Estée Lauder returns to growth as tariff refunds pad the bottom line

The Estée Lauder Companies reported a 6 percent increase in fourth-quarter sales, with growth across most categories and regions and North America leading the recovery. For the full fiscal year, net sales topped $15 billion, according to Cosmetics Business. The results mark a further step in the company's multi-year effort to stabilise a business that has struggled with weak demand in China, excess inventory in its travel retail channel, and slow reaction to shifting consumer habits in skincare and fragrance.

Part of the improvement, however, is not organic. Estée Lauder recorded a $38 million benefit in cost of sales during the fourth quarter from US tariff refunds, after the Supreme Court ruled that the Trump administration had incorrectly used the International Emergency Economic Powers Act to impose the levies in the first place. That refund flattered margins at a moment when investors are hunting for evidence that the underlying business, rather than a favourable court ruling, is genuinely healing.

The distinction matters for how the market reads the next few quarters. Estée Lauder's recovery story has rested on cost discipline, brand pruning and a slow rebuild of its China and travel retail exposure, not on a return to the double-digit growth that defined the prestige beauty boom of the early 2020s. A one-off tariff windfall makes the current print look stronger than the trend line beneath it. Executives and analysts will be watching whether North America's momentum holds without that boost, and whether Asia travel retail, still the group's most exposed and volatile segment, starts to contribute rather than drag.

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