Estee Lauder Companies, Inc. (NYSE:EL) shares are trading lower in the premarket session on Thursday after the company reported the third-quarter results.

The company reported adjusted earnings per share of 65 cents, beating the analyst consensus estimate of 32 cents. Quarterly sales of $3.55 billion (down 10% year over year) outpaced the street view of $3.52 billion.  Organic net sales decreased 9%.

Estée Lauder reported a decline across all product categories:

• Skin Care sales dropped 11%, mainly due to weaker performance in Asia travel retail, impacting Estée Lauder and La Mer.
• Makeup sales fell 7%, largely from lower shipments and fewer new launches at M·A·C.
• Fragrance sales dipped 1%, with Clinique contributing to the decline.
• Hair Care sales declined 10%, led by softness in Aveda's salon and standalone store channels.

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Quarterly gross profit slumped 6% year over year to $2.661 billion. Adjusted gross margin, however, expanded to 75% from 71.9% in the year-ago period. The firm said no significant negative effects are expected from current tariffs, including on consumer sentiment.

Adjusted operating income in the quarter under review slumped 27% year over year to $403 million, with adjusted operating margin contracting to 11.4% from 14.1% in the year-ago period.

The company said that the margin contraction reflects the increase in consumer-facing investments, along with sales volume deleverage in the fiscal 2025 third quarter.

Estée Lauder expanded its Profit Recovery and Growth Plan (PRGP) in February 2025 to boost efficiency, return to sales growth, and restore strong margins by 2027.

The company said it has already improved its adjusted gross margin by over 300 basis points each quarter of fiscal 2025, despite lower sales. Key actions include cutting excess inventory, reducing promotions, and streamlining operations. The restructuring part of the plan involves up to $1.6 billion in charges and a workforce reduction of 5,800 to 7,000 roles. As of April 2025, $623 million in initiatives and over 2,600 job cuts have been approved.

Dividend: The company announced a quarterly dividend of $.35 per share on its Class A and Class B common stock, payable in cash on June 16, to stockholders of record at the close of business on May 30.

Outlook: Estée Lauder lowered its FY2025 adjusted EPS guidance from $2.75–$2.95 to $1.30–$1.55 versus the $1.40 estimate.

It also cut its sales forecast from $15.45 billion–$15.92 billion to $14.20 billion–$14.36 billion, below the $14.51 billion estimate.

Price Action: EL shares are trading higher by 0.73% in the pre-market session, at $60.40 at last check Thursday.

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