Pacific region,will now be reported as a separate region.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.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 andVietnam.Our references to North America within this document include the United States and Canada.CustomersOur strategy is to build strong relationships globally with select retailers,and our senior management works with executives of our major retail accounts on a regular basis in support of theserelationships.We believe we are viewed as an important supplier to these customers.In addition,we connect with our consumers directly through freestanding stores,e-commerce sites and socialmedia to build a robust omnichannel experience that allows consumers to shop in these and other channels.MarketingOur strategy to market and promote our products begins with our well-diversified portfolio of distinctive brands across four major product categories.Our portfolio can be deployed in multipledistribution 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 tierswhere our global reputation and awareness of our brands benefit us.By putting the consumer at the center of every engagement and leveraging our geographic and distribution channel diversity,weoffer 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.This strategy is built around“Bringing the Best to Everyone We Touch.”Our founder,Mrs.Este Lauder,formulated this unique marketing philosophy to provide“High-Touch”service and high-quality products as the foundation for a solid and loyal consumer base.Our“High-Touch”approach is demonstrated through our integrated consumer engagement models thatleverage our product specialists and technology to provide the consumer with a distinct and truly personalized experience.As our business has grown and channel mix has evolved,we have furtherexpanded our marketing philosophy and“High-Touch”execution to build both online and offline personalized consumer experiences through digital and physical demonstration,targeted digital mediaand tailored trial-to-loyalty pathways.We plan to continue to leverage our core strengths,including the quality of our products,our“High-Touch”consumer engagement and a diversified portfolio ofbrands,channels and geographies.9Table of ContentsOur marketing strategies vary by brand,local market and distribution channel.We have a diverse portfolio of brands,and we employ different engagement models suited to each brands equity,distribution,product focus,understanding of the core consumer and local relevance.This enables us to elevate the consumer experience as we attract new consumers,create trial,build loyalty,driveconsumer advocacy and address the transformation of consumer shopping behaviors.Hero products are at the core of our brand marketing strategies.They are the pillars of our brands and historicallyhave provided strong results through high repeat sales and consumer loyalty.In addition to continuing to attract existing consumers,our hero products provide an opportunity for new consumers to beintroduced 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 ofour 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.Ourmarketing planning approach focuses on effective and impactful visible advertising spending,optimizing marketing programs,and eliminating low-return activities to accelerate new consumeracquisition.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 mosteffectively.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 theseinsights 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 engagementprograms.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 asbillboards 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 and omnichannel presence,including social media andinfluencer marketing.Our ongoing investments in new analytical capabilities enable us to create more personalized experiences across our distribution channels.We also anticipate and monitoremerging platforms,balancing speed to market with brand protection to ensure readiness while safeguarding brand equity.We continue to innovate to better meet consumer online shoppingpreferences(e.g.,how-to videos,ratings and reviews and mobile phone and tablet applications),support e-commerce businesses via digital and social marketing activities designed to build brandequity and“High-Touch”consumer engagement,in order to continue to offer better experiences and services and set the standard for prestige beauty shopping online.We also support our authorizedretailers 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.As examples,we are using AI toidentify 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 therespective brands.Our marketing efforts also benefit from cooperative advertising programs with some retailers,some of which are supported by coordinated promotions,such as sampling programs,including purchase with purchase and gift with purchase.Sampling is a key promotional activity as the quality and perceived benefits of sample products are very effective inducements to purchasesby new and existing consumers.Such activities attract consumers and keep existing consumers engaged.Our marketing and sales executives spend considerable time in the field meeting withconsumers,retailers,beauty advisors and makeup artists at the points of sale to enable us to offer a seamless experience across channels of distribution.As consumer behaviors,digital-first consumer journeys and e-commerce evolve,we adjust our direct-to-consumer business models and consumer engagement programs.These models and programsare designed to provide distinct one-to-one and one-to-many“High-Touch”omnichannel services and personalized experiences by leveraging technology and our talented beauty advisors,consultants,and makeup artists.Information TechnologyInformation technology,including operational technology and our websites,is a key enabler of all aspects of our business,from research and development,product development,production anddistribution,to marketing,sales and order processing,consumer experiences as well as finance and human resources.We continue to make strategic investments to align with our long-term strategyand to maintain and enhance our information technology and cybersecurity infrastructure.We are focused on optimizing adoption of such investments to maximize return on investment and realizedvalue.The modernization and simplification of our technology ecosystem remains a key focus,as we increasingly leverage the benefits of the cloud.10Table of ContentsWe 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,acrossvarious aspects of our business.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 DevelopmentWe 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.Our research anddevelopment group,which includes scientists,engineers,analysts,and other employees involved in product and packaging innovation,works closely with our marketing and product developmentteams,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 newpackaging concepts,and improve,redesign or reformulate existing products.In addition,these research and development personnel provide ongoing technical assistance and know-how to qualityassurance and manufacturing personnel on a worldwide basis,to ensure consistent global standards for our products and to deliver environmentally responsible products that meet or exceed consumerexpectations.The research and development group has research-based working relationships with several U.S.and international dermatology and medical institutions,research universities andeducational facilities,which supplement internal capabilities.Members of the research and development group are also responsible for product safety,registration and regulatory compliance matters.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 hadapproximately 1,100 employees engaged in research and development activities.We maintain research and development programs at certain of our principal facilities and facilities dedicated toperforming research and development,see Item 2.Properties.Manufacturing,Warehousing and Raw MaterialsWe manufacture our products primarily in our own facilities in The Americas(United States and Canada);in Europe,the Middle East&Africa(Belgium,Switzerland and the United Kingdom);and inAsia/Pacific(Japan),and we also leverage global third-party manufacturing networks.We continue to evaluate our manufacturing facilities and processes and identify sourcing opportunities toimprove 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 aremodern,and our manufacturing processes are substantially automated.While we believe our manufacturing network of internal and external sites is sufficient to meet current and reasonablyanticipated increased requirements,we continue to implement improvements in capacity,technology,and productivity and align our manufacturing with regional sales demand to be more agile.Fromtime to time,demand changes may challenge our capacity for certain subcategories on a short-term basis,but we believe these changes will not impact our ability to meet our long-term strategicobjectives.We have established a flexible global distribution network that is designed to meet the changing demands of our customers while maintaining service levels.We are continuously evaluating andadjusting 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 toincrease efficiencies and reduce costs.We have established regional and local distribution centers,including those maintained by third parties,strategically positioned throughout the world in order tofacilitate efficient delivery of our products to our customers and consumers.As discussed above,we continue to focus on social impact and sustainability across our operations.Focus areas include employee health and safety and minimizing our impact on the environment.This is achieved,in part,through investment in equipment while enhancing the work environment through safe practices and capabilities.We also engage in initiatives to improve our equipment andbuildings to support and deliver our sustainability goals and reduce our impact on the environment.Environmental efforts include waste reduction,reducing industrial waste to landfills,investments inrenewable 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 designspecifications.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 extensivenetwork 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 andspeed-to-market,ensuring supply sufficiency and reducing costs.In addition,we focus on supply sourcing within the region of manufacture to allow for improved supply chain efficiencies,lead-timereduction and reduced emissions.11Table of ContentsSome 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 strategicinventory buffer and multi-sourcing solutions.In the past,we have been able to obtain an adequate supply of essential raw materials and packaging components for virtually all materials used in theproduction of our products.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 ofsuppliers has the resources and facilities to overcome most unforeseen interruptions of supply.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 thechanging needs of the business.Additionally,in connection with our Profit Recovery and Growth Plan(“PRGP”),we have,and are continuing to focus on our levels of excess inventory andobsolescence 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 toimprove our overall supply chain performance.CompetitionThere 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.There continues to be interest and awareness from our customers andconsumers 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 andsustainability efforts.Marketing,merchandising,in-store and online experiences and demonstrations,and new product innovations also have an impact on consumers purchasing decisions.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 careproducts,most of which market and sell their products under multiple brand names.Our competitors include LOreal S.A.;Unilever;Procter&Gamble;LVMH Mot 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-equityinvestors,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.Trademarks,Patents and CopyrightsWe 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 suchproducts are sold,including Este Lauder,Aramis,Clinique,Lab Series,Origins,MAC,Bobbi Brown,La Mer,Aveda,Jo Malone London,Bumble and bumble,Darphin,TOM FORD,Smashbox,Le Labo,Editions de Parfums Frdric Malle,GLAMGLOW,KILIAN PARIS,Too Faced,Dr.Jart ,The Ordinary and NIOD.We are the exclusive worldwide licensee for fragrances,cosmetics,skincare 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 andSupplementary Data Note 2 Summary of Significant Accounting Policies Royalty Fees-License Arrangements.We protect our trademarks in the United States,China and other principal marketsworldwide.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 orcopyrights.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 theconduct of our business.Human CapitalWe strive to operate responsibly and to build a sustainable business based on uncompromising ethics and integrity,consistent with our Company values.We view human capital management and thestrength 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,health and safety,and compensation and benefits.12Table of ContentsAs 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 areemployed by us as of June 30,2025 and 2024,respectively.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.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 haveno employees in the United States that are covered by a collective bargaining agreement.A limited number of employees outside of the United States are covered by works council agreements or othersyndicate arrangements.Our human capital management includes the following strategic areas:Building a Strong and Inclusive CultureWe 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 meetthe evolving needs of our global consumers.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 whereemployees 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 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 DevelopmentHiring,retaining and developing the best talent globally is key to our success.Our talent strategy is focused on employee engagement and investments in career development,succession planning andbuilding leadership at various levels across the organization,as well as measuring,recognizing and rewarding business and leadership performance.Our investments include providing programs toequip 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 stagesof an employees 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.We believethese 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.Based on ourreview of employee survey results,action plans are implemented to enhance employee satisfaction and to drive alignment with our overall human capital strategy.One example is our TalentMarketplace(called ELC Grow),which enables employees to explore roles,projects,and networking opportunities which align to their skills and career aspirations;empowering employees to takedeliberate actions toward their growth and development.Health and SafetyWe are committed to providing a healthy and safe workplace for our employees.We establish and update safety policies and procedures,train employees on our safety guidelines and localrequirements,and seek to create a culture focused on well-being and safety through ongoing communication,awareness and engagement.Employee RewardsWe offer competitive compensation and benefit packages to attract,motivate and retain world-class talent,and we are committed to fair pay across the organization.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 andwellness benefits,flexible working arrangements,parental(maternal and paternal)leave and support programs,adoption assistance and education-related benefits.13Table of ContentsVolunteerism and Community EngagementWe support volunteer efforts by our employees as our long-term success can benefit from the vitality of the communities where we have a presence.This is done through our ELC Good Worksprogram,our global charitable and volunteerism program which allows eligible employees to create and participate in volunteer activities,with their cash donations matched by the Company andvolunteer hours rewarded through additional cash donations by the Company.Government RegulationWe 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 producedor sold.Such laws and regulations relate to a wide range of matters including ingredients,manufacturing,labeling,packaging,marketing,advertising,transport and the sale,disposal and safety of ourproducts,as well as environmental matters.We rely on legal and operational compliance programs,as well as in-house and outside counsel,to guide our businesses in complying with applicable lawsand regulations.SeasonalityOur 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 inthe second half of the fiscal year.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 eventsand by retailers for holiday selling seasons.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 leveland 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.Additionally,grossmargins and operating expenses are impacted on a quarter-by-quarter basis by holiday and key shopping moments,as well as variations in our launch calendar and the timing of promotions,includingpurchase with purchase and gift with purchase promotions.Availability of ReportsWe make available financial information,news releases and other information on our website:.Our annual report on Form 10-K,quarterly reports on Form 10-Q,currentreports on Form 8-K and other reports,as well as any amendments to these reports filed or furnished pursuant to Section 13(a)or 15(d)of the Securities Exchange Act of 1934,are available free ofcharge via the EDGAR database at www.sec.gov or our website,as soon as reasonably practicable after we file such reports and amendments with,or furnish them to,the U.S.Securities and ExchangeCommission.Corporate Governance Guidelines and Code of ConductThe 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 practicesare set forth in our Corporate Governance Guidelines.We also have a Code of Conduct(“Code”)applicable to all employees,officers and directors of the Company,including the Chief ExecutiveOfficer,the Chief Financial Officer and other senior financial officers.These documents and any waiver of a provision of the Code granted to any senior officer or director or any material amendmentto the Code may be found in the“Investors”section of our website: under the heading“Corporate Governance.”The charters for the Audit Committee,CompensationCommittee and Nominating and ESG Committee may be found in the same location on our website.14Table of ContentsInformation about our Executive Officers*NameAgePosition(s)HeldMichael Bowes54Executive Vice President,Chief People OfficerRoberto Canevari59Executive Vice President,Chief Value Chain OfficerStphane de La Faverie51President,Chief Executive Officer and a DirectorJane Hertzmark Hudis65Executive Vice President,Chief Brand OfficerRashida La Lande51Executive Vice President and General CounselRonald S.Lauder81Chairman of Clinique Laboratories,LLCAkhil Shrivastava52Executive Vice President and Chief Financial OfficerMeridith Webster49Executive Vice President,Global Communications and Public Affairs*As of August 13,2025All 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.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.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 ChiefCommunications Officer,Vox Media,Inc.,an independent media company.Ms.La Lande joined the Company in August 2024.Previously,from December 2023 to August 2024,she served as Executive Vice President and Chief Legal and Corporate Affairs Officer,at TheKraft Heinz Company,a manufacturer and marketer of food and beverage products.Ms.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.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.Previously,he was Executive Group President from September 2022 to December 2024;and GroupPresident,The Este Lauder Companies and Global President Este Lauder and AERIN Beauty from July 2020 to August 2022.Ms.Hertzmark Hudiss responsibilities and title changed to Executive Vice President,Chief Brand Officer,effective April 2025.Previously,she was Executive Group President from July 2020 toMarch 2025.Mr.Shrivastava was appointed Executive Vice President and Chief Financial Officer,effective November 2024.Previously,he was Senior Vice President,Corporate Controller from July 2024 toOctober 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 November2020.15Table of ContentsInformation about our Board of Directors*NamePrincipal Occupation or EmploymentCharlene BarshefskyChair,Parkside Global Advisors,a consulting firmAngela Wei DongChairman and CEO of NIKE Greater China and All Conditions Gear(ACG),NIKE,Inc.,a company that designs and develops,and marketsand sells worldwide,athletic footwear,equipment,accessories and servicesStphane de La FaveriePresident and Chief Executive Officer,The Este Lauder Companies Inc.Lynn Forester de RothschildChief Executive Officer and Chair E.L.Rothschild LLC,a private investment companyPaul J.FribourgChairman and Chief Executive Officer,Continental Grain Company,an international agribusiness and investment companyJennifer HymanCo-Founder,Chief Executive Officer,and Chair,Rent the Runway,Inc.,a company that enables women to subscribe,rent items,and shopresale from an unlimited closet of designer brandsGary M.LauderManaging Director,Lauder Partners LLC,a venture capital firmJane LauderFormer Executive Vice President,Enterprise Marketing and Chief Data Officer,The Este Lauder Companies Inc.William P.LauderChair of the Board,The Este Lauder Companies Inc.Arturo NuezFounder and Chief Executive Officer of AIE Creative,a branding and marketing firmBarry S.SternlichtChairman and Chief Executive Officer,Starwood Capital Group,a privately-held global investment firm focused on global real estateJennifer TejadaChief Executive Officer and Chair,PagerDuty,Inc.,a digital operations management platform for businessesRichard F.ZanninoManaging Director,CCMP Capital Advisors,LLC,a private equity firmEric L.ZinterhoferFounding Partner of Searchlight Capital Partners,L.P.,a private equity firm*As of August 13,202516Table of ContentsItem 1A.Risk Factors.There are risks associated with an investment in our securities.Please consider the following risks and all of the other information in this annual report on Form 10-K and in our subsequent filings withthe U.S.Securities and Exchange Commission(“SEC”).Our business may also be adversely affected by risks and uncertainties not presently known to us or that we currently believe to be notmaterial.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.Risks related to our Business and our IndustryThe 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.Some competitors have greater resources than we do,others are newercompanies(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 canchange rapidly due to consumer preferences and industry trends.In some cases,we may not be able to respond to changing business and economic conditions as quickly as ourcompetitors.Competition in the beauty business is based on a variety of factors including pricing of products,innovation,perceived value,service to the consumer,promotional activities,advertising,special events,new product introductions,and e-commerce initiatives,including the ability to effectively leverage existing and emerging digital technologies,such as AI and data analytics,to gainmore commercial insights and develop relevant marketing concepts and advertising to reach consumers.It is difficult for us to predict the timing and scale of our competitors actions in these areas.Our ability to compete also depends on the continued strength of our brands,our ability to attract and retain key talent and other personnel,the efficiency of our manufacturing facilities anddistribution network,and our ability to maintain and protect our intellectual property and those other rights used in our business.Our Company has a well-recognized and strong reputation and our ability to maintain our reputation is critical to our business.Our reputation could be negatively impacted by social media and manyother 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.In addition,certain of our key retailers around the world market and sellcompeting 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.Our inability to anticipate and respond to market trends and changes in consumer preferences could adversely affect our business.Our success depends on our ability to anticipate,gauge and react in a timely and cost-effective manner to changes in consumer preferences for skin care,makeup,fragrance and hair care products,attitudes toward our industry and brands,as well as to where and how consumers shop.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 ofproducts,successfully manage our inventories,and modernize and refine our approach as to how and where we market and sell our products.We recognize consumer preferences cannot be predictedwith certainty and can change rapidly,driven by the use of digital and social media by consumers and the speed by which information and opinions are shared.If we are unable to anticipate andrespond 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 totime,sales growth or profitability may be concentrated in a relatively small number of our brands,channels and/or countries.If such a situation persists or one or more brands,channels or countriesfails to perform as expected,there could be a material adverse effect on our business.17Table of ContentsIn 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 orother 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 thebusiness operations of our customers could have a corresponding material adverse effect on us.If one or more of our largest customers change their strategies(including pricing or promotionalactivities),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.Achieving our long-term strategy will require investment in new capabilities,brands,categories,distribution channels,supply chain facilities,technologies and emerging and more mature geographicmarkets.These investments may result in short-term costs without any current sales and,therefore,may be dilutive to our earnings.In addition,we may dispose of or discontinue select brands orstreamline operations and incur costs,inclusive of restructuring and other charges,in doing so.Although we believe our strategy will lead to long-term growth in sales and profitability,we may notrealize the anticipated benefits.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 andthe 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.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 orotherwise 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 rationalizeproduct offerings.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 thefull intended benefit of such transactions.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 keyemployees from,or customers,consumers or suppliers of,acquired businesses;(ii)diversion of managements attention from our existing businesses;(iii)adverse effects on existing businessrelationships 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 mixof 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 whichwe have limited or no prior experience.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,anyfinancing for these transactions would result in an increase in our indebtedness,dilute the interests of our stockholders or both.The purchase price for some acquisitions may include additionalamounts 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.If the performance of any such acquiredbusiness exceeds such operating results,then we may incur additional charges and be required to pay additional amounts.Completed acquisitions typically result in additional goodwill and/or an increase in other intangible assets on our balance sheet.We are required at least annually,or as facts and circumstances exist,totest 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 andother intangible asset impairment charges in each of the last few fiscal years.We cannot accurately predict the amount and timing of any impairment of assets.Should the value of goodwill or otherintangible 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 strategic activities,could have a materialadverse effect on our business.18Table of ContentsOur business could be negatively impacted by social impact and sustainability matters.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.Fromtime 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.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 tochanges 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 andevolving,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 theseinitiatives or those that oppose them.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 materialadverse effect on our business.We use AI,and challenges with properly managing its use could have an adverse impact on our business.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 ourbusiness.These applications may become increasingly important in our operations over time.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,orinadvertent access to,transmission,or leakage of proprietary or sensitive information.These risks may become more pronounced as organizational reliance on AI increases.No assurance can be madethat the usage of AI will assist us in being more efficient in all cases.Our competitors or other third parties may incorporate AI into their business,services,and products more rapidly or moresuccessfully than us,which could hinder our ability to compete effectively and adversely affect our business.The technologies underlying AI and their use cases are rapidly developing,and it is notpossible to predict all the legal,reputational,operational or technological risks related to the use of AI.While new AI initiatives,laws,and regulations are emerging and evolving,uncertainty willremain,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 intoour business.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 ourcustomers that are retailers.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,allof 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.Adecline in consumer purchases of discretionary items also tends to impact our customers that are retailers.We generally extend credit to a retailer based on an evaluation of its financial condition,usually without requiring collateral.However,the financial difficulties of a retailer could cause us to curtail or eliminate business with that customer.We may also assume more credit risk relating tothe receivables from that retailer.In the event of a retailer liquidation,we may incur additional costs if we choose to purchase the retailers inventory of our products to protect brand equity.Ourinability to collect receivables from our largest customers or from a group of customers could have a material adverse effect on our business.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,adverseweather conditions,climate changes or seismic events,can have a short-term and,sometimes,long-term impact on consumer spending.Events that impact consumers willingness or ability to travel or purchase our products while traveling may impact our business,including travel retail,a significant contributor to our overall results,and our strategy to market and sell products to international travelers at their destinations.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 consumerconfidence 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.Additionally,wecontinue to monitor the effects of the global macroeconomic environment;social,political and human rights issues;regulatory matters,including the imposition of tariffs or sanctions;geopoliticaltensions;and global security issues.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 effecton our business,as could geopolitical tensions involving countries that are key markets for us,or where we manufacture our products or source ingredients.19Table of ContentsVolatility 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 typicallygenerate significant cash flows from our ongoing operations and have access to global credit markets through our various financing activities,credit markets may experience significantdisruptions.Deterioration in global financial markets or an adverse change in our credit ratings could make future financing difficult or more expensive.If any financial institutions that are parties toour 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 toperform under their agreements with us.This could leave us with reduced borrowing capacity or unhedged against certain foreign currency or interest rate exposures which could have a materialadverse effect on our business.Our success depends,in part,on the quality,efficacy and safety of our products.Our success depends,in part,on the quality,efficacy and safety of our products.If our products are found to be defective or unsafe,our product claims are found to be deceptive,or our productsotherwise fail to meet our consumers expectations,our relationships with customers or consumers could suffer,the appeal of our brands could be diminished,and we could lose sales and becomesubject to liability or claims,any of which could result in a material adverse effect on our business.In addition,counterfeit versions of some of our products may be sold by third parties,which maypose safety risks,may fail to meet consumers expectations,and may have a negative impact on our business.Our success depends,in part,on our key personnel.Our success depends,in part,on our ability to retain our key personnel,including our executive officers and senior management team.We have had,and may continue to have,changes to seniormanagement 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 ProfitRecovery and Growth Plan(“PRGP”).Transition periods accompanying changes in leadership and changes due to business reorganization may result in uncertainty,impact business performance andstrategies 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 potentialreputational harm,costs,losses,and other liabilities.The unexpected loss of,or misconduct by,one or more of our key employees could adversely affect our business.Our success also depends,inpart,on our continuing ability to identify,hire,train and retain personnel across all levels of our business.We may not be able to attract,assimilate or retain necessary personnel in the future,and ourfailure 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,aswell as by market conditions.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 inpart,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.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 operationalfacilities located inside and outside the United States that manufacture,warehouse or distribute goods for sale throughout the world.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 atwhich 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 indifferent markets;(ii)foreign or U.S.laws,regulations and policies,including restrictions on trade,immigration and travel,operations,and investments;currency exchange controls;restrictions onimports 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.These risks could have a material adverse effect on our business.20Table of ContentsA 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.Such risks include industrial accidents,environmental events,strikesand other labor disputes,capacity constraints,disruptions in ingredient,material or packaging supply or availability of natural resources(e.g.,water),as well as global shortages,disruptions in supplychain or information technology,loss or impairment of key manufacturing or distribution sites or suppliers,product quality control,safety,increase in commodity prices and energy costs,licensingrequirements and other regulatory issues,as well as natural disasters,outages due to fire,floods,power loss,telecommunications failures,break-ins and other events or external factors over which wehave no control.If such an event were to occur,it could have a material adverse effect on our business.We use a wide variety of direct and indirect suppliers of goods and services from around the world.Some of our products rely on a single or a limited number of suppliers.Changes in the financial orbusiness condition of our suppliers could subject us to losses or adversely affect our ability to bring products to market.Further,the failure of our suppliers to deliver goods and services in sufficientquantities,in compliance with applicable standards,and in a timely manner could adversely affect our customer service levels and overall business.In addition,any increases in the costs of goods andservices for our business may adversely affect our profit margins if we are unable to pass along any higher costs in the form of price increases or otherwise achieve cost efficiencies in our operations.As we outsource functions,we become more dependent on the entities performing those 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 somecases,this requires the outsourcing of functions or parts of functions that we believe can be performed more effectively by external service providers.The failure of one or more such providers todeliver 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 performancestandards 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 inreturning these outsourced functions to being performed under our management and direct control,could have a material adverse effect on our business.In addition,when we transition to,from orbetween external service providers,we may experience challenges that could have a material adverse effect on our business.Risks related to Legal and Regulatory MattersChanges in laws,regulations and policies could adversely affect our business.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 ourbusiness could adversely affect our business.These changes include accounting standards,as well as laws and regulations relating to tax matters,trade(including sanctions),data privacy(e.g.,GeneralData 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.We are,and may in the future become,party to litigation,other disputes or regulatory proceedings across a wide range of matters,including ones relating to product liability matters(includingasbestos-related claims),advertising,regulatory,employment,intellectual property,real estate,environmental,trade relations,securities,tax and privacy.In general,claims made by us or against us inlitigation,disputes or other proceedings can be expensive and time consuming and could result in settlements,injunctions or damages that could significantly affect our business.It is not possible topredict 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 materialadverse effect on our business.21Table of ContentsGovernment reviews,inquiries,investigations and actions could harm our business.As we operate in various locations around the world,our operations are subject to governmental scrutiny and may be adversely impacted by the results of such scrutiny.The regulatory environmentwith regard to our business is evolving,and officials often exercise broad discretion in deciding how to interpret and apply applicable regulations.From time to time,we may receive formal andinformal inquiries from various government regulatory authorities,as well as self-regulatory organizations,about our business and compliance with local laws,regulations or standards.Anydetermination that our operations or activities,or the activities of our employees,are not in compliance with existing laws,regulations or standards could negatively impact us in a number of ways,including the imposition of substantial fines,interruptions of business,loss of supplier,vendor or other third-party relationships,termination of necessary licenses and permits,or similar results,all ofwhich could potentially harm our business.Regardless of the outcomes,these reviews,inquiries,investigations and actions could create negative publicity which could harm our business.Risks related to Technology and Cybersecurity MattersThe compromise or interruption of,or damage to,our information technology(including our operational technology and websites)by cybersecurity incidents,data security breaches,othersecurity problems,design defects or system failures could have a material negative impact on our business.We rely on information technology that supports our business processes,including research and development,product development,production,distribution,marketing,sales,order processing,consumer experiences,human resource management,finance and internal and external communications throughout the world.We have e-commerce and other Internet websites in the United Statesand many other countries.If our information technology does not function properly,or is not adequately supported or updated,it could adversely affect the Companys business and operations.We experience cybersecurity incidents of varying degrees on our information technology and,as a result,unauthorized parties have obtained in the past,and may obtain in the future,access to oursystems and data(including unauthorized acquisition of such data).Such incidents have also caused,and may in the future cause,disruption to parts of our business operations and result in variousexpenses for investigation,remediation and other related matters.Cybersecurity incidents at our Company have in the past resulted from,and may in the future result from,social engineering or impersonation of authorized users,and may also result from efforts todiscover and exploit design flaws,bugs,security vulnerabilities or security weaknesses,intentional or unintentional acts by employees or other insiders with access privileges,intentional acts ofvandalism or fraud by third parties and sabotage.In some instances,efforts to correct vulnerabilities or prevent incidents have in the past and may in the future reduce the functionality or performanceof our information technology,which could negatively impact our business.Cybersecurity incidents can be caused by ransomware,distributed denial-of-service attacks,worms,and other malicioussoftware programs or other attacks,including the covert introduction of malware to our information technology,and the use of techniques or processes that change frequently,may be disguised ordifficult to detect,or are designed to remain dormant until a triggering event,and may continue undetected for an extended period of time.In addition,some of our suppliers,vendors,serviceproviders,cloud solution providers and customers have in the past experienced,and may in the future experience,such incidents,which could in turn disrupt our business.The evolution and adoptionof 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 mayprovide coverage with regard to such events may not cover any or all of the resulting financial losses.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 personalinformation of consumers,customers,suppliers,service providers and employees.We share some of this information with certain third parties who assist us with business matters.Moreover,thesuccess of our operations depends upon the secure transmission of confidential,proprietary or otherwise sensitive data,including personal information,over networks.Any unauthorized access or dataacquisition,despite security measures in place to protect such data,or other failure on the part of us or third parties to maintain the security of such data could result in business disruption,damage toour reputation,financial obligations to third parties,legal obligations,fines,penalties,regulatory proceedings and private litigation with potentially large costs,and also could result in deterioration inconfidence in our Company and other competitive disadvantages,and thus could have a material adverse effect on our business.In addition,a cybersecurity incident could require that we expend significant additional resources on remediation,restoration and enhancement of our information technology.22Table of ContentsRisks related to our Securities and our Ownership StructureThe trading prices of our securities periodically may rise or fall based on the accuracy of predictions of our financial performance.Our business planning process is designed to maximize our long-term strength,growth and profitability,not to achieve an earnings target in any particular fiscal quarter.We believe this longer-termfocus is in the best interests of the Company and our stockholders.At the same time,however,we recognize it may be helpful to provide investors with guidance as to our expectations regardingcertain aspects of our business.This could include forecasts of net sales,earnings per share and other financial metrics or projections.We assume no responsibility to provide or update guidance,andany longer-term guidance we may provide is based on goals we believe,at the time guidance is given,are reasonably attainable for growth and performance over a number of years.We historicallyhave paid dividends on our common stock and repurchased shares of our Class A Common Stock;however,at times we have suspended the declaration of dividends and/or the repurchase of our ClassA Common Stock.Going forward,at any time,we could stop,suspend or change the amounts of dividends or stop or suspend our stock repurchase program,and any such action could cause themarket price of our stock to decline.In all of our public statements when we make,or update,a forward-looking statement about our business,whether it be about net sales or earnings expectations or expectations regarding restructuringor other initiatives,or otherwise,we accompany such statements directly,or by reference to a public document,with a list of factors that could cause our actual results to differ materially from thosewe expect.Such a list is included,among other places,in our earnings press release and in our periodic filings with the SEC(e.g.,in our reports on Form 10-K and Form 10-Q).These and other factorsmay make it difficult for us and for outside observers,such as research analysts,to predict what our earnings or other financial metrics,or business outcomes,will be in any given fiscal quarter or year.Outside analysts and investors have the right to make their own predictions of our business for any future period.Outside analysts,however,have access to no more material information about ourresults or plans than any other public investor,and we do not endorse their predictions as to our future performance.Nor do we assume any responsibility to correct the predictions of outside analystsor others when they differ from our own internal expectations.If our actual results differ from those that outside analysts or others have been predicting,the market price of our securities could beaffected.Investors who rely on the predictions of outside analysts or others when making investment decisions with respect to our securities do so at their own risk.We take no responsibility for anylosses suffered as a result of such changes in the prices of our securities.We are controlled by the Lauder family.As a result,the Lauder family has the ability to prevent or cause a change in control or approve,prevent or influence certain actions by us.As of August 13,2025,members of the Lauder family beneficially own,directly or indirectly,shares of the Companys 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.In addition,four members of the Lauder family are on our Board of Directors.One othermember of the Lauder family is an executive officer.As a result of their stock ownership and positions at the Company,as well as our dual-class structure,the Lauder family has the ability to exercise significant control and influence over our business,including all matters requiring stockholder approval(e.g.,the election of directors,amendments to the certificate of incorporation,and significant corporate transactions,such as a merger or other saleof our Company or its assets)for the foreseeable future.In addition,if significant stock indices decide to prohibit the inclusion of companies with dual-class stock structures,the price of our Class ACommon Stock could be negatively impacted and could become more volatile.23Table of ContentsWe 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 aredesigned 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 Exchangecorporate governance standards.As a controlled company,we are exempt under the New York Stock Exchange standards from the obligation to comply with certain New York Stock Exchangecorporate governance requirements,including the requirements that(1)a majority of our board of directors consists of independent directors;(2)we have a nominating committee that is composedentirely of independent directors with a written charter addressing the committees purpose and responsibilities;and(3)we have a compensation committee that is composed entirely of independentdirectors with a written charter addressing the committees purpose and responsibilities.While we have voluntarily caused our Board of Directors to have a majority of independent directors and the written charters of our Nominating and ESG Committee and Compensation Committee tohave the required provisions,we are not requiring our Nominating and ESG Committee and Compensation Committee to be comprised solely of independent directors.As a result of our use of the“controlled company”exemptions,investors will not have the same protection afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governancerequirements.Item 1B.Unresolved Staff Comments.None.Item 1C.Cybersecurity.Risk Management and StrategyOur 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 managementteam 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.This integrated approach helps us assess,identify,and manage cybersecurity risks along with our other operational,financial and strategic risks,assisting in more effectively managinginterdependencies among risks and enhancing risk mitigation strategies.We have implemented a cybersecurity program including processes,technologies,and controls to assess,identify,and manage material risks from cybersecurity threats.This program includesimplementing new technologies to proactively identify and monitor new vulnerabilities and reduce risk,conducting due diligence of third-party vendors information security programs,maintainingsecurity policies and standards and regularly updating and testing our response planning and protocols.We maintain a formal information security training program for employees that includes trainingon matters such as phishing and email security best practices.Employees are also required to complete mandatory training on data privacy.We also have a third-party cybersecurity risk reviewprocess,including requiring key third-party service providers to complete initial and periodic security assessments,which prioritizes,monitors and assesses the risks associated with our third-partyservice provider interactions.To evaluate and enhance our cybersecurity program,we periodically utilize third-party experts to undertake maturity assessments of the program.We have also adopted a cybersecurity incident response plan that is designed to effectively identify,analyze,contain,remediate and eradicate,escalate,report,and appropriately documentcybersecurity incidents.The plan also includes a materiality assessment framework that sets forth procedures and escalation protocols to support our assessment of whether a cybersecurity incident ismaterial and subject to SEC reporting requirements.Such escalation protocols include the involvement of the CISO and other senior leaders across various functions,including finance,legal,privacyand global communications,as appropriate.We also maintain insurance coverage that,subject to its terms and conditions,is intended to address costs associated with certain aspects of cybersecurityincidents.24Table of ContentsWe 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 anyprevious cybersecurity incidents,that have materially affected or are reasonably likely to materially affect our business strategy,results of operation or financial condition.However,we cannoteliminate all risks and the compromise or interruption of,or damage to,our information technology(including our operational technology and websites)by cybersecurity incidents could have amaterial negative impact on our business.For a more detailed discussion of the risks,see Risks related to Technology and Cybersecurity Matters within Item 1A.Risk Factors.GovernanceThe Audit Committee of the Board of Directors oversees our information security program,which includes oversight of the cybersecurity program and management of cybersecurity risks.The AuditCommittee receives at least semi-annual updates from the CISO,which typically address our cybersecurity strategy,initiatives,key security metrics,business response plans and the evolving cyberthreat landscape and a detailed threat assessment relating to information technology risks.At the management level,our cybersecurity program is led by the CISO,who is responsible for assessing and managing material risks from cybersecurity threats,including the prevention,mitigation,detection,and remediation of cybersecurity incidents.The CISO is informed about cybersecurity threats and incidents in accordance with the cybersecurity incident response plan as discussed above.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 bywhich certain cybersecurity incidents are reported promptly to the Chair of the Audit Committee and Chief Financial Officer,as appropriate.The Companys CISO has served in various cybersecurityroles for over 20 years,leading a variety of cybersecurity and risk capabilities and also holds multiple cybersecurity certifications such as Certified Information Systems Security Professional,Certified Information Systems Auditor,and Certified in Risk and Information Systems Control.Item 2.Properties.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.The AmericasEurope,the MiddleEast&AfricaAsia/PacificOwnedLeasedOwnedLeasedOwnedLeasedManufacturing2 2 4 1 R&D1 4 1 Distribution 6 1 6 1 Manufacturing and R&D1 Manufacturing and Assembly 2 Distribution and Manufacturing 1 Principal Executive Offices 1 Total4 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.As demand changes,certain of our manufacturing facilities can produce products from categories other than their primary category.We consider our properties to be generally in good condition and believe our facilities are adequate for our operations and provide sufficient capacity to meet anticipated requirements.Item 3.Legal Proceedings.For a discussion of legal proceedings,see Item 8.Financial Statements and Supplementary Data Note 17 Commitments and Contingencies.25Table of ContentsItem 4.Mine Safety Disclosures.Not applicable.26Table of ContentsPART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities.Market for Registrants Common Equity and Related Stockholder MattersOur 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 dividend is payable in cash on September 16,2025 to stockholders ofrecord 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 orthat the Board of Directors will continue to declare them.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 ProgramWe 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 otherfactors.The following table provides information relating to our repurchase of Class A Common Stock during the referenced periods:PeriodTotal Number of SharesPurchasedAverage Price Paid PerShareTotal Number of Shares Purchased asPart ofPublicly Announced ProgramMaximum Number of Shares that MayYet Be PurchasedUnder the ProgramApril 2025$25,073,242May 20253,86564.84 25,073,242June 2025 25,073,2423,86564.84 Represents shares that were repurchased by the Company to satisfy tax withholding obligations upon the payout of certain stock-based compensation arrangements.The Board of Directors has authorized the current repurchase program for up to 256.0 million shares.The total amount was last increased by the Board on October 31,2018.Our repurchase program does not have anexpiration date.Beginning in December 2022,we suspended the repurchase of shares of our Class A Common Stock under our publicly announced program.We may resume such repurchases in the future.(1)(2)(1)(2)27Table of ContentsPerformance GraphThe following graph compares the cumulative five-year total stockholder return(stock price appreciation plus dividends)on the Companys Class A Common Stock with the cumulative total return ofthe S&P 500 Index and the S&P 500 Consumer Staples Index.The returns are calculated by assuming an investment of$100 in the Class A Common Stock and in each index on June 30,2020.Item 6.Reserved28Table of ContentsItem 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.RESULTS OF OPERATIONSWe manufacture,market and sell beauty products including those in the skin care,makeup,fragrance and hair care categories,which are distributed in approximately 150 countries and territories.Year Ended June 30,202520242023($in millions)$%$%$%Net sales$14,326 100.0%$15,608 100.0%$15,910 100.0%Cost of sales3,729 26.0 4,424
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