Revenue Growth

FY 2026

Sales Growth: Confidence in returning to growth in FY 2026, contingent on resolution of tariffs " "

For Travel Retail, modest growth; China, mid-single-digit; North America, positive; Emerging Markets, double-digit; Europe facing challenges " " " " "

no change

Gross Margin

FY 2026

Focus on improvement through workforce reduction, outsourcing and procurement projects " "

Expected to be flat to positive despite tariff offsets " "

lowered

Operating Margin

FY 2026

no prior guidance

9.4% to 9.9% "

no prior guidance

SG&A

FY 2026

no prior guidance

Focus on reducing non-consumer-facing costs including shared services, employee costs and procurement efficiencies "

no prior guidance

PRGP

FY 2026

no prior guidance

Significant PRGP savings embedded with further opportunities in outsourcing and procurement expected in future years " "

no prior guidance

Pricing

FY 2026

no prior guidance

Low single-digit price increases paired with strategic price reductions on certain products "

no prior guidance

Inventory and Retail Alignment

FY 2026

no prior guidance

Efforts to align retail and net sales across all geographies with a narrowing gap expected " "

no prior guidance

Emerging Markets and Innovation

FY 2026

no prior guidance

Focus on accelerating growth in emerging markets and tailoring innovation to meet consumer demand across different price tiers "

no prior guidance

Organizational Transformation and Restructuring

Q3 2025 emphasized streamlining the organization via a leaner executive structure, reducing management layers and shifting P&L responsibility to regions. " " Q2 2025 highlighted realigning regions into clusters and establishing a new consumer-centric executive team. " "

Q4 2025 reiterates region consolidation into four regions, while adding new leadership with an upcoming Head of R&D, and actively communicating cultural change throughout the organization as part of its biggest transformation ever. "

Consistent focus on transformation, with Q4 shifting toward finalizing new leadership appointments and deepening cultural change initiatives.

Margin Enhancement and Cost-Cutting Initiatives

Q3 2025 focused on PRGP measures that reduced net positions, improved gross margins by 300 basis points, and drove efficiency through outsourcing and procurement. " " " Q2 2025 discussed substantial restructuring—with significant charges and annual savings targets—as part of PRGP. " "

Q4 2025 reported gross margin expansion of 230 basis points despite volume deleverage, updated PRGP achievements, and detailed cost structure optimizations including SG&A adjustments, while noting an operating margin contraction due to increased consumer-facing investments. " " "

Persistent core focus, with continued cost-cutting efforts but a nuanced sentiment as Q4 balances margin improvement with increased consumer investments.

Market Positioning and Channel Mix Improvements

Q3 2025 highlighted market share gains in the U.S., China, and Japan with brands like Clinique and MAC driving performance. " " " Q2 2025 noted double-digit online growth in North America mixed with challenges in China and growth opportunities in Japan. " " "

Q4 2025 emphasized notable market share gains across North America, China, and Japan, along with strategic channel mix improvements through Amazon and expanded online presence, aiming for better alignment between net sales and retail sales. " " " "

Consistently positive, with Q4 building on previous successes by further optimizing distribution channels and leveraging digital platforms to drive growth.

Travel Retail Performance and Inventory Management Challenges

In Q3 2025, the travel retail segment experienced a 28% organic decline with active measures to reduce elevated inventory levels. " " Q2 2025 detailed weak retail trends in Asia travel retail, forecasted strong double-digit declines, and highlighted inventory excess and obsolescence challenges. " "

Q4 2025 reported a 13% decline in organic net sales for travel retail, but noted healthier trade inventory levels achieved through significant reductions in key markets (Travel Retail Asia, China, U.S.), with expectations for modest growth in fiscal 2026. " " " "

Continued challenges, yet with signs of stabilization in inventory management. Although travel retail remains weak, Q4 shows focused strategic resets to set the stage for future recovery.

Tariff Exposure and Supply Chain Diversification

Q3 2025 discussed regionalized sourcing with increased North American and Japan production to cushion tariff impacts, leveraging global manufacturing campuses. " " Q2 2025 did not mention this topic.

Q4 2025 addressed tariff exposures by forecasting approximately $100 million of headwinds for fiscal 2026, while detailing mitigation strategies and supply chain agility that offset more than half of the expected impacts. "

Emerged in Q3 and continues in Q4, though the focus has softened to pragmatic updates and measured mitigation efforts rather than broad strategic realignments.

Consumer Sentiment Dynamics in Key Markets

Q3 2025 noted subdued consumer sentiment in China and the U.S., along with concerns in Europe and emerging market challenges, driving a need for close monitoring and mitigating actions. " " " Q2 2025 reported significant pressure in China and Korea impacting the Asia travel retail business. " " "

Q4 2025 described improving sentiment in China with growth across channels, strong performance in North America, but persistent concerns in Europe, prompting targeted consumer recruitment and strategic investments in each key market. " "

Enhanced regional focus, with Q4 identifying specific improvements (China, North America) while acknowledging ongoing challenges in Europe, indicating a more segmented approach to consumer sentiment.

Innovation and Consumer-Facing Investment Strategies

Q2 2025 emphasized fast-to-market product launches across price tiers, a strategic boost in advertising spending, and initiatives like biotech collaborations to accelerate innovation. " " " Q3 2025 focused on transformative, targeted innovations with several product launch successes and increased consumer-facing investments, particularly in the U.S. and China. " " "

Q4 2025 built on these themes by accelerating transformative innovation (with faster product launch targets) across skincare, makeup, and fragrance, integrating AI to boost media ROI and expanding both online and pharmacy channels. " "

Consistent evolution, where the approach to innovation and consumer investments has deepened—with faster launches, digital integration, and broader channel expansion accentuating the strategic shift since Q2.

Underperformance of Traditional Channels

Q2 2025 mentioned challenges in traditional channels with North America’s slower growth exposure and the need for strategic pricing and reduced discounting. " " " Q3 2025 did not provide detailed commentary on this topic.

Q4 2025 explicitly addressed underperformance in department stores, noting ongoing discounting pressures, and highlighted a shift toward more productive channels like Amazon, with a deliberate effort to rebalance consumer coverage and reduce reliance on traditional outlets. " "

Increased emphasis in Q4, as explicit commentary on department store challenges and discounting pressures reemerges after a quieter Q3, signaling a focused strategic shift to rebalance the channel mix.