Estée Lauder eyes 2026 recovery as international demand offsets US weakness

US cosmetics group Estée Lauder (NYSE: EL) is expected to return to growth in fiscal 2026, with Visible Alpha consensus pointing to a 4.7% rise in sales, marking an expected end to three consecutive years of decline as the company pushes ahead with its “Beauty Reimagined” overhaul.

The company, which has faced pressure from tariff-related costs, uneven travel retail demand and a prolonged slowdown in China, is forecast to generate roughly $15 billion in revenue in 2026.

While its core Americas business remains subdued, with analysts penciling in just 0.5% sales growth, momentum is expected to be driven by international markets. Sales in EMEA are projected to rise 6.7%, Asia Pacific 4%, and Mainland China 8.6%, reflecting a gradual recovery in demand outside the US.

Category trends also suggest a broad-based rebound. Skin care, the group’s largest segment, is expected to grow sales by 6%, supported by brands such as La Mer and The Ordinary. Fragrance is forecast to see sales rise by 8%, driven by continued strength in luxury lines including Tom Ford and Le Labo. Makeup is forecast to post modest 2% growth. Hair care remains the laggard, with sales expected to fall 2%, albeit a marked improvement on the roughly 10% decline recorded last year.

Strategically, Estée Lauder is pursuing both restructuring and expansion. The group is in early-stage talks with Spain’s Puig, combining complementary strengths in skincare and fragrance and better positioning the companies against rivals such as L'Oréal SA. However, investors have reacted cautiously, with Estée Lauder shares falling following news of the discussions amid concerns over execution risk during an ongoing turnaround.

At the same time, the company is doubling down on high-growth emerging markets. It has agreed to acquire the remaining stake in Indian brand Forest Essentials.

Shares in Estée Lauder currently are down about 36.4% year-to-date. Yet consensus forecasts suggest 2026 could mark an inflection point, with international growth and portfolio repositioning beginning to offset structural weaknesses in its home market.

 This article was published by Visible Alpha, part of S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.