Shares of Estee Lauder (EL) plunged 5.10% in Thursday's trading session, despite the company reporting better-than-expected fiscal first-quarter results. The cosmetics giant beat Wall Street estimates on both earnings and revenue, but investors seemed more focused on the company's cautious outlook and ongoing restructuring efforts.

For the quarter ended September 30, Estee Lauder reported adjusted earnings of $0.32 per share, significantly surpassing the analysts' expectations of $0.18 per share. Net sales came in at $3.48 billion, up from $3.36 billion a year earlier and above the consensus estimate of $3.38 billion. The company's fragrance and skincare segments showed resilience, contributing to the overall sales growth.

However, the market's negative reaction appears to stem from Estee Lauder's full-year guidance and ongoing challenges. The company reaffirmed its fiscal 2026 outlook, expecting adjusted earnings per share between $1.90 and $2.10, which falls short of analysts' expectations of $2.11. Additionally, Estee Lauder revealed that it has approved initiatives resulting in cumulative charges of $852 million and a net reduction of over 4,000 positions as part of its restructuring program. The company also noted that while consumer sentiment in China is improving, it remains subdued and has yet to fully recover from historical lows, potentially impacting future growth prospects in a key market.