The Estée Lauder Companies Inc. (EL): Business Model Canvas [Dec-2025 Updated]

You're digging into the mechanics of The Estée Lauder Companies Inc. right now, and honestly, the picture for fiscal year 2025-with net sales landing at $14.3 billion but seeing declines across Skincare, Makeup, and Hair Care-tells a clear story: this prestige powerhouse is in the middle of a major pivot. As an analyst who's seen a few cycles, I can tell you their Business Model Canvas is currently dominated by the 'Beauty Reimagined' strategy and the Profit Recovery and Growth Plan (PRGP), which involves significant restructuring charges. Below, we break down exactly how they are trying to re-engineer their 25+ luxury brands and their global distribution to navigate this tough spot, so you can see where the near-term risks and opportunities really lie.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Key Partnerships

The Estée Lauder Companies Inc. relies on a complex web of external partners to ensure global reach, specialized production, and digital relevance, especially as the company navigates its strategic vision, Beauty Reimagined.

Global luxury department stores and specialty retailers (e.g., Sephora, Nordstrom)

Distribution through established prestige retailers remains a core channel, though it faced headwinds in fiscal 2025. For instance, M·A·C Cosmetics, which is the number one prestige makeup brand globally, announced in October 2025 that it would expand its partnership with Sephora to include U.S. stores and online presence starting in early 2026.

The Hair Care category saw its net sales decrease by 10% in fiscal 2025, which was pressured by softness in the specialty-multi and salon channels for brands like Bumble and bumble. Furthermore, the global travel retail business, which is included in Europe, Middle East & Africa (EMEA) results, saw a strong double-digit net sales decline in fiscal 2025, with travel retail accounting for only 15% of reported sales, down from its peak in fiscal year 2021.

Strategic digital platform partners like Google Cloud for AI innovation

The Estée Lauder Companies Inc. has deepened its strategic partnership with Google Cloud to pioneer new uses of generative artificial intelligence (AI). This collaboration leverages Google Cloud's AI capabilities, including Gemini and the Vertex AI platform, to enhance consumer experiences.

A concrete output of this partnership is the Jo Malone London Scent Advisor, an AI-powered digital experience launched in the United States and United Kingdom in December 2025. This tool uses natural language interpretation to provide personalized fragrance recommendations.

This technology push is occurring alongside significant internal restructuring. The company's Profit Recovery and Growth Plan (PRGP) has seen restructuring charges reach $1.14 billion as of late 2025, with $285 million in new charges approved between October 27 and November 29, 2025. This restructuring involves a shift toward more outsourced and technology-driven operations.

E-commerce giants (Amazon U.S. Premium Beauty, Shopee, TikTok Shop)

E-commerce has become a critical growth area, reaching an all-time high in fiscal 2025. The company leaned heavily into this channel, with online sales reaching 31% of reported sales for the full fiscal year ended June 30, 2025.

The expansion across major digital marketplaces in fiscal 2025 included specific platform activations:

The Americas region saw its organic net sales fall by 5%, but Amazon Premium Beauty store launches provided a cushion. Conversely, the decline in overall organic net sales for fiscal 2025 was 8%, with reported net sales at $14.3 billion.

Manufacturing partners for specialized cosmetic and fragrance production

The Estée Lauder Companies Inc. manages its specialized production through a network of partners and internal facilities. Capital expenditures reflect this operational footprint, showing a deliberate optimization effort in fiscal 2025. Capital expenditures decreased to $602 million in fiscal 2025, down from $919 million in the prior year. This reduction was primarily attributed to prior-year payments related to a manufacturing facility in Japan.

Global beauty influencers and celebrity brand ambassadors

Marketing partnerships with digital creators are a significant component of the promotional strategy, designed to enhance online visibility and drive engagement. The company's focus on digital spending is pronounced.

• Approximately 90% of the marketing budget is directed toward digital channels.
• The company has engaged with over 300 social media influencers worldwide as part of its strategy.
• These collaborations led to a 25% increase in engagement rates across various social media channels in a recent period.
• In a prior period, 75% of advertising investment was allocated to digital social media influencers, deemed highly productive.
• Notable brand ambassadors have included figures like Karlie Kloss and Kendall Jenner, amplifying brand visibility.

Finance: draft 13-week cash view by Friday.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Key Activities

You're looking at the core engine driving The Estée Lauder Companies Inc. (EL) right now-the hard work of turning around a tough period. As a seasoned analyst, I see these Key Activities as the levers they are pulling to get back to that solid, double-digit adjusted operating margin they're targeting under the Beauty Reimagined strategy. It's all about disciplined execution against a clear plan.

Executing the 'Beauty Reimagined' Strategic Overhaul

This overhaul, unveiled in February 2025 alongside the Q2 FY2025 results, is the blueprint for restoring sustainable sales growth. It's a massive organizational shift, collapsing seven regions into four and giving geographic teams full P&L control, moving away from the old global brand-led structure. The goal is clear: become the best consumer-centric prestige beauty company. The numbers from fiscal 2025 show the starting point: reported net sales were $14.3 billion, an 8% year-over-year decline, with organic net sales also down 8%. Still, the company is projecting a rebound for fiscal 2026, forecasting net sales growth of 2-5% and adjusted EPS between $1.90-2.10, which represents YoY growth of 26-39%. That's the expected payoff for this strategic pivot.

Implementing the Profit Recovery and Growth Plan (PRGP) for Operational Efficiency

The PRGP, which started back in November 2023, is the cost-discipline side of the coin, designed to rebuild profit margins through fiscal 2025 and 2026. This plan is deep, targeting a net workforce reduction of 5,800-7,000 positions; as of November 2025, they've cut more than a third of that target. The financial impact is measurable: they reduced non-consumer-facing expenses by 6% in fiscal 2025. This discipline helped deliver a 230-basis-point gross margin improvement to 74.0% for the full fiscal 2025 year, even while sales were falling. They are reinvesting some of those savings, with consumer-facing investments surging by 580 basis points in Q4 2025. The total expected operating profit net savings from the PRGP across fiscal 2025 and 2026 is a significant $1.1 billion to $1.4 billion. You have to track the charges, too; cumulative restructuring and other charges through November 29, 2025, were approximately $1.137B before taxes, with $362 million in restructuring charges recorded in fiscal 2025 alone.

High-end Product Research and Development (R&D) in Skincare and Fragrance

The Estée Lauder Companies Inc. is actively fueling innovation to drive future sales, especially in high-margin categories. They signaled commitment by opening a new BioTech Hub in Belgium in December 2024 and starting a collaboration with the Massachusetts Institute of Technology in January 2025. Skincare saw a specific move with a strategic partnership with Serpin Pharma on February 26, 2025, focusing on anti-inflammatory research for longevity benefits. While the overall Skin Care category net sales dropped 12% in FY2025, the high-end brand La Mer showed growth late in the year due to launches like The Night Recovery Concentrate. Fragrance was a bright spot, with net sales rising 14% in Q1 2026 (July-Sept 2025), driven by strong double-digit growth from Le Labo and Kilian Paris, though the overall FY2025 fragrance results were flat, impacted by a $549 million intangible asset impairment charge related to TOM FORD.

Global Supply Chain Management and Inventory Optimization

Supply chain activity is focused on efficiency gains, partly through the PRGP's zero-waste approach to improve demand forecasting and minimize excess inventory. They piloted an AI-driven forecasting and replenishment system across six markets that yielded great results: service levels rose 12%, stockouts fell 15%, and overstock declined 9% over six months. This also led to 7% faster replenishment cycles at the plant level. They are aiming for 98% forecasting coverage and a 5% reduction in stock-outs with the full rollout. This is critical because the global travel retail business, a traditional strength, declined 28% in FY2025 and now makes up only 15% of total sales, down from nearly 30% at its peak. They are also optimizing their footprint, with plans to further streamline manufacturing to bring production closer to the consumer.

Digital Transformation and AI-Powered Consumer Experience Development

Digital is a major activity, with e-commerce hitting a record 31% of total revenue in FY2025, a three-point increase from the prior year. The investment in AI is showing a return; they reported a 31% improvement in ROI on North American media campaigns thanks to AI optimization. They are building a generative AI ecosystem using tools like Copilot Studio and Azure OpenAI Service to speed up trend detection and marketing asset creation. The expansion across digital retail is aggressive: they now have 11 brands on Amazon's U.S. Premium Beauty store, up from just three in fiscal 2024. Furthermore, The Ordinary launched an AI-powered flagship store on Tmall in July 2025. The potential scale is huge, as McKinsey & Company estimated in January 2025 that Generative AI could generate $9 billion to $10 billion in the beauty industry globally.

• The Estée Lauder Companies Inc. reduced non-consumer-facing expenses by 6% in fiscal 2025.
• The company reported a $549 million intangible asset impairment charge relating to TOM FORD in FY2025.
• The company has 11 brands on Amazon's U.S. Premium Beauty store, up from three in fiscal 2024.
• Fragrance net sales rose 14% year-over-year in Q1 2026.
• The BioTech Hub in Belgium opened in December 2024.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Key Resources

You're looking at the core assets The Estée Lauder Companies Inc. (EL) relies on to compete in prestige beauty. These aren't just things they own; they are the engines that drive their value proposition.

The foundation is undeniably the brand portfolio. The Estée Lauder Companies Inc. stewards a collection of 20+ brands, each with a distinct luxury or prestige positioning. This diversity helps them capture different segments of the high-end consumer market globally. Think of brands like La Mer, Clinique, MAC, Le Labo, and the DECIEM family of brands, including The Ordinary and NIOD.

Another critical resource is the investment in science. The company maintains proprietary R&D and intellectual property in beauty science, which fuels product innovation across skincare, makeup, and fragrance categories. This scientific backing supports the premium pricing these products command.

Operationally, the reach is vast. The Estée Lauder Companies Inc. has a global manufacturing and distribution network that serves consumers in approximately 150 countries and territories. This scale is necessary to support a global luxury presence, though recent performance shows challenges in certain key Asian markets.

Brand equity is intangible but perhaps the most valuable. The company possesses strong brand equity and heritage in the luxury beauty segment, built over decades. This trust allows them to launch new products and maintain premium positioning even when facing market volatility, such as the 8% decline in organic sales for fiscal year 2025.

Finally, liquidity remains a key resource for strategic maneuvers, like the recent minority investment in a Mexican luxury fragrance brand in late 2025. Here's a quick look at the balance sheet strength as of the end of fiscal year 2025:

The company is actively managing this resource base, evidenced by initiatives like the Profit Recovery and Growth Plan (PRGP) which helped reduce non-consumer-facing expenses by 6% in fiscal 2025.

The Estée Lauder Companies Inc. also utilizes its technology infrastructure as a resource, recently launching an AI-powered digital experience for Jo Malone London to enhance online fragrance discovery.

• Brands include: Estée Lauder, La Mer, Clinique, M·A·C, Tom Ford, Aveda, Le Labo, and Jo Malone London.
• Distribution spans approximately 150 countries and territories.
• Affiliate offices are established in 50+ countries and regions.
• The company is publicly traded, providing access to capital markets.

Finance: draft 13-week cash view by Friday.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Value Propositions

Prestige and luxury positioning across diverse price points is central to The Estée Lauder Companies Inc.'s value. For the fiscal year ended June 30, 2025, As Reported and Organic Net sales decreased by 8%, landing at $14.3 billion from $15.6 billion the prior year. Still, the Luxury Brands within the Fragrance category delivered a mid-single-digit increase in net sales in fiscal 2025. To be fair, in the first quarter of fiscal 2026, Fragrance showed a strong organic lift of +13%, fueled by double-digit growth from these luxury names. The company's prestige positioning was evident in key markets during fiscal 2025, achieving share gains in the U.S., Mainland China, and Japan. Furthermore, during the 11.11 Global Shopping Festival in fiscal 2025, Estée Lauder and La Mer ranked either #1 or #2 in Prestige Beauty and Luxury across major platforms like Douyin, JD, and Tmall.

Clinically-proven, high-performance skincare and makeup products form another core value. While Skin Care net sales saw a 12% decrease and Makeup net sales decreased by 5% in fiscal 2025, specific brands showed resilience. Clinique, for instance, posted net sales growth across all geographic regions in fiscal 2025, led by its face and lip subcategories. Innovation continues to be a driver; Clinique introduced Clinique CX, a new advanced post-procedure treatment franchise for China in November 2024, and Estée Lauder launched its Re-Nutriv longevity expansion into eye in January 2025.

Personalized digital experiences are increasingly vital, reflecting a pivot toward younger, digital-first consumers. The company saw mid single-digit organic net sales growth online in the third quarter of fiscal 2025. This focus is underscored by the hiring of Aude Gandon as the first chief digital and marketing officer and a reported commitment of $1 billion to a Shopify digital partnership as of late 2025. A concrete example of this personalization is the launch of an AI-powered scent advisor for the Jo Malone London brand, signaling a shift toward technology-driven discovery.

Global access to exclusive, artisanal fragrance brands, like Le Labo, provides a high-margin value component. Le Labo delivered strong double-digit growth in fiscal 2025's third quarter, driven by hero products and innovation such as Osmanthus 19 and Eucalyptus 20. This growth contributed to the overall Fragrance category's flat net sales performance for the full fiscal year 2025. The company expanded its physical footprint to support these brands, opening approximately 40 net new freestanding stores globally in fiscal 2025, led by Jo Malone London and Le Labo.

The commitment to social impact and sustainability across all brands underpins long-term value. The Estée Lauder Companies has sustained its commitment to sourcing 100% renewable electricity for its direct operations for each year from fiscal 2020 to 2025. On climate goals, the company achieved a 37.6% reduction in absolute Scope 1 and 2 greenhouse gas emissions from a 2018 baseline. Water stewardship saw a major win, with a 41% reduction in water withdrawal at manufacturing sites by fiscal 2025, surpassing the initial 20% goal from a 2019 baseline. Furthermore, 97% of palm-based ingredients were certified sustainable through RSPO physical supply chains in fiscal 2025. In terms of internal equity, 70% of scientists and tech professionals across the company are women, and women lead all R&D and Innovation Centers.

Here's a quick look at some key performance and commitment metrics for the period:

The focus on high-value, exclusive brands is clear from the growth of Le Labo, which saw strong double-digit growth in Q3 of fiscal 2025, even as the overall portfolio faced an 8% organic sales contraction for the year. The company is actively working to embed purpose, with over 98% of its forest-based fiber cartons now being FSC certified.

• Clinique net sales growth in FY2025 across all geographic regions.
• Le Labo innovation with products like Eucalyptus 20 and Osmanthus 19.
• Estée Lauder and La Mer ranking #1 or #2 in Prestige Beauty on key Chinese platforms during the 11.11 Festival.
• The company's goal to reduce absolute Scope 1 and 2 greenhouse gas emissions by 50% by 2030 from a 2018 baseline.
• The company's Scope 3 goal to reduce emissions from purchased goods, transport, and travel by 60% per unit revenue by 2030.

Finance: draft 13-week cash view by Friday.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Customer Relationships

The Estée Lauder Companies Inc. focuses its customer relationships on a seamless, data-driven journey that bridges the digital and physical worlds, a core tenet of its 'Beauty Reimagined' strategy launched in February 2025. The goal is to become the best consumer-centric prestige beauty company.

High-touch, personalized in-store consultation and service

While the digital shift is pronounced, The Estée Lauder Companies Inc. continues to invest in physical touchpoints, evidenced by boosting consumer-facing investments, which include funding brand-building freestanding stores. The company is strategically increasing consumer-facing investments globally, optimizing marketing programs to enhance customer acquisition. This supports the overall strategy to accelerate best-in-class consumer coverage by expanding portfolio presence across preferred channels.

Digital personalization and targeted marketing via data analytics

Data analytics and Artificial Intelligence (AI) are central to tailoring the experience. The implementation of AI personalization has dramatically transformed consumer engagement metrics, with 68% of combined Gen Z and Alpha already maintaining skincare routines, showing increased engagement with personalized experiences. The company has partnered with Adobe and Microsoft to deploy generative AI tools that have already yielded measurable results, reducing campaign execution times in North America by 30% in 2025. The CEO noted that AI will change how shoppers mix and match products, suggesting complementary items based on prior selections, like suggesting products to go with a red lipstick. The Estée Lauder Companies Inc. is also tapping into consumer data and online chatter to capitalize on trends.

The digital expansion in fiscal 2025 included significant channel growth:

• Launched eight brands in Amazon's U.S. Premium Beauty store in fiscal 2025.
• Expanded online distribution in Southeast Asia, launching 14 additional stores on Shopee and four on TikTok Shop in fiscal 2025.
• Broadened Fragrance distribution with approximately 10 net new freestanding stores opened globally in the fiscal 2025 third quarter, led by Le Labo and KILIAN PARIS.

Online sales accounted for 31% of total revenue in Q4 2025.

Brand-specific loyalty programs and direct-to-consumer engagement

The Estée Lauder Companies Inc. is focused on driving new consumer acquisition through targeted media activation and expanding consumer coverage. Industry-wide data suggests the importance of these programs: 83% of consumers report that loyalty programs influence their decision to make repeat purchases, and 70% of brands report increased customer engagement thanks to their loyalty initiatives. For customers, the most desired benefits are early access to sales at 60.1% and early access to new products at 50.8%. In line with industry trends, 58% of brands are prioritizing personalization within their loyalty strategies in 2025.

The company is actively growing its direct-to-consumer (DTC) footprint, which aligns with the finding that 43% of Gen Z consumers prefer purchasing directly from brands. The Estée Lauder Companies Inc. launched The Ordinary on TikTok Shop in Thailand in April 2025 and in Amazon's U.S. Premium Beauty in January 2025.

Cultivating relationships with high-net-worth consumers globally

The Estée Lauder Companies Inc. manages a wide spectrum of price points to capture different consumer segments, from entry-level to high-luxury. The company is focused on 'local relevance,' adapting activation across Europe, China, and India, and has taken minority investments in Chinese, Mexican, and Indian beauty labels to support this.

Here is a look at the price segmentation across two key brands:

In the US, among Estée Lauder's current customers, only 6% come from households earning more than 200% of the median income. The CEO has stated that the emerging middle class globally is seen as a key market between now and 2030.

Community building through social and environmental cause championing

The 'Beauty Reimagined' strategy includes a renewed focus on transformative innovation and strengthening presence in high-growth channels, markets, and price tiers to participate in key growth opportunities. While specific community metrics aren't detailed, the company is increasing consumer-facing investments and optimizing marketing programs, which often encompasses cause-related marketing and brand storytelling to build deeper connections. The company is also focused on sustainability integration in its innovation strategy, with a focus on eco-friendly packaging.

Finance: draft 13-week cash view by Friday.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Channels

You're analyzing The Estée Lauder Companies Inc.'s distribution strategy as of late 2025, and the numbers show a clear pivot away from traditional wholesale toward owned digital experiences, even as a key channel struggles.

Digital commerce, encompassing brand sites, Amazon Premium Beauty, and TikTok Shop, hit an all-time high, representing 31% of reported sales for the full fiscal year 2025. Online organic sales growth accelerated from low single digits in the first half of the year to mid-single digits in the second half of fiscal 2025. This digital push included expanding consumer coverage by launching eight brands in Amazon's U.S. Premium Beauty store during fiscal 2025, with Aveda and Origins launching in the fourth quarter. Furthermore, Southeast Asia saw expanded online distribution with the launch of 14 additional stores on Shopee and four on TikTok Shop in fiscal 2025.

The Global travel retail channel, traditionally a powerhouse, saw significant headwinds. Sales in this segment fell by 28% year-on-year for the full fiscal 2025 year. This channel now accounts for approximately 15% of The Estée Lauder Companies Inc.'s reported sales, which is a drop of four percentage points from the prior year and fourteen percentage points below its peak in fiscal year 2021. This decline drove nearly two-thirds of the company's overall 8% organic sales decline for the year.

The performance across other channels was mixed, reflecting strategic adjustments and market softness. The Americas region saw a 4% sales decline, though this was cushioned by the aforementioned Amazon Premium Beauty launches. The decline from Aveda specifically reflected continued softness in brick-and-mortar channels as well as freestanding store closures. Similarly, softness in the specialty-multi and salon channels partially drove the net sales decline for Bumble and bumble.

Here's a quick look at the financial context for the full fiscal year 2025:

The reliance on specialty multi-brand retailers and department stores remains significant, though the data points to pressure in these traditional areas. For instance, the decline in Hair Care was pressured by softness in the specialty-multi and salon channels. Department stores, a traditional backbone, are implicitly included in the brick-and-mortar softness mentioned, contrasting sharply with the digital acceleration.

The Estée Lauder Companies Inc. is actively managing its physical footprint and partner mix:

• Launched eight brands in Amazon's U.S. Premium Beauty store in fiscal 2025.
• Expanded online distribution in Southeast Asia via 14 new Shopee stores and four new TikTok Shop stores in fiscal 2025.
• Reported softness in freestanding store closures impacting Aveda performance.
• Achieved prestige beauty share gains in Mainland China, Japan, and the U.S., demonstrating success in key direct and retail partner markets.

Finance: draft 13-week cash view by Friday.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Customer Segments

You're looking at the diverse base of buyers that keeps The Estée Lauder Companies Inc. running, a group spanning the entire prestige spectrum globally.

The foundation is the global prestige beauty consumer, a massive audience across all age groups that The Estée Lauder Companies Inc. serves through distribution in approximately 150 countries and territories. For the full fiscal year ended June 30, 2025, the company's total reported net sales reached $14.326 billion, reflecting the overall demand landscape across these segments.

Within this global base, you see clear tiers of spending power:

• High-net-worth luxury buyers are crucial for brands like La Mer and Tom Ford Beauty.
• These luxury segments, particularly La Mer, drove share gains in key markets like Mainland China during fiscal 2025.
• Fragrance, which includes luxury brands like Tom Ford Beauty and Jo Malone London, remained stable year-on-year in FY2025, with a mid-single-digit increase from Luxury brands offsetting other declines.

Then there are the mass-market and accessible luxury consumers, served by brands like Clinique and The Ordinary. Clinique showed net sales growth across all geographic regions in FY2025, led by its face and lip subcategories, which is a bright spot against broader category weakness.

The company heavily targets consumers in high-growth emerging markets. Mainland China is pivotal; for fiscal year 2026, The Estée Lauder Companies Inc. projects organic net sales growth of around 5% there. Still, the overall Asia-Pacific region faced headwinds, with net sales for the trailing twelve months (TTM) ending June 30, 2025, at $4.54 billion.

The travel retail shoppers represent a segment that has seen significant recent volatility, though management is optimistic about a return to growth. In fiscal 2025, travel retail represented approximately 15% of reported sales, a drop of 4 percentage points from fiscal 2024. This channel saw a strong double-digit net sales decline, specifically -28% year-on-year, driven largely by Asia travel retail and subdued sentiment from Chinese consumers. The company is actively working to improve this exposure, noting a breakthrough agreement with Duty Free Americas in the US.

Here's a look at how the revenue was distributed geographically for the TTM ending June 30, 2025:

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Cost Structure

You're looking at the major outflows for The Estée Lauder Companies Inc. as they push through the Profit Recovery and Growth Plan (PRGP). The cost structure is heavily influenced by necessary, but significant, investments in marketing and the one-time, yet massive, costs associated with this transformation.

Significant Restructuring Charges from PRGP

The Profit Recovery and Growth Plan (PRGP), initiated in November 2023 and expanded in February 2025, is a major driver of current period costs. The total estimated restructuring and other charges for the overall expanded program are between $1.2 billion and $1.6 billion (before tax). The plan is expected to be substantially completed by the end of fiscal 2027.

As of November 29, 2025, the cumulative restructuring and other charges recorded related to initiatives approved under the Restructuring Program were approximately $1.137 billion (before tax). This plan includes a targeted workforce reduction of 7,000 employees.

Here's a breakdown of the most recent restructuring activity:

These charges cover professional services for design and implementation, transition support, and the global project management office for the initiative.

High Consumer-Facing Investments

The Estée Lauder Companies Inc. continues to allocate significant capital toward consumer-facing activities to drive brand visibility and sales conversion. These costs are a necessary component of competing in the prestige beauty space, especially when facing softness in key markets like mainland China.

Consumer-facing investments explicitly include:

• Co-operative advertising expenses.
• Selling, advertising, and promotional expenses.
• Store operating costs.

For instance, operating income in the Fragrance segment declined in the fiscal 2025 first quarter due to strategic investments supporting expanded global consumer reach through advertising and promotional activities, such as the launch of BALMAIN Beauty. Similarly, the adjusted operating margin contracted in the fiscal 2025 third quarter, reflecting an increase in these consumer-facing investments.

Cost of Goods Sold (COGS) for Premium Ingredients and Manufacturing

The Cost of Sales (COGS) reflects the expense of sourcing premium ingredients and the associated manufacturing overhead. While specific COGS dollar amounts for fiscal 2025 aren't immediately available in the search snippets, the impact of managing these costs is evident through gross margin movements.

The Company noted that its As Reported and Adjusted Gross margin expanded by 310 basis points to 75.0% in the fiscal 2025 third quarter. This expansion was primarily driven by net benefits from the PRGP, which included a reduction in cost of sales. However, this margin benefit was partially offset by an unfavorable impact of 100 basis points due to a charge for under-absorbed manufacturing overhead costs recognized in that quarter.

R&D Expenses for Product Innovation and Clinical Testing

Specific reported dollar amounts for Research & Development (R&D) expenses are not detailed in the provided late 2025 financial updates. However, the strategic focus under the 'Beauty Reimagined' vision emphasizes creating transformative innovation across prestige price tiers to deliver fast-to-market, on-trend products. This strategic priority implies continued, significant investment in product development and associated testing.

General and Administrative (G&A) Expenses, Targeted for Reduction via PRGP

The PRGP is explicitly designed to create efficiencies that reduce operating expenses, which includes G&A costs, by transforming the operating model to be leaner and more agile. The net benefits from the PRGP helped to reduce non-consumer facing expenses in the fiscal 2025 third quarter. The restructuring initiatives focus on simplification, acceleration of processes, and standardizing end-to-end business processes, all aimed at lowering structural costs over time.

Finance: draft 13-week cash view by Friday.

The Estée Lauder Companies Inc. (EL) - Canvas Business Model: Revenue Streams

You're looking at the top-line performance for The Estée Lauder Companies Inc. for the fiscal year ended June 30, 2025. Honestly, it was a year of navigating continued softness, but the company is pointing to a turnaround starting in fiscal 2026. For the full fiscal year 2025, the reported net sales landed at $14.3 billion, which was an 8% decrease on a reported basis from the prior year's $15,608 million. The organic net sales, which strip out currency effects, were $14,351 million, also down 8%.

The revenue generation is heavily reliant on product categories, and as you can see below, most categories faced headwinds in FY2025, though the company managed to expand its gross margin to 74.0%, up 230 basis points, partly due to its Profit Recovery and Growth Plan. The mix of sales is critical here; for instance, global travel retail, which used to be a cornerstone, accounted for just 15% of reported sales, a sharp drop from its peak.

The Skincare category remains the largest contributor to revenue, bringing in $6,962 million in FY2025, but it saw the steepest decline at 12%. The Makeup segment also contracted by 5%, while Hair Care sales dropped by 10%. On a brighter note, Fragrance sales held steady, remaining flat for the year, which was supported by growth in the Luxury brands portfolio.

The channels through which The Estée Lauder Companies Inc. sells its products are also a key part of the revenue story, especially the shift toward digital. You should definitely track the direct-to-consumer performance going forward.

• Online sales, spanning e-commerce and company stores, hit an all-time high, representing 31% of reported sales in fiscal 2025.
• The growth in online sales accelerated from low single digits in the first half of FY2025 to mid-single digits in the second half.
• The launch of The Ordinary on Amazon's U.S. Premium Beauty Store, followed by Origins and Aveda, bolstered digital revenue.
• Fragrance brands like Le Labo benefited from targeted expansion of consumer reach, including direct-to-consumer channels globally.
• The Americas region saw its sales fall by 4%, cushioned somewhat by the Amazon Premium Beauty store launches and pricing gains.

The performance within categories was brand-specific, too. For example, the 12% decline in Skincare was mostly due to drops from Estée Lauder and La Mer, but Clinique provided some offset with growth across regions. Similarly, the flat Fragrance performance was driven by mid-single-digit increases from Luxury brands and strong double-digit growth from Le Labo and Kilian Paris, which counteracted declines from Estée Lauder and Clinique franchises.