UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~March 31, ~~2025~~2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-14064

The Estée Lauder Companies Inc.

(Exact name of registrant as specified in its charter)

Delaware

11-2408943

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

767 Fifth Avenue, New York, New York

10153

(Address of principal executive offices)

(Zip Code)

212-572-4200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $.01 par value	EL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At April 24, 2026, 247,287,571 shares of the registrant’s Class A Common Stock, $.01 par value, and 114,507,344 shares of the registrant’s Class B Common Stock, $.01 par value, were outstanding.

Table of Contents

THE ESTÉE LAUDER COMPANIES INC.

			Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Earnings (Loss) — Three and Six Months Ended December 31, 2025 and 2024			2
Consolidated Statements of Comprehensive Income (Loss) — Three and Six Months Ended December 31, 2025 and 2024			3
Consolidated Balance Sheets — December 31, 2025 and June 30, 2025			4
Consolidated Statements of Cash Flows — Six Months Ended December 31, 2025 and 2024			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			40
Item 3. Quantitative and Qualitative Disclosures About Market Risk			67
Item 4. Controls and Procedures			67
Part II. Other Information
Item 1. Legal Proceedings			67
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			68
Item 5. Other Information			68
Item 6. Exhibits			68
Signatures			69

INDEX


			Page

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

Consolidated Statements of Earnings (Loss) — Three and Nine Months Ended March 31, 2026 and 2025			2

Consolidated Statements of Comprehensive Incom e (Loss) — Three and Nine Months Ended March 31, 2026 and 2025			3

Consolidated Balance Sheets — March 31, 2026 and June 30, 2025			4

Consolidated Statements of Cash Flows — Nine Months Ended March 31, 2026 and 2025			5

Notes to Consolidated Financial Statements			6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			40

Item 3. Quantitative and Qualitative Disclosures About Market Risk			68

Item 4. Controls and Procedures			68

Part II. Other Information

Item 1. Legal Proceedings			69

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			69

Item 5. Other Information			69

Item 6. Exhibits			70

Signatures			71

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(Unaudited)

	Three Months EndedDecember 31,			Six Months EndedDecember 31,
	Three Months EndedMarch 31,			Nine Months EndedMarch 31,
(In millions, except per share data)		~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
Net sales		$	43,~~229~~712	$	43,~~004~~550	$	711,~~710~~422	$	710,~~365~~915
Cost of sales		~~994~~876		~~957~~889		12,~~921~~797		12,~~885~~774
Gross profit		32,~~235~~836		32,~~047~~661		58,~~789~~625		58,~~480~~141
Operating expenses
Selling, general and administrative		2,~~627~~279		2,~~585~~258		47,~~923~~202		47,~~883~~141
Restructuring and other charges		~~207~~224		~~181~~97		~~296~~520		~~278~~375
Impairment of goodwill and other intangible assets		—		861		—		861
Securities class action litigation settlement		84		—		84		—
Impairment of goodwill and other intangible assets		—		—		—		861
Talcum litigation settlement agreements		—		—		—		159
Total operating expenses		2,~~834~~587		32,~~627~~355		57,~~219~~806		68,~~181~~536
Operating income (loss)		~~401~~249		~~(580)~~306		~~570~~819		(~~701~~395)
Interest expense		8582		9087		~~171~~253		~~182~~269
Interest income and investment income, net		2115		2327		5166		5885
Other components of net periodic benefit cost		43		35		811		510
Earnings (loss) before income taxes		~~333~~179		~~(650)~~241		~~442~~621		(~~830~~589)
Provision (benefit) for income taxes		~~171~~90		~~(60)~~82		~~233~~323		(842)
Net earnings (loss)		$	~~162~~89	$	~~(590)~~159	$	~~209~~298	$	(~~746~~587)
Net earnings (loss) per common share
Basic		$	.4525	$	(1.~~64)~~44	$	.5882	$	(21.0763)
Diluted		$	.4424	$	(1.~~64)~~44	$	.5782	$	(21.0763)
Weighted average common shares outstanding
Basic		362.17		360.03		~~361~~362.70		359.89
Diluted		~~364~~365.84		~~360~~361.04		364.25		359.89

See notes to consolidated financial statements.

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THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months EndedDecember 31,				Six Months EndedDecember 31,
	Three Months EndedMarch 31,				Nine Months EndedMarch 31,
(In millions)	~~2025~~2026		~~2024~~2025			~~2025~~2026		~~2024~~2025
Net earnings (loss)	$	~~162~~89	$	~~(590)~~159		$	~~209~~298	$	(~~746~~587)
Other comprehensive income (loss):
Other comprehensive (loss) income:
Net cash flow hedge gain (loss)	8		55			24		(2)
Net cash flow hedge	15		(24)			39		(26)
Cross-currency swap contract - fair value hedge gain (loss)	2		(5)			5		7
Cross-currency swap contract - fair value hedge	(3)		7			2		14
Retirement plan and other retiree benefit adjustments	3		23			710		47
Translation adjustments	56(87)		~~(309)~~68			29(58)		(~~201~~133)
Provision for income taxes on components of other comprehensive income (loss)	(8)		(27)			(18)		(9)
Income tax effect on components of other comprehensive (loss) income	(4)		14			(22)		5
Total other comprehensive income (loss), net of tax	61		(284)			47		(201)
Total other comprehensive (loss) income, net of tax	(76)		68			(29)		(133)
Comprehensive income (loss)	$	~~223~~13	$	~~(874)~~227		$	~~256~~269	$	(~~947~~720)

See notes to consolidated financial statements.

Table of Contents

THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except share and per share data)	~~December~~March 31, ~~2025~~2026		June 30, 2025
ASSETS
Current assets
Cash and cash equivalents	$	3,~~082~~126	$	2,921
Accounts receivable, net	1,~~657~~746		1,530
Inventory and promotional merchandise	1,~~895~~917		2,074
Prepaid expenses and other current assets	~~524~~707		544
Total current assets	7,~~158~~496		7,069
Property, plant and equipment, net	2,~~966~~845		3,172
Other assets
Operating lease right-of-use assets	1,~~860~~786		1,952
Goodwill	2,~~137~~116		2,135
Other intangible assets, net	3,~~696~~635		3,759
Other assets	1,~~817~~786		1,805
Total other assets	9,~~510~~323		9,651
Total assets	$	19,~~634~~664	$	19,892
LIABILITIES AND EQUITY
Current liabilities
Current debt	$	3502	$	3
Accounts payable	1,~~260~~324		1,497
Operating lease liabilities	~~413~~401		406
Other accrued liabilities	3,~~595~~684		3,529
Total current liabilities	5,~~271~~911		5,435
Noncurrent liabilities
Long-term debt	76,~~319~~810		7,314
Long-term operating lease liabilities	1,~~655~~587		1,744
Other noncurrent liabilities	1,~~358~~363		1,534
Total noncurrent liabilities	109,~~332~~760		10,592
Commitments and contingencies
Equity
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at December 31, 2025 and June 30, 2025; shares issued: 486,114,024 at December 31, 2025 and 472,541,563 at June 30, 2025; Class B shares authorized: 304,000,000 at December 31, 2025 and June 30, 2025; shares issued and outstanding: 114,507,344 at December 31, 2025 and 125,542,029 at June 30, 2025	6		6
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at March 31, 2026 and June 30, 2025; shares issued: 486,253,355 at March 31, 2026 and 472,541,563 at June 30, 2025; Class B shares authorized: 304,000,000 at March 31, 2026 and June 30, 2025; shares issued and outstanding: 114,507,344 at March 31, 2026 and 125,542,029 at June 30, 2025	6		6
Paid-in capital	7,~~245~~324		7,012
Retained earnings	11,~~624~~585		11,672
Accumulated other comprehensive loss	(1,~~080~~156)		(1,127)
	17,795		17,563
	17,759		17,563
Less: Treasury stock, at cost; 238,960,893 Class A shares at December 31, 2025 and 238,316,738 Class A shares at June 30, 2025	(13,764)		(13,698)
Less: Treasury stock, at cost; 238,965,784 Class A shares at March 31, 2026 and 238,316,738 Class A shares at June 30, 2025	(13,766)		(13,698)
Total equity	43,~~031~~993		3,865
Total liabilities and equity	$	19,~~634~~664	$	19,892

See notes to consolidated financial statements.

Table of Contents

THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months EndedDecember 31,
	Nine Months EndedMarch 31,
(In millions)	~~2025~~2026		~~2024~~2025
Cash flows from operating activities
Net earnings (loss)	$	~~209~~298	$	(~~746~~587)
Adjustments to reconcile net earnings (loss) to net cash flows from operating activities:
Depreciation and amortization	~~397~~598		~~415~~619
Deferred income taxes	11(22)		(~~292~~334)
Non-cash stock-based compensation	~~182~~254		~~180~~255
Net loss on disposal of property, plant and equipment	310		25
Non-cash restructuring and other charges	1842		17
Pension and post-retirement benefit expense	4058		3758
Pension and post-retirement benefit contributions	(3954)		(5069)
Impairment of goodwill and other intangible assets	—		861
Other adjustments and non-cash items	~~(12)~~3		711
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable, net	(126)		79
Increase in accounts receivable, net	(228)		(77)
Decrease in inventory and promotional merchandise	~~179~~135		~~132~~215
Decrease (increase) in other assets, net	25		(47)
Increase in other assets, net	(104)		(33)
Decrease in accounts payable	(~~239~~168)		(~~298~~230)
Increase in other accrued and noncurrent liabilities	133		102
Increase (decrease) in other accrued and noncurrent liabilities	391		(19)
Increase (decrease) in operating lease assets and liabilities, net	4		(12)
Decrease in operating lease assets and liabilities, net	(16)		(21)
Net cash flows provided by operating activities	~~785~~1,197		~~387~~671
Cash flows from investing activities
Capital expenditures	(~~204~~306)		(~~273~~395)
Proceeds from sale of property, plant and equipment	—		3
Proceeds from property, plant and equipment insurance recoveries	10		—
Purchases of investments	—		(1)
Proceeds from the disposition of investments	3		—
Settlement of net investment hedges	(1711)		(2015)
Net cash flows used for investing activities	(~~208~~304)		(~~294~~408)
Cash flows from financing activities
Repayments of long-term debt	(23)		(~~502~~503)
Payment of deferred consideration	(~~150~~300)		—
Settlement of cross-currency swaps	919		1020
Net proceeds from stock-based compensation transactions	4653		15
Dividends paid to stockholders	(~~255~~381)		(~~366~~492)
Payments to acquire treasury stock	(6770)		(35)
Net cash flows used for financing activities	(419)		(878)
Payment for acquisition of noncontrolling interest	—		(21)
Effect of exchange rate changes on Cash and cash equivalents	3		(24)
Net cash flows used for financing activities	(682)		(1,016)
Net increase (decrease) in Cash and cash equivalents	161		(809)
Effect of exchange rate changes on Cash and cash equivalents	(6)		(11)
Net increase (decrease) in Cash and cash equivalents	205		(764)
Cash and cash equivalents at beginning of period	2,921		3,395
Cash and cash equivalents at end of period	$	3,~~082~~126	$	2,~~586~~631

See notes to consolidated financial statements.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated.

The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP in annual financial statements. The unaudited interim consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Certain prior-year amounts in the notes to the consolidated financial statements have been reclassified to conform to current-year presentation.

Management Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Descriptions of the Company’s significant accounting policies are discussed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, as relevant, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions will be reflected in the consolidated financial statements in future periods.

Currency Translation and Transactions

All assets and liabilities of foreign subsidiaries and affiliates are translated at period-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation ~~gains~~ (losses) gains, net of tax, reported as translation adjustments through other comprehensive ~~income~~ (loss) income (“OCI”) were $52(88) million and $~~(323)~~78 million, net of tax, for the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively, and $20(68) million and $(~~208~~130) million, net of tax, for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency, and these subsidiaries are not material to the Company's consolidated financial statements or liquidity as of and for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings.

The Company enters into foreign currency forward contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. Additionally, the Company enters into foreign currency forward contracts and cross-currency swap contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 4 – Derivative Financial Instruments for further discussion. The Company categorizes these instruments as entered into for purposes other than trading.

The accompanying consolidated statements of earnings (loss) include net exchange (losses) gains on foreign currency transactions of ~~less than~~ $(110) million and $2511 million for the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively, and $(615) million and $4455 million for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively.

Table of Contents

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risk

The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to department stores, duty-free retailers, specialty -multi retailers, online pure players, perfumeries and pharmacies, and salons and spas. The Company grants credit to qualified customers. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments.

Inventory and Promotional Merchandise

Inventory and promotional merchandise consists of the following:

(In millions)	~~December~~March 31, ~~2025~~2026		June 30, 2025
Raw materials	$	~~534~~571	$	631
Work in process	~~217~~239		283
Finished goods	~~1,015~~992		996
Promotional merchandise	~~129~~115		164
Total inventory and promotional merchandise	$	1,~~895~~917	$	2,074

Property, Plant and Equipment

Property, plant and equipment consists of the following:

($ in millions)

~~December~~March 31, ~~2025~~2026

June 30, 2025

Assets (Useful Life)

Land and improvements(1)

7271

Buildings and improvements (10 to 40 years)

1,~~030~~016

1,057

Machinery and equipment (3 to 20 years)

1,~~446~~447

1,429

Computer hardware and software (4 to 10 years)

2,~~084~~045

1,926

Furniture and fixtures (5 to 10 years)

~~145~~141

145

Leasehold improvements

2,~~675~~661

2,631

Construction in progress

~~316~~292

462

Total property, plant and equipment, gross

7,~~768~~673

7,725

Less accumulated depreciation and amortization

(4,~~802~~828)

(4,553)

Total property, plant and equipment, net

2,~~966~~845

3,172

(1)Land improvements are depreciated over a 10 year useful life.

Depreciation and amortization of property, plant and equipment was $~~168~~173 million and $167 million for the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively, and $~~338~~511 million and $~~336~~503 million for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively. Depreciation and amortization related to the Company’s manufacturing process is included in Cost of sales, and all other depreciation and amortization is included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings (loss).

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

	Three Months Ended December 31,				Six Months Ended December 31,
	Three Months Ended March 31,				Nine Months Ended March 31,
	2025		2024		2025		2024
	2026		2025		2026		2025
Effective rate for income taxes	5150.403	%	934.200	%	52.700	%	100.103	%
Basis-point change from the prior-year period	41,~~220~~630				45,~~260~~170

For the three months ended ~~December~~March 31, ~~2025~~2026, the increase in effective tax rate was primarily attributable to the loss before income taxes and the impact of the discrete treatment of the impairment of goodwill and other intangible assets, both during the fiscal 2025 second quarter. Further contributing to the increase in the effective tax rate was the estimated unfavorable impact of the recently enacted U.S. tax legislation known as the "One Big Beautiful Bill Act", ~~and~~resulting afrom ~~higher~~an ~~effective~~increase in tax ~~rate~~deductible oninterest ~~the~~expense ~~Company's~~which ~~foreign~~reduced ~~operations~~U.S. ~~due~~taxable toincome anand ~~unfavorable~~increased ~~impact associated with~~ the ~~establishment~~excess offoreign ~~valuation allowances against certain net deferred~~ tax ~~assets,~~credits ~~partially~~generated ~~offset~~which byrequire ~~the~~a ~~year-over-year~~valuation ~~favorable impact associated with previously issued stock-based compensation~~allowance.

For the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026, the increase in effective tax rate was primarily attributable to the loss before income taxes, the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, and the charge associated with the talcum litigation settlement agreements, each during the ~~six~~nine months ended ~~December~~March 31, ~~2024~~2025. Further contributing to the increase in the effective tax rate was the estimated unfavorable impact of the ~~recently enacted~~ One Big Beautiful Bill Act, resulting from an increase in tax deductible interest expense which reduced U.S. taxable income and increased the excess foreign tax credits generated which require a valuation allowance, a higher effective tax rate on the Company’s foreign operations due to an unfavorable impact associated with the establishment of valuation allowances against certain net deferred tax assets, partially offset by the year-over-year favorable impact associated with previously issued stock-based compensation.

On July 4, 2025, the One Big Beautiful Bill Act was enacted. This legislation includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business tax provisions. The legislation has multiple effective dates, with certain provisions becoming effective in fiscal 2026. The most impactful provision effective beginning in fiscal 2026 relates to the expansion of the business interest expense deduction limitation. The resulting increase in tax deductible interest expense reduced U.S. taxable income and increased the excess foreign tax credits generated which require a valuation allowance. The estimated unfavorable fiscal 2026 impact of the One Big Beautiful Bill Act has been included in the provision for income taxes, and the impact for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 was $2023 million and $2851 million, respectively.

In December 2021, the Organization for Economic Cooperation and Development issued "Pillar Two" Global Anti-Base Erosion model rules for countries to enact into domestic law that would establish a 15% global minimum tax applied on a country-by-country basis for multinational companies. In certain countries that have enacted legislation incorporating the global minimum tax, it became effective for the Company at the beginning of fiscal 2025. The estimated tax impact of such legislation has been included in the provision for income taxes for the three and ~~six~~nine months ended ~~December~~March 31, 2026 and 2025 and was not material.

During the fiscal 2026 second quarter, the Company received notification of the formal conclusion of the compliance process with respect to its fiscal 2024 income tax return under the U.S. Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”), which had no impact on the Company’s consolidated financial statements for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026.

As of ~~December~~March 31, ~~2025~~2026 and June 30, 2025, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $144 million and $140 million, respectively. The total amount of unrecognized tax benefits at ~~December~~March 31, ~~2025~~2026 that, if recognized, would affect the effective tax rate was $137 million. The total gross interest and penalties accrued related to unrecognized tax benefits for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 in the accompanying consolidated statements of earnings (loss) was $1 million and $34 million, respectively. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at ~~December~~March 31, ~~2025~~2026 and June 30, 2025, was $2223 million and $19 million, respectively. On the basis of the information available as of ~~December~~March 31, ~~2025~~2026, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

At ~~December~~March 31, ~~2025~~2026 and June 30, 2025, total Other assets of $1,~~817~~786 million and $1,805 million included $1,~~318~~335 million and $1,339 million of deferred tax assets, respectively.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplier Finance Programs

Under its supplier finance programs, the Company agrees to pay the banks the stated amount of confirmed invoices from its designated suppliers on the due dates of the invoices. The Company may terminate the agreements upon written notice (with notice periods ranging from 30 to 60 days) or immediately upon a breach. The supplier invoices that have been confirmed as valid under the programs require payment in full within 90 days of the invoice date.

Outstanding obligations confirmed as valid totaling $7764 million and $82 million as of ~~December~~March 31, ~~2025~~2026 and June 30, 2025, respectively, are included in Accounts payable in the accompanying consolidated balance sheets.

Other Accrued Liabilities

Other accrued liabilities consist of the following:

(In millions)	~~December~~March 31, ~~2025~~2026		June 30, 2025
Accrued employee compensation	$	~~481~~559	$	551
Accrued income taxes	~~185~~142		282
Accrued payroll and other non-income taxes	~~372~~340		307
Accrued restructuring	~~362~~427		279
Accrued sales incentives	~~343~~315		321
Accrued selling, advertising, marketing, promotion and product development	~~333~~310		287
Deferred revenue	~~327~~294		314
Sales return accrual	283		255
Other	~~909~~1,014		933
Total other accrued liabilities	$	3,~~595~~684	$	3,529

Recently Issued Accounting Standards

FASB ASU No. 2025-10 – Accounting for Government Grants Received by Business Entities (Topic 832)

In December 2025, the FASB issued authoritative guidance on the recognition, measurement, and presentation of government grants received by business entities. A government grant is defined as a transfer of a monetary asset or a tangible nonmonetary asset, other than in an exchange transaction, from a government to an entity. Government grants are recognized in earnings in the same periods that the costs for which the grant was intended to compensate are recognized. A government grant can be recognized once it is probable that both of the following conditions are met: (1) the company will comply with the conditions attached to the grant and (2) the grant will be received. The guidance differentiates between a grant related to an asset and a grant related to income, which is based on the purpose and conditions of the grant. A grant related to an asset is a government grant that is conditioned on the purchase, construction, or acquisition of an asset and is recognized on the balance sheet once the probable threshold is met and the related costs are incurred. The guidance allows companies to make an accounting policy election to use either a deferred income approach or a cost accumulation approach for recognition of a grant of an asset. A grant related to income is a government grant that does not meet the definition of a grant related to an asset and is recognized in earnings on a systematic and rational basis over the periods the related costs are recognized as expenses. The guidance allows alternative accounting policies for the financial statement presentation of a government grant, depending on the type of grant as well as new disclosure requirements for grants related to an asset and grants of tangible nonmonetary assets.

Effective for the Company: The guidance becomes effective for the Company’s first quarter of fiscal 2030. The guidance can be applied on a modified prospective basis, modified retrospective basis or a full retrospective basis. Early adoption is permitted.

Impact on consolidated financial statements: The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FASB ASU No. 2025-06 – Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40)

In September 2025, the FASB issued authoritative guidance to modernize the accounting for the costs to develop software for internal use to align better with current software development methods, such as agile programming. Capitalization of eligible costs will begin when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, entities are required to consider whether there is significant uncertainty associated with the development activities of the software. The new standard does not change the types of costs that are capitalizable once the threshold for capitalization is met. Capitalization ceases when the software project is substantially complete and ready for its intended use, which typically occurs after all substantial testing is completed. Furthermore, the guidance supersedes website development costs guidance and incorporates the recognition requirements for website-specific development costs into Subtopic 350-40. The guidance clarifies that existing disclosure requirements under ASC 360 for property, plant and equipment apply to capitalized costs under the new standard, regardless of how the internal-use software is classified on the balance sheet or how it was acquired.

Effective for the Company: The guidance becomes effective for the Company’s first quarter of fiscal 2029. The guidance can be applied prospectively, retrospectively or through a modified transition approach. Early adoption is permitted.

Impact on consolidated financial statements: The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

FASB ASU No. 2025-05 – Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326)

In July 2025, the FASB issued authoritative guidance related to the estimation of expected credit losses for current accounts receivable and current contract assets. The guidance allows entities to elect a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. Entities electing the practical expedient are still required to adjust historical loss information to reflect current conditions to the extent that historical loss information does not reflect current conditions. An entity that elects to use the practical expedient is required to disclose that fact.

Effective for the Company: The guidance becomes effective for the Company’s first quarter of fiscal 2027 and is applied prospectively. Early adoption is permitted.

Impact on consolidated financial statements: The Company iswill ~~currently~~elect ~~evaluating~~to adopt the ~~impact~~practical ~~that~~expedient beginning in the first quarter of fiscal 2027 on a prospective basis. The adoption of this ~~guidance~~practical ~~will~~expedient is not expected to have ona ~~its~~material ~~accounts~~impact ~~receivable~~on ~~balance~~the ~~and~~Company’s consolidated financial ~~statement disclosures~~statements.

FASB ASU No. 2024-03 and 2025-01 – Disaggregation of Income Statement Expenses (Subtopic 220-40)

In November 2024 and January 2025, the FASB issued authoritative guidance requiring disclosures, in a tabular format in the notes to the consolidated financial statements, on the disaggregation of relevant expense captions that are included on the face of the consolidated statement of earnings (loss) within continuing operations. The relevant expense captions are required to be disaggregated into natural expense categories including purchases of inventory, employee compensation, depreciation and intangible asset amortization. The guidance also requires certain expenses, gains or losses that require disclosure under existing U.S. GAAP, and that are recorded in a relevant expense caption on the face of the consolidated statement of earnings (loss), to be presented in the same tabular disclosure. Qualitative disclosures about any remaining amounts in relevant expense line items are required as well. In addition, companies are required to disclose the total amount of selling expenses and, on an annual basis, how it defines selling expenses.

Effective for the Company: The guidance is effective for the Company’s fiscal year ending June 30, 2028 Form 10-K and then in interim periods beginning in the Company’s first quarter of fiscal 2029. Early adoption is permitted. The guidance should be applied on a prospective basis; however, retrospective application is permitted.

Impact on consolidated financial statements: The Company is currently evaluating the impact that this guidance will have on its consolidated financial statement disclosures.

FASB ASU No. 2023-09 – Improvements to Income Tax Disclosures (Topic 740)

In December 2023, the FASB issued authoritative guidance to amend and enhance existing annual income tax disclosures primarily focusing on two reporting areas: (1) greater disaggregation of information in the effective tax rate reconciliations and (2) disclosure of income taxes paid, disaggregated by applicable jurisdiction.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Companies are required to use specific categories to prepare and disclose a tabular rate reconciliation (using both percentages and reporting currency amounts) of:

•the reported income tax expense (or benefit) from continuing operations and the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal income tax rate of the jurisdiction of domicile; and

•reconciling items within certain categories that are equal to or greater than a specified quantitative threshold, including the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items.

The guidance also requires companies to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign jurisdictions including individual jurisdictions with amounts paid equal to or greater than a specified quantitative threshold. The guidance also codifies existing SEC rules that require companies to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign as well as income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign jurisdictions.

Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2026 Form 10-K. Early adoption is permitted. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively.

Impact on consolidated financial statements – The Company iswill ~~currently~~apply ~~evaluating~~ the ~~impact~~disclosure ~~that~~requirements ~~this~~as required by the guidance ~~will~~beginning ~~have~~with onthe ~~its~~June ~~consolidated~~30, ~~financial~~2026 ~~statement~~Form ~~disclosures~~10-K.

NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company assigns goodwill at the time of acquisition to a reporting unit, which is one level below the Company's operating segments. The skin care, makeup, fragrance and hair care product categories are the Company's operating segments.

The following table presents goodwill by product category and the related change in the carrying amount:

(In millions)	Skin Care		Makeup		Fragrance		Hair Care		Total
Balance as of June 30, 2025
Goodwill	$	1,616	$	1,116	$	260	$	353	$	3,345
Accumulated impairments	(435)		(745)		(30)		—		(1,210)
	1,181		371		230		353		2,135
Translation adjustments, goodwill	(1447)		—		—(2)		—		(1449)
Translation adjustments, accumulated impairments	1630		—		—		—		1630
	2		—		—		—		2
	(17)		—		(2)		—		(19)
Balance as of December 31, 2025
Balance as of March 31, 2026
Goodwill	1,~~602~~569		1,116		~~260~~258		353		3,~~331~~296
Accumulated impairments	(~~419~~405)		(745)		(30)		—		(1,~~194~~180)
Total goodwill	$	1,~~183~~164	$	371	$	~~230~~228	$	353	$	2,~~137~~116

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Intangible Assets

Other intangible assets consist of the following:

December 31, 2025

June 30, 2025

March 31, 2026

June 30, 2025

(In millions)

GrossCarryingValue

AccumulatedAmortization

Total NetBookValue

GrossCarryingValue

AccumulatedAmortization

Total NetBookValue

Amortizable intangible assets:

Customer lists and other

1,~~942~~893

1,~~369~~360

~~573~~533

1,984

1,348

636

Non-amortizable intangible assets:

Trademarks

3,~~123~~102

3,123

Total other intangible assets, net

3,~~696~~635

3,759

The aggregate amortization expense related to amortizable intangible assets was $2726 million and $3534 million for the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively, and $5379 million and $71105 million for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively.

The estimated aggregate amortization expense for the remainder of fiscal 2026 and for each of the next four fiscal years is as follows:

	Fiscal
(In millions)	2026		2027		2028		2029		2030
Estimated aggregate amortization expense	$	5123	$	8785	$	7068	$	6967	$	6765

Impairment Analysis During the ~~Six~~Nine Months Ended ~~December~~March 31, ~~2024~~2025

During the fiscal 2025 second quarter, the TOM FORD brand experienced lower-than-expected growth within key geographic regions and channels, including in mainland China, Asia travel retail and Hong Kong SAR. Also during the fiscal 2025 second quarter, the Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels. As a result, the Company made revisions to the internal forecasts relating to its TOM FORD brand and Too Faced reporting unit. Additionally, there were increases in the weighted average cost of capital for both the TOM FORD brand and Too Faced reporting unit as compared to the prior-year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024.

The Company concluded that the changes in circumstances in the TOM FORD brand and Too Faced reporting unit, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of the TOM FORD trademark and the Too Faced trademark and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the TOM FORD and Too Faced trademarks and Too Faced goodwill as well as a recoverability test for the Too Faced long-lived assets as of December 31, 2024. The Company concluded that the carrying value of the trademark intangible assets exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method, and recorded an impairment charge of $773 million for TOM FORD and $75 million for Too Faced. The Company concluded that the carrying amounts of the long-lived assets for Too Faced were recoverable. Additionally, as a result of the interim impairment review, the remaining carrying value of Too Faced’s goodwill was not recoverable and the Company recorded an impairment charge of $13 million, reducing the carrying value to zero. The significant assumptions used in the relief-from-royalty method include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates. The most significant unobservable input used to estimate the fair value of the TOM FORD and Too Faced trademark intangible assets was the weighted average cost of capital, which was 11.5% and 14%, respectively.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the impairment charges for the ~~three~~nine ~~and six~~ months ended ~~December~~March 31, ~~2024~~2025 and the remaining trademark and goodwill carrying values as of ~~December~~March 31, ~~2024~~2025, for the TOM FORD brand and Too Faced reporting unit, are as follows:

			Impairment Charges(1)	~~Impairment Charges(1)~~								Carrying Value		~~Carrying Value~~
(In millions)		Nine Months EndedMarch 31, 2025	~~Three and Six Months EndedDecember 31, 2024~~					As of March 31, 2025		~~As of December 31, 2024~~
Brand/Reporting Unit	Geographic Region			Trademark		~~Trademark~~		Goodwill		~~Goodwill~~		Trademark(2)		~~Trademark(2)~~		Goodwill		~~Goodwill~~
TOM FORD	The Americas			$	773	$	~~773~~	$	—	$	—	$	1,805	$	~~1,805~~	$	—	$	—
Too Faced	The Americas			75		75		13		13		112		~~112~~		—		—
Total				$	848	$	~~848~~	$	13	$	13	$	1,917	$	~~1,917~~	$	—	$	—

(1)The date of the fair value measurement for the TOM FORD and Too Faced trademark intangible assets and Too Faced reporting unit was December 31, 2024.

(2)The carrying values of the trademark intangible assets, subsequent to the impairment charges, are equal to their fair values. The carrying values as of March 31, 2025 are consistent with the carrying values at the fair value measurement date.

The impairment charge related to the TOM FORD trademark intangible asset for the ~~three~~nine ~~and six~~ months ended ~~December~~March 31, ~~2024~~2025 of $773 million was reflected in the fragrance, makeup and other product categories of $549 million, $170 million and $54 million, respectively. The trademark and goodwill impairment charges related to Too Faced were reflected in the makeup product category.

NOTE 3 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

Restructuring Program Component of the Profit Recovery and Growth Plan

As announced on November 1, 2023, the Company launched the Profit Recovery and Growth Plan ("PRGP") to help progressively rebuild its profit margins in fiscal years 2025 and 2026.

As a component of the PRGP, on February 5, 2024, the Company announced a two-year restructuring program. The Company committed to this course of action on February 1, 2024.

After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, the Company committed to the expansion of the PRGP, including an expansion of the restructuring program.

The expanded component of the restructuring program began during the Company’s fiscal 2025 third quarter. The focus of the overall expanded restructuring program (collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models. Cumulative initiatives under the Restructuring Program are expected to be approved by the end of fiscal 2026 and substantially completed by the end of fiscal 2027.

In connection with the Restructuring Program, ~~as of December 31, 2025,~~ the Company now estimates a final net reduction in the range of approximately 59,~~800~~000 to 710,000 positions globally, ~~which~~an isincrease ~~about~~from ~~9%-11%~~the ofprevious ~~its~~range ~~positions including temporary and part-time employees as~~ of ~~June 30~~5,800 ~~2023~~to 7,000. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.

The Company now expects that the Restructuring Program will result in restructuring and other charges totaling between $1,500 million and $1,700 million, before taxes, an increase from the previous range of $1,200 million and $1,600 million, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.

Additional information relating to the Company's Profit Recovery and Growth Plan and related Restructuring Program is included in Notes to Consolidated Financial Statements, Note 8 – Charges Associated with Restructuring and Other Activities in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restructuring Program Approvals

Cumulative charges for initiatives approved by the Company in connection with the Restructuring Program as of ~~December~~March 31, ~~2025~~2026 and through ~~January~~April 3029, 2026, were:

	SalesReturns(included inNet Sales)		Cost of Sales		Operating Expenses				Total
(In millions)					RestructuringCharges		OtherCharges
Total Charges (Adjustments) Approved
Cumulative charges approved through June 30, 2025	$	4	$	10	$	552	$	114	$	680
Six months ended December 31, 2025	(1)		—		291		258		548
Nine months ended March 31, 2026	11		(7)		424		259		687
Cumulative charges approved through December 31, 2025	3		10		843		372		1,228
Cumulative charges approved through March 31, 2026	15		3		976		373		1,367
January 1, 2026 - January 30, 2026	2		(1)		22		(2)		21
April 1, 2026 - April 29, 2026	5		4		42		(1)		50
Cumulative charges approved through January 30, 2026	$	5	$	9	$	865	$	370	$	1,249
Cumulative charges approved through April 29, 2026	$	20	$	7	$	1,018	$	372	$	1,417

Included in the above table, cumulative restructuring charges for initiatives approved by the Company in connection with the Restructuring Program as of ~~December~~March 31, ~~2025~~2026 and through ~~January~~April 3029, 2026, by major cost type were:

(In millions)	Employee-RelatedCosts		Asset-RelatedCosts		ContractTerminations		Other ExitCosts		Total
Restructuring Charges (Adjustments) Approved
Cumulative charges approved through June 30, 2025	$	512	$	14	$	3	$	23	$	552
Six months ended December 31, 2025	187		74		23		7		291
Nine months ended March 31, 2026	315		77		23		9		424
Cumulative charges approved through December 31, 2025	699		88		26		30		843
Cumulative charges approved through March 31, 2026	827		91		26		32		976
January 1, 2026 - January 30, 2026	22		1		—		(1)		22
April 1, 2026 - April 29, 2026	35		3		1		3		42
Cumulative charges approved through January 30, 2026	$	721	$	89	$	26	$	29	$	865
Cumulative charges approved through April 29, 2026	$	862	$	94	$	27	$	35	$	1,018

Specific actions taken since the Restructuring Program inception ~~to drive future sales growth and productivity to rebuild gross and operating margin profitability~~ include:

•Enterprise Business Services – The Company approved an initiative in connection with the transformation of its global operating model to (i) consolidate certain service providers, (ii) expand outsourced services, and (iii) redesign and standardize the related end-to-end business processes, leveraging advanced technology to improve productivity. These actions will primarily result in other charges, including professional services related to the design, implementation and execution of the initiative. These charges include transition and transformation support, process design, and costs to support the global project management office for this initiative. These actions will also result in employee severance through a net reduction in workforce and contract termination charges.

•Value Chain Optimization – The Company approved initiatives to reduce spans and layers and right-size organizational capability within its supply chain and research and development functions. These actions will primarily result in employee severance through a net reduction in workforce, as well as asset-related costs and costs to decommission and relocate activities.

•Enabling Function Re-Invention – The Company approved initiatives to reorganize and right-size various corporate functions. Additionally, as a result of the reorganization and right-sizing of various areas of the organization as previously approved under the Restructuring Program, the Company approved an initiative to exit an office lease. These activities will primarily result in employee severance through a net reduction in workforce and asset-related costs.

•Future of Brand-led Model – The Company approved initiatives to reorganize and simplify its global marketing and creative operating model, as well as redesign spans and layers in its marketing, creative and other functions within the brand and product category structures, to make them leaner, faster and more agile and drive greater efficiency and effectiveness. These activities will primarily result in employee severance through a net reduction in workforce.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

•Go-to-Market Operating Model Acceleration – The Company approved initiatives to optimize and right-size the organizational structure within its geographic regions to drive greater efficiency and effectiveness, as well as optimize the selling model and exit unprofitable brands from specific markets and distribution channels. These activities will primarily result in employee severance through a net reduction in workforce, ~~inventory write-offs,~~ as well as costs associated with sales returns and inventory write-offs.

•Digital Organization Transformation – The Company approved initiatives to reorganize and right-size its technology functions, which support its internal enterprise and commercial capabilities, to create a leaner, faster, more effective and more agile technology organization. These activities will primarily result in employee severance through a net reduction in workforce, as well as asset-related costs.

Once the relevant accounting criteria have been met, the Company expects to record cumulative restructuring and other charges of approximately $1,~~249~~417 million (before tax) in connection with ~~these~~the initiatives approved to date, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.

Restructuring Program Restructuring and Other Charges

The Company classifies restructuring charges as follows:

Employee-Related Costs – Employee-related costs are primarily comprised of severance and other post-employment benefit costs, calculated based on salary levels, prior service and other statutory minimum benefits, if applicable.

Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets (including operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative.

Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration.

Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and outplacement for separated employees.

The Company classifies other charges associated with restructuring activities as follows:

Sales Returns and Cost of Sales – Product returns (offset by the related cost of sales) and inventory write-offs or write-downs as a direct result of an approved restructuring initiative to exit certain businesses or locations ~~will~~are be recorded as a component of Net sales and/or Cost of sales when estimable and reasonably assured.

Other Charges – Other charges related to the design and implementation of approved initiatives, ~~which~~ are charged to Operating expenses as incurred and primarily include the following:

•Consulting and other professional services for transition support, transformational organization design of the future structures and processes, as well as the implementation and execution thereof;

•Temporary labor backfill;

•Costs to establish and maintain a Project Management Office for the duration of the Restructuring Program, including internal costs for employees dedicated solely to project management activities, and consulting services to assist with business case development and execution; and

•Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative.

The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total cumulative charges recorded associated with restructuring and other activities for the Restructuring Program were:

	SalesReturns(included inNet Sales)		Cost of Sales		Operating Expenses				Total
(In millions)					RestructuringCharges		OtherCharges
Total Charges
Cumulative charges through June 30, 2025	$	—	$	9	$	524	$	77	$	610
Three months ended September 30, 2025	—		(2)		72		17		87
Six months ended December 31, 2025	—		(2)		224		72		294
Three months ended December 31, 2025	—		—		152		55		207
Three months ended March 31, 2026	—		—		159		65		224
Cumulative charges through December 31, 2025	$	—	$	7	$	748	$	149	$	904
Cumulative charges through March 31, 2026	$	—	$	7	$	907	$	214	$	1,128

Included in the above table, cumulative restructuring charges recorded by the Company in connection with the Restructuring Program as of ~~December~~March 31, ~~2025~~2026, by major cost type were:

(In millions)	Employee-RelatedCosts		Asset-RelatedCosts		ContractTerminations		Other ExitCosts		Total
Restructuring Charges
Cumulative charges through June 30, 2025	$	503	$	13	$	3	$	5	$	524
Three months ended September 30, 2025	66		5		—		1		72
Six months ended December 31, 2025	180		20		21		3		224
Three months ended December 31, 2025	114		15		21		2		152
Three months ended March 31, 2026	128		30		—		1		159
Cumulative charges through December 31, 2025	$	683	$	33	$	24	$	8	$	748
Cumulative charges through March 31, 2026	$	811	$	63	$	24	$	9	$	907

Changes in accrued restructuring charges from the Restructuring Program for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 were:

(In millions)	Employee-RelatedCosts		Asset-RelatedCosts		ContractTerminations		Other ExitCosts		Total
Balance at June 30, 2025	$	369	$	—	$	2	$	—	$	371
Charges	~~180~~308		2050		21		34		~~224~~383
Cash payments	(~~133~~192)		—		(12)		(34)		(~~137~~198)
Non-cash asset-related costs	—		(2045)		—		—		(2045)
Translation and other adjustments	(37)		—		1		$	—	(26)
Balance at December 31, 2025	$	413	$	—	$	23	$	—	$	436
Balance at March 31, 2026	$	478	$	5	$	22	$	—	$	505

Accrued restructuring charges at ~~December~~March 31, ~~2025~~2026 relating to the Restructuring Program are expected to result in cash expenditures funded from cash provided by operations of approximately $~~214~~227 million, $~~197~~254 million and $2524 million for the remainder of fiscal 2026 and for fiscal 2027 and 2028, respectively.

Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.

NOTE 4 – DERIVATIVE FINANCIAL INSTRUMENTS

The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. The Company does not utilize derivative financial instruments for trading or speculative purposes. At December 31, 2025, the notional amount of derivatives not designated as hedging instruments was $3,010 million.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – DERIVATIVE FINANCIAL INSTRUMENTS

The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. The Company does not utilize derivative financial instruments for trading or speculative purposes. At March 31, 2026, the notional amount of derivatives not designated as hedging instruments was $3,335 million.

Fair Value Hedges

The Company enters into interest rate contracts to manage the exposure to interest rate fluctuations on its funded indebtedness. At ~~December~~March 31, ~~2025~~2026, the Company has interest rate swap contracts, with notional amounts totaling $700 million, $300 million and $600 million, to effectively convert the fixed rate interest on its 2030 Senior Notes, 2031 Senior Notes and 2034 Senior Notes, respectively, to variable interest rates based on the Secured Overnight Financing Rate ("SOFR") plus a margin. These interest rate swap agreements are designated as fair value hedges of the related long-term debt, and the changes in the fair value of the interest rate swap ~~agreements~~contracts are exactly offset by the change in the fair value of the underlying long-term debt.

The Company enters into cross-currency swap contracts to manage the exposure of foreign exchange rate fluctuations on its intercompany foreign currency denominated debt. At ~~December~~March 31, ~~2025~~2026, the Company has cross-currency swap contracts with notional amounts totaling $491 million, to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. The cross-currency swap contracts are designated as fair value hedges of the related intercompany debt, and the gains and losses representing hedge components included in the assessment of effectiveness are presented in the same income statement line item as the earnings effect of the hedged transaction in the consolidated statements of earnings (loss). Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction in the consolidated statements of earnings (loss). Any difference between the changes in the fair value of the excluded components and amounts recognized in earnings (loss) will be recognized in Accumulated Other Comprehensive Loss ("AOCI") in the accompanying consolidated balance sheet.

The estimated net gain on the Company’s derivative instruments designated as fair value hedges as of ~~December~~March 31, ~~2025~~2026 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $1415 million. The accumulated net gain on derivative instruments designated as fair value hedges in AOCI was $129 million and $7 million as of ~~December~~March 31, ~~2025~~2026 and June 30, 2025, respectively.

Cash Flow Hedges

The Company enters into foreign currency forward contracts to hedge anticipated transactions and receivables and payables denominated in foreign currencies, for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries. The foreign currency forward contracts entered into to hedge anticipated transactions and receivables and payables denominated in foreign currencies have been designated as cash flow hedges and have varying maturities through the end of June 2027. Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes forward points in the effectiveness assessment. At ~~December~~March 31, ~~2025~~2026, the Company had cash flow hedges outstanding with a notional amount totaling $1,~~025~~747 million.

For foreign currency forward contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses in AOCI are reclassified to Net sales when the underlying forecasted transaction occurs. If it is probable that the forecasted transaction will no longer occur, then any gains or losses in AOCI are reclassified to current-period Net sales. As of ~~December~~March 31, ~~2025~~2026, the Company’s foreign currency forward contracts were highly effective.

The Company may enter into interest rate forward contracts to hedge anticipated issuance of debt for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of interest rate movements on the cost of debt issuance.

The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of December 31, 2025 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $18 million. The accumulated net gain (loss) on derivative instruments designated as cash flow hedges in AOCI was $11 million and $(13) million as of December 31, 2025 and June 30, 2025, respectively.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of March 31, 2026 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $7 million. The accumulated net gain (loss) on derivative instruments designated as cash flow hedges in AOCI was $26 million and $(13) million as of March 31, 2026 and June 30, 2025, respectively.

Net Investment Hedges

The Company enters into foreign currency forward contracts and cross-currency swap contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations. Forward points and cross-currency basis spreads, respectively, are excluded from the effectiveness assessment and are recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the Company’s net investment in these foreign operations. The net investment hedge contracts have varying maturities through the end of November 2029. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At ~~December~~March 31, ~~2025~~2026, the Company had net investment hedges outstanding with notional amounts totaling $1,~~077~~118 million.

Credit Risk

As a matter of policy, the Company only enters into derivative contracts with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $~~118~~164 million at ~~December~~March 31, ~~2025~~2026. To manage this risk, the Company has strict counterparty credit guidelines that are continually monitored. Accordingly, management believes risk of loss under these hedging contracts is remote.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows:

	Asset Derivatives					Liability Derivatives
		Fair Value(1)					Fair Value(1)
(In millions)	Balance SheetLocation	~~December~~March 31, ~~2025~~2026		June 30, 2025		Balance SheetLocation	~~December~~March 31, ~~2025~~2026		June 30, 2025
Derivatives Designated as Hedging Instruments:
Foreign currency forward contracts(2)	Prepaid expenses and other current assets; Other assets	$	726	$	7	Other accrued liabilities	$	3023	$	82
Cross-currency swap contracts(3)	Prepaid expenses and other current assets; Other assets	~~107~~119		50		Other accrued liabilities	—		15
Interest rate contracts	Prepaid expenses and other current assets	—		—		Other accrued liabilities	~~102~~111		104
Total Derivatives Designated as Hedging Instruments		~~114~~145		57			~~132~~134		201
Derivatives Not Designated as Hedging Instruments:
Foreign currency forward contracts	Prepaid expenses and other current assets	419		25		Other accrued liabilities	1319		15
Total derivatives		$	~~118~~164	$	82		$	~~145~~153	$	216

(1)See Note 5 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.

(2)Included in the asset derivatives for the foreign currency forward contracts at ~~December~~March 31, ~~2025~~2026 is $13 million, classified within Other assets in the accompanying consolidated balance sheets. There were no amounts classified in Other assets at June 30, 2025.

(3)Included in the asset derivatives for the cross-currency swap contracts at ~~December~~March 31, ~~2025~~2026 and June 30, 2025 is approximately $8796 million and $40 million, respectively, classified within Other assets in the accompanying consolidated balance sheets.

1819

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows:

	Amount of Gain (Loss)Recognized in OCI onDerivatives				Location of Gain (Loss) Reclassifiedfrom AOCI intoEarnings (Loss)	Amount of Gain (Loss)Reclassified from AOCI into Earnings (Loss)(1)
	Amount of Gain (Loss)Recognized in OCI on Derivatives				Location of Gain (Loss) Reclassifiedfrom AOCI into Earnings	Amount of Gain (Loss)Reclassified from AOCI into Earnings(1)
	Three Months EndedDecember 31,					Three Months EndedDecember 31,
	Three Months EndedMarch 31,					Three Months EndedMarch 31,
(In millions)	~~2025~~2026		~~2024~~2025			~~2025~~2026		~~2024~~2025
Derivatives in Cash Flow Hedging Relationships:
Foreign currency forward contracts	$	—7	$	70(17)	Net sales	$	(98)	$	147
Interest rate contracts	—		—		Interest expense	1—		1—
Total cash flow hedges	—7		70(17)			(8)		157
Derivatives in Net Investment Hedging Relationships(2):
Foreign currency forward contracts(3)	~~(2)~~14		86(29)			—		—
Cross-currency swap contracts(4)	205		2(6)			—		—
Total net investment hedges	1819		88(35)			—		—
Total derivatives	$	1826	$	~~158~~(52)		$	(8)	$	157

(1)There was no amount reclassified into the accompanying consolidated statements of earnings (loss) as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period.

(2)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.

(3)For each of the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, the gain recognized in the accompanying consolidated statements of earnings (loss) from foreign currency forward contracts related to the amount excluded from effectiveness testing was $34 million ~~and $7 million, respectively~~.

(4)For each of the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, the gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing was $3 million ~~and $1 million, respectively~~.

1920

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Amount of Gain (Loss)Recognized in OCI onDerivatives				Location of Gain (Loss) Reclassifiedfrom AOCI intoEarnings (Loss)	Amount of Gain (Loss)Reclassified from AOCI into Earnings (Loss)(1)
	Amount of Gain (Loss)Recognized in OCI on Derivatives				Location of Gain (Loss) Reclassifiedfrom AOCI into Earnings (Loss)	Amount of Gain (Loss)Reclassified from AOCI into Earnings (Loss)(1)
	Six Months Ended December 31,					Six Months Ended December 31,
	Nine Months Ended March 31,					Nine Months Ended March 31,
(In millions)	~~2025~~2026		~~2024~~2025			~~2025~~2026		~~2024~~2025
Derivatives in Cash Flow Hedging Relationships:
Foreign currency forward contracts	$	1623	$	236	Net sales	$	(917)	$	2431
Interest rate contracts	—		—		Interest expense	1		1
Total cash flow hedges	1623		236			(816)		2532
Derivatives in Net Investment Hedging Relationships(2):
Foreign currency forward contracts(3)	~~(2)~~12		22(7)			—		—
Cross-currency swap contracts(4)	3540		2(4)			—		—
Total net investment hedges	3352		24(11)			—		—
Total derivatives	$	4975	$	47(5)		$	(816)	$	2532

(2)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.

(3)For the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, the gain recognized in the accompanying consolidated statements of earnings (loss) from foreign currency forward contracts related to the amount excluded from effectiveness testing was $610 million and $1418 million, respectively.

(4)For the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, the gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing was $69 million and $14 million, respectively.

		Amount of Gain (Loss) Recognized in Earnings (Loss) on Derivatives
	Location of Gain (Loss) Recognized in Earnings (Loss) on Derivatives	Three Months EndedDecember 31,				Six Months EndedDecember 31,
	Location of Gain (Loss)Recognized in Earnings (Loss) on Derivatives	Three Months EndedMarch 31,				Nine Months EndedMarch 31,
(In millions)		~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
Derivatives in Fair Value Hedging Relationships:
Cross-currency swap contracts (1)	Selling, general and administrative	$	22	$	43	$	34	$	(9)
Cross-currency swap contracts(1)	Selling, general and administrative	$	8	$	(20)	$	42	$	(29)
Interest rate contracts (2)	Interest expense	$	(3)	$	(34)	$	1	$	7
Interest rate contracts(2)	Interest expense	$	(8)	$	21	$	(7)	$	28

(1)Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing for each of the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 was $~~4 million and $~~5 million, ~~respectively,~~ and for each of the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 was $914 million.

(2)Changes in the fair value of the interest rate contracts are exactly offset by the change in the fair value of the underlying long-term debt.

2021

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional information regarding the cumulative amount of fair value ~~hedging~~hedge gain (loss) recognized in the accompanying consolidated statements of earnings (loss) for items designated and qualifying as hedged items in fair value hedges is as follows:

(In millions)

Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included

Carrying Amount of theHedged ~~Liabilities~~Liability

Cumulative Amount of FairValue Hedging Gain (Loss)Included in the Carrying Amount of ~~the~~theHedged ~~Hedged~~ Liability

December 31, 2025

March 31, 2026

Long-term debt

1,~~488~~479

(~~102~~111)

Intercompany debt

—

7684

Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:

Three Months Ended December 31,

Three Months Ended March 31,

2025

2024

2026

2025

(In millions)

Net Sales

Selling, General and Administrative

InterestExpense

Net Sales

Selling, General and Administrative

InterestExpense

Total amounts of income and expense line items presented in the accompanying consolidated statements of earnings (loss) in which the effects of fair value and cash flow hedges are recorded

43,~~229~~712

2,~~627~~279

8582

43,~~004~~550

2,~~585~~258

9087

The effects of fair value and cash flow hedging relationships:

Gain (loss) on fair value hedge relationships – interest rate contracts:

Hedged item

N/A

34(21)

Derivatives designated as hedging instruments

N/A

(38)

N/A

~~(34)~~21

Gain (loss) on fair value hedge relationships – cross-currency swap contracts:

Hedged item

N/A

(228)

N/A

~~(43)~~20

N/A

Derivatives designated as hedging instruments

N/A

228

N/A

43(20)

N/A

Gain on cash flow hedge relationships – interest rate contracts:

Amount of gain reclassified from AOCI

N/A

1—

N/A

1—

Gain (loss) on cash flow hedge relationships – foreign currency forward contracts:

(Loss) gain on cash flow hedge relationships – foreign currency forward contracts:

Amount of (loss) gain reclassified from AOCI

(98)

N/A

147

N/A

N/A (Not applicable)

2122

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended December 31,

Nine Months Ended March 31,

2025

2024

2026

2025

(In millions)

Net Sales

Selling, General and Administrative

InterestExpense

Net Sales

Selling, General and Administrative

InterestExpense

Total amounts of income and expense line items presented in the accompanying consolidated statements of earnings (loss) in which the effects of fair value and cash flow hedges are recorded

711,~~710~~422

47,~~923~~202

~~171~~253

710,~~365~~915

47,~~883~~141

~~182~~269

The effects of fair value and cash flow hedging relationships:

Gain (loss) on fair value hedge relationships – interest rate contracts:

Hedged item

N/A

~~(1)~~7

N/A

(728)

Derivatives designated as hedging instruments

N/A

1(7)

N/A

728

Gain (loss) on fair value hedge relationships – cross-currency swap contracts:

Hedged item

N/A

(3442)

N/A

929

N/A

Derivatives designated as hedging instruments

N/A

3442

N/A

(929)

N/A

Gain on cash flow hedge relationships – interest rate contracts:

Amount of gain reclassified from AOCI

N/A

Gain (loss) on cash flow hedge relationships – foreign currency forward contracts:

(Loss) gain on cash flow hedge relationships – foreign currency forward contracts:

Amount of (loss) gain reclassified from AOCI

(917)

N/A

2431

N/A

N/A (Not applicable)

The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows:

Amount of Gain (Loss)Recognized in Earnings (Loss) on Derivatives

Location of Gain (Loss) Recognized in Earnings (Loss) on Derivatives

Three Months EndedDecember 31,

Six Months EndedDecember 31,

Location of Gain (Loss)Recognized in Earnings (Loss) on Derivatives

Three Months EndedMarch 31,

Nine Months EndedMarch 31,

(In millions)

~~2025~~2026

~~2024~~2025

~~2025~~2026

~~2024~~2025

Derivatives Not Designated as Hedging Instruments:

Foreign currency forward contracts

Selling, general and administrative

5(14)

31(6)

217

(1925)

2223

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's derivative instruments are subject to enforceable master netting agreements. These agreements permit the net settlement of these contracts on a per-institution basis; however, the Company records the fair value on a gross basis on its consolidated balance sheets based on maturity dates, including those subject to master netting arrangements. The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties:

	As of December 31, 2025						As of June 30, 2025
	March 31, 2026						June 30, 2025
(In millions)	Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet		Contracts Subject to Netting		Net Amounts of Assets / (Liabilities)		Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet		Contracts Subject to Netting		Net Amounts of Assets / (Liabilities)
Derivative Financial Instruments
Derivative assets	$	~~118~~164	$	(3455)	$	84109	$	82	$	(60)	$	22
Derivative liabilities	(~~145~~153)		3455		(~~111~~98)		(216)		60		(156)
Total derivatives	$	~~(27)~~11	$	—	$	~~(27)~~11	$	(134)	$	—	$	(134)

NOTE 5 – FAIR VALUE MEASUREMENTS

The Company records certain of its financial assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The accounting for fair value measurements must be applied to nonfinancial assets and nonfinancial liabilities that require initial measurement or remeasurement at fair value, which principally consist of assets and liabilities acquired through business combinations and goodwill, indefinite-lived intangible assets and long-lived assets for the purposes of calculating potential impairment. The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:

Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date.

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

2324

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of ~~December~~March 31, ~~2025~~2026:

(In millions)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	~~647~~879	$	—	$	—	$	~~647~~879
Foreign currency forward contracts	—		1145		—		1145
Cross-currency swap contracts	—		~~107~~119		—		~~107~~119
Total	$	~~647~~879	$	~~118~~164	$	—	$	~~765~~1,043
Liabilities:
Foreign currency forward contracts	$	—	$	4342	$	—	$	4342
Interest rate contracts	—		~~102~~111		—		~~102~~111
Total	$	—	$	~~145~~153	$	—	$	~~145~~153

The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025:


(In millions)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	727	$	—	$	—	$	727
Foreign currency forward contracts	—		32		—		32
Cross-currency swap contracts	—		50		—		50

Total	$	727	$	82	$	—	$	809

Liabilities:
Foreign currency forward contracts	$	—	$	97	$	—	$	97
Interest rate contracts	—		104		—		104
Cross-currency swap contracts	—		15		—		15
Total	$	—	$	216	$	—	$	216

The estimated fair values of the Company’s financial instruments not measured at fair value on a recurring basis are as follows:

	December 31, 2025				June 30, 2025
	March 31, 2026				June 30, 2025
(In millions)	CarryingAmount		FairValue		CarryingAmount		FairValue
Current and long-term debt	$	7,~~322~~312	$	6,~~902~~734	$	7,317	$	6,794
Deferred consideration payable	$	172	$	174	$	322	$	323
Notes payable and deferred consideration	$	88	$	87	$	322	$	323

24The following methods and assumptions were used to estimate the fair value of the Company’s financial instruments for which it is practicable to estimate that value:

Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy). Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of these cash equivalent instruments.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign currency forward contracts – The ~~following~~fair ~~methods~~values ~~and~~of ~~assumptions~~the Company’s foreign currency forward contracts were ~~used~~determined tousing ~~estimate~~an ~~the~~industry-standard ~~fair~~valuation ~~value~~model, ofwhich ~~the~~is ~~Company’s~~based ~~financial~~on ~~instruments~~an ~~for~~income ~~which~~approach. The itsignificant isobservable ~~practicable~~inputs to ~~estimate~~the ~~that~~model, ~~value:~~such as swap yield curves, SOFR forward curves and currency spot and forward rates, were obtained from an independent pricing service.

Foreign currency forward contracts – The fair values of the Company’s foreign currency forward contracts were determined using an industry-standard valuation model, which is based on an income approach. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from an independent pricing service. To determine the fair value of contracts under the model, the difference between the contract price and the current forward rate was discounted using SOFR forward curves.

Cross-currency swap contracts – The fair values of the Company’s cross-currency swap contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from independent pricing services.

Interest rate contracts – The fair values of the Company’s interest rate contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as treasury yield curves, swap yield curves and SOFR forward curves, were obtained from independent pricing services.

Current and long-term debt – The fair value of the Company’s debt was estimated based on the current rates offered to the Company for debt with the same remaining maturities. To a lesser extent, debt also includes finance lease obligations for which the carrying amount approximates the fair value. The Company’s debt is classified within Level 2 of the valuation hierarchy.

~~Deferred~~Notes ~~consideration~~ payable and deferred consideration – ~~The~~Notes payable and deferred consideration ~~payable~~as ~~consists~~of March 31, 2026 consist primarily of obligations to a vendor related to deferred service payments, and as of June 30, 2025 consist primarily of deferred payments associated with the fiscal 2023 fourth quarter acquisition of TOM FORD, which was paid during the fiscal 2026 first and third quarters. The fair value of ~~the~~notes ~~payments~~payable ~~treated~~and as deferred consideration ~~payable~~ are calculated based on the net present value of cash payments using an estimated borrowing rate based on quoted prices for a similar liability. The Company’s notes payable and deferred consideration ~~payable~~are is classified within Level 2 of the valuation hierarchy.

NOTE 6 – REVENUE RECOGNITION

Disaggregation of net sales by the Company's geographic regions(1) are as follows:

Three Months EndedDecember 31,

Six Months Ended December 31,

Three Months EndedMarch 31,

Nine Months EndedMarch 31,

(In millions)

~~2025~~2026

~~2024~~2025

~~2025~~2026

~~2024~~2025

The Americas

1,~~218~~076

1,~~209~~063

23,~~392~~468

23,~~406~~469

Europe, United Kingdom and Ireland and Emerging Markets ("EUKEM")

~~1,183~~859

~~1,085~~785

2,~~084~~943

12,~~953~~738

Asia/Pacific(2)

~~900~~1,003

~~888~~1,006

12,~~773~~776

12,~~694~~700

Mainland China

~~928~~774

~~822~~696

12,~~460~~234

12,~~312~~008

4,229

4,004

7,709

7,365

3,712

3,550

11,421

10,915

Returns associated with restructuring and other activities

—

Net sales

43,~~229~~712

43,~~004~~550

711,~~710~~422

710,~~365~~915

(1)The Company has reorganized its geographic regions, effective July 1, 2025 and has presented the information for the three and ~~six~~ nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 under this new basis.

(2)The net sales from the Company’s travel retail business are included in the Asia/Pacific region.

25Accounts Receivable

Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $43 million and $38 million as of March 31, 2026 and June 30, 2025, respectively. Payment terms are short-term in nature and are generally less than one year.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable

Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $53 million and $38 million as of December 31, 2025 and June 30, 2025, respectively. Payment terms are short-term in nature and are generally less than one year.

Changes in the allowance for credit losses are as follows:

(In millions)	~~December~~March 31, ~~2025~~2026
Balance at June 30, 2025	$	26
Provision for expected credit losses	1415
Write-offs, net & other	—(12)
Balance at December 31, 2025	$	40
Balance at March 31, 2026	$	29

The remaining balance of the allowance for doubtful accounts and customer deductions of $1314 million and $12 million as of ~~December~~March 31, ~~2025~~2026 and June 30, 2025, respectively, relates to non-credit losses, which are primarily due to customer deductions.

Deferred Revenue

Changes in deferred revenue are as follows:

	Three Months EndedDecember 31,				Six Months EndedDecember 31,
	Three Months EndedMarch 31,				Nine Months EndedMarch 31,
(In millions)	~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
Deferred revenue, beginning of period	$	~~548~~539	$	~~567~~562	$	533	$	560
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	(~~103~~29)		(~~107~~38)		(~~230~~259)		(~~255~~293)
Revenue deferred during the period	93		104		234		258
Revenue (released) deferred during the period	(7)		(29)		227		229
Other	1—		~~(2)~~1		2		~~(1)~~—
Deferred revenue, end of period	$	~~539~~503	$	~~562~~496	$	~~539~~503	$	~~562~~496

Transaction Price Allocated to the Remaining Performance Obligations

At ~~December~~March 31, ~~2025~~2026, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions, gift card liabilities and the Marcolin license arrangement related to TOM FORD that are unsatisfied (or partially unsatisfied) is $~~327~~294 million. The remaining balance of deferred revenue at ~~December~~March 31, ~~2025~~2026 will be recognized beyond the next twelve months, of which $~~204~~201 million relates to the non-refundable upfront payment received as part of the Marcolin licensing arrangement that is being recognized on a straight-line basis over the estimated economic life of the license, which is 20 years ending in fiscal 2043.

Royalty Revenue – License Arrangements

The Company’s contractually guaranteed minimum royalty amounts due during future periods under its existing license arrangements is disclosed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

NOTE 7 – PENSION AND POST-RETIREMENT BENEFIT PLANS

The Company maintains pension plans covering substantially all of its full-time employees for its U.S. operations and a majority of its international operations. The Company also maintains post-retirement benefit plans that provide certain medical and dental benefits to eligible employees. Descriptions of these plans are included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

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The components of net periodic benefit cost for the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 consisted of the following:

	Pension Plans								Other thanPension Plans
	U.S.				International				Post-retirement
(In millions)	~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
Service cost	$	98	$	98	$	7	$	76	$	—	$	—1
Interest cost	13		1213		5		45		2		21
Expected return on plan assets	(1312)		(1213)		(68)		(6)		—		—
Amortization of:
Actuarial loss (gain)	5		5		—(1)		(21)		—		—
Prior service cost	—		—		(1)		—		(12)		(1)
Special termination benefits	—		—		~~(1)~~—		13		—		—
Net periodic benefit cost	$	14	$	1413	$	4	$	47	$	1—	$	1

The components of net periodic benefit cost for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 consisted of the following:

	Pension Plans								Other thanPension Plans
	U.S.				International				Post-retirement
(In millions)	~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
Service cost	$	1826	$	1826	$	1421	$	1420	$	—	$	—1
Interest cost	2740		2538		914		914		46		45
Expected return on plan assets	(2638)		(2538)		(1321)		(1319)		—		—
Amortization of:
Actuarial loss (gain)	1015		1015		—(1)		(34)		—		—
Prior service cost	—		—		~~(1)~~—		—		(24)		(34)
Special termination benefits	—		—		—		14		—		—
Net periodic benefit cost	$	2943	$	2841	$	913	$	815	$	2	$	12

The amounts recognized in the consolidated balance sheets related to the Company’s pension and post-retirement benefit plans consist of the following:

(In millions)	~~December~~March 31, ~~2025~~2026		June 30, 2025
Other assets	$	~~128~~127	$	128
Other accrued liabilities	(44)		(44)
Other noncurrent liabilities	(346)		(349)
Funded status	(~~262~~263)		(265)
Accumulated other comprehensive loss	~~259~~256		268
Net amount recognized	$	(37)	$	3

2728

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Contractual Obligations

During the fiscal 2026 second quarter, the Company entered into a contract in connection with the transformation of its operating model, as part of its PRGP Enterprise Business Services initiative, as further described in Note 3 – Charges Associated with Restructuring and Other Activities. This contract is intended to drive productivity and savings. As of ~~December~~March 31, ~~2025~~2026, ~~this~~unconditional ~~contract~~purchase isobligations ~~expected~~related to ~~increase~~this ~~our~~contract ~~unconditional~~are ~~purchase~~estimated ~~obligations~~to ~~through~~be ~~fiscal 2033 by~~ approximately $1,600 million and are expected to be payable through fiscal 2033. The amounts expected to be paid under the contract may vary from this amount based on future variability in the pricing model and performance by the vendor under the contract.

Legal Proceedings

The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability ~~matters~~ (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, securities, tax, and privacy matters.

The Company ~~establishes~~records accruals for loss contingencies when ~~it has determined that~~ a loss is probable and ~~that~~reasonably ~~the~~estimable, ~~amount~~and ofestimates ~~loss,~~reasonably possible losses or ~~range~~ranges of ~~loss,~~losses ~~can~~in beexcess ~~reasonably~~of ~~estimated. Amounts~~ accrued ~~for~~amounts, ~~legal~~when ~~contingencies~~such ~~often~~estimates ~~result~~can ~~from~~be amade. ~~complex~~Such ~~series~~estimates ofinvolve ~~judgments~~significant ~~about~~judgment regarding future events and uncertainties, ~~that rely on estimates and assumptions~~ including timing of related payments., ~~Any~~and ~~such accruals~~ are adjusted ~~thereafter~~ as appropriate ~~to reflect changes in circumstances~~. The Company also determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that a loss is reasonably possible, and it is able to determine such estimates. Legal defense costs are ~~recognized~~expensed as incurred ~~when the legal services are provided~~.

~~Refer~~See below for the assessment of loss contingencies ~~associated~~related ~~with~~to the Company'’s Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters.

Management believes that the outcome of all ~~remaining~~other ~~current~~pending litigation and ~~other~~ legal proceedings will not have a material adverse effect ~~upon~~on the Company’s ~~business, results of~~ operations, ~~financial condition~~ or ~~cash~~consolidated ~~flows~~financial statements. Reasonably possible losses in ~~addition~~excess toof ~~the~~accrued amounts ~~accrued for the Company's remaining litigation and legal proceedings~~ are not expected to be material ~~to the Company’s consolidated financial statements~~. However, management's assessment of the Company's current litigation and other legal proceedings, including the Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters, could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management's evaluation of the possible liability or outcome of such litigation or proceedings.

Management’s assessments of the Company’s pending litigation and other legal proceedings, including the Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters, are subject to inherent uncertainties and may change based on future developments.

Securities Class Action and Derivative Matters

On December 7, 2023 and January 22, 2024, ~~the Company and its then Chief Executive Officer and Chief Financial Officer were named as defendants in separate~~ purported securities class action complaints were filed in the United States District Court for the Southern District of New York. Onagainst ~~February~~the ~~20,~~Company ~~2024,~~and ~~those~~its ~~two~~then ~~purported~~Chief ~~securities~~Executive ~~class~~Officer and Chief Financial Officer. The actions were consolidated ~~into~~on ~~one~~February ~~action~~20, 2024. On March 22, 2024, plaintiffs filed ~~their~~a consolidated amended ~~class~~complaint ~~action~~alleging ~~complaint,~~violations ~~which~~of ~~alleges~~Sections ~~that~~10(b) ~~defendants~~and ~~made~~20(a) of the Securities Exchange Act of 1934 based on alleged materially false and misleading statements ~~during~~between ~~the period~~ February 3, 2022 toand October 31, 2023. inOn ~~press~~March ~~releases~~31, 2025, the ~~Company~~Court denied defendants’s ~~public~~motion ~~filings~~to ~~and~~dismiss. ~~during~~On ~~conference~~April ~~calls~~2, ~~with~~2026, ~~analysts~~the ~~that~~parties ~~artificially~~reached ~~inflated~~an agreement in principle to settle the ~~price~~securities class action litigation. In light of these discussions, the Company’s ~~stock~~has inrecorded ~~violation~~a loss contingency of ~~Sections~~$210 million ~~10(b)~~relating ~~and~~to ~~20(~~a) potential settlement of the ~~Securities~~securities ~~Exchange~~class ~~Act~~action ofin ~~1934~~Other accrued liabilities in the accompanying consolidated balance sheet. OnThe ~~March~~Company ~~31,~~maintains ~~2025,~~insurance ~~the~~coverage ~~Court~~that ~~denied~~will ~~defendants'~~offset ~~motion~~a toportion ~~dismiss.~~of ~~Defendants~~defense ~~intend~~and tosettlement ~~defend~~costs ~~the~~for ~~action~~this ~~vigorously~~action.

OnStockholder derivative complaints were filed on February 1, 2024 and March 15, 2024, ~~stockholder~~in ~~derivative~~the ~~action~~same ~~complaints~~court ~~were filed~~ against certain ofcurrent ~~the~~and ~~Company’s~~former officers asand ~~of those dates, all the Company’s~~ directors as of ~~those dates and certain of~~ the Company’s ~~former~~and ~~directors~~were asvoluntarily ofdismissed ~~those~~without ~~dates~~prejudice in ~~the United States District Court for the Southern District of New York. In~~ April 2024~~, both complaints were voluntarily dismissed without prejudice~~. ~~Subsequently,~~The ~~the~~ Company's ~~Board~~subsequently ~~of Directors ("the Board")~~ received stockholder litigation demands, requesting, ~~among other things,~~ that the Board investigate ~~potential~~similar claims on behalf of the Company based on the same alleged course of conduct identified in the securities case complaint (which were also the subject of the voluntarily dismissed stockholder derivative actions complaints) described aboveallegations. A committee of the Board has been formed to review ~~the~~these ~~stockholder~~ demands and make recommendations, as appropriate ~~in its discretion, to the Board~~.

28Two additional stockholder derivative complaints were filed on May 8, 2025 in the United States District Court for the Southern District of New York; one stockholder derivative complaint was filed on June 23, 2025 in the Supreme Court of the State of New York in Kings County; and four additional stockholder derivative complaints were filed on September 15, 2025, September 26, 2025, November 11, 2025 and November 12, 2025 in Delaware Chancery Court against certain current and former officers and directors, asserting claims including breach of fiduciary duty, unjust enrichment, as well as claims of waste, gross mismanagement and insider trading. One of the Delaware complaints originally filed in September was voluntarily dismissed and refiled on November 11, 2025 by shareholders.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In fiscal 2025, on May 8, 2025, two additional stockholder derivative action complaints were filed in the United States District Court for the Southern District of New York against certain of the Company’s current and former officers and directors alleging breach of fiduciary duty and unjust enrichment from the sale of stock by certain individual defendants during the time period surrounding the allegations of false and misleading statements in the purported securities class action described above. Then, on June 23, 2025, another stockholder derivative action complaint was filed in the Supreme Court of the State of New York in Kings County against certain of the Company’s current and former officers and directors, also alleging breach of fiduciary duty and unjust enrichment as well as claims of waste, gross mismanagement and insider trading.

In fiscal 2026, on September 15, 2025 and September 26, 2025, two additional stockholder derivative action complaints were filed in Delaware Chancery Court against certain of the Company’s current and former officers and directors, also alleging breach of fiduciary duty and unjust enrichment as well as claims of waste, gross mismanagement and insider trading. One of those complaints was voluntarily dismissed and refiled on November 11, 2025, by the proper shareholder. On November 11, 2025 and November 12, 2025, two additional stockholder derivative action complaints were filed in Delaware Chancery Court against certain of the Company's current and former officers and directors, also alleging breach of fiduciary duty and unjust enrichment as well as claims of waste, gross mismanagement and insider trading.

The Company believes that it is not possible at this time to reasonably assess the outcome of these matters or to estimate the loss or range of losses, if any.

Cosmetic Talcum Powder Matters

The Company has been named as a defendant in civil actions alleging that certain cosmetic talcum powder products sold by the Company were contaminated with asbestos. Most of these actions involve a number of co-defendants from a variety of different industries. As of December 31, 2025, there were 105 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 84 cases as of June 30, 2025. During the six months ended December 31, 2025, 41 new cases were filed and 20 cases were resolved by settlement or voluntary dismissal.

In view of the number of cases pending against the Company at June 30, 2024, as well as the evolution of the litigation landscape and expectations regarding future claims at that time, the Company took action from the end of August 2024 through October 2024 to mitigate its future exposure. During that period, the Company reached agreements with certain plaintiff law firms (collectively, the “talcum litigation settlement agreements”) for: (i) the resolution of over 200 pending cosmetic talcum powder matters handled by those firms as well as (ii) a process for resolving potential future cosmetic talcum powder claims expected to be brought on behalf of plaintiffs by those firms from January 1, 2025 through December 31, 2029, with annual capped amounts per year for each participating law firm.

To account for the talcum litigation settlement agreements, the Company recorded a charge of $159 million during the fiscal 2025 first quarter for the amount agreed to settle the current and potential future claims (amounts recorded for potential future claims were based on the best estimate of the probable loss at that time, and actual additional charges and any further reasonably possible losses beyond the amounts recorded during the three months ended September 30, 2024 has not been and is not expected to be material). As of December 31, 2025, $24 million is recorded in Other accrued liabilities and $73 million is recorded in Other noncurrent liabilities in the accompanying consolidated balance sheet related to the talcum litigation settlement agreements.

There are and could be other plaintiff law firms outside of those included in the talcum litigation settlement agreements that bring claims against the Company. The value of other settlements outside of the talcum litigation settlement agreements, either individually or in the aggregate, for the three and six months ended December 31, 2025 and 2024 was not material. Given the inherent uncertainties of litigation, it is not possible to predict the outcome of all individual cases pending against the Company or potential unasserted claims, and therefore a specific estimate and associated provision is made, as needed, for a small number of individual cases that have advanced to the later stages of legal proceedings. For the remaining filed cases, the Company records an estimate of exposure loss on an aggregated and ongoing basis, which takes into account the historical outcomes of cases the Company has resolved to date. Any adverse outcomes, either in an individual case or in the aggregate, could be material. While the Company and its legal counsel intend to continue to defend these cases vigorously, there can be no assurances regarding the ultimate resolution of these matters. The amounts recorded during the three and six months ended December 31, 2025 and 2024 for such litigation, outside of the talcum litigation settlement agreements, are not material to the Company's consolidated financial statements. The range of reasonably possible losses in excess of accrued liabilities currently cannot be reasonably estimated for cosmetic talcum matters, outside of the talcum litigation settlement agreements.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company believes that ait ~~portion~~is ofnot ~~its~~possible ~~costs~~at ~~incurred~~this intime ~~defending~~to ~~and~~reasonably ~~resolving~~assess ~~these~~the ~~claims~~outcome ~~may~~of bethese ~~covered~~derivative bymatters ~~insurance~~or ~~policies~~to ~~issued~~estimate bythe ~~several~~loss ~~insurance~~or ~~carriers,~~range ~~subject~~of ~~to deductibles~~losses, ~~exclusions,~~if ~~retentions and policy limits~~any. ~~Amounts received to date have not been material.~~

Cosmetic Talcum Powder Matters

The Company has been named as a defendant in civil actions alleging that certain cosmetic talcum powder products were contaminated with asbestos. These matters generally involve multiple co-defendants.

In fiscal 2025, in view of the number of cases pending against the Company as well as the evolution of the litigation landscape and expectations regarding future claims at that time, the Company took action from the end of August 2024 through October 2024 to mitigate its future exposure. During that period, the Company entered into agreements with certain plaintiff law firms to resolve over 200 pending matters and establish a framework for resolving potential future claims from January 1, 2025 through December 31, 2029, subject to annual caps (the “talcum litigation settlement agreements”).

In connection with these agreements, the Company recorded a charge of $159 million in the fiscal 2025 first quarter, representing its best estimate of probable losses for current and potential future claims. As of March 31, 2026, $25 million and $66 million are recorded in Other accrued liabilities and Other noncurrent liabilities, respectively, in the accompanying consolidated balance sheet. Additional charges and reasonably possible losses in excess of the initial charge have not been and are not expected to be material.

Other claims may be brought by plaintiff firms not party to the talcum litigation settlement agreements. For certain matters that have advanced to later stages, the Company records specific accruals as appropriate. For remaining matters, the Company estimates losses on an aggregate basis based on historical experience. While amounts recorded for the three and nine months ended March 31, 2026 and 2025, respectively, for these matters (outside the talcum litigation settlement agreements) are not material, adverse outcomes could be material. The Company cannot reasonably estimate the range of possible losses in excess of accrued amounts for these matters.

As of March 31, 2026, there were 130 cases pending against the Company in U.S. state and federal courts, as compared to 84 cases as of June 30, 2025. During the nine months ended March 31, 2026, 74 cases were filed and 28 cases were resolved.

The Company maintains insurance coverage that may offset a portion of defense and settlement costs, subject to policy terms. Recoveries to date have not been material.

NOTE 9 – STOCK PROGRAMS

Additional information relating to the Company's stock programs are included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Total net stock-based compensation expense is attributable to the granting of, and the remaining requisite service periods of stock options, restricted stock units (“RSUs”) and performance share units (“PSUs”). Compensation expense attributable to net stock-based compensation was $9472 million and $~~106~~75 million for the three months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively, and was $~~182~~254 million and $~~180~~255 million for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, respectively.

Stock Options

During the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026, the Company granted stock options in respect of approximately 1.2 million shares of Class A Common Stock with a weighted average exercise price per share of $9192.7118 and a weighted average grant date fair value per share of $3435.8407. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model.

Restricted Stock Units

During the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026, the Company granted RSUs in respect of approximately 3.5 million shares of Class A Common Stock with a weighted average grant date fair value per share of $91.6689 that, at the time of grant, are scheduled to vest at 1.2 million, 1.5 million and 0.8 million shares per year, in fiscal 2027, fiscal 2028 and fiscal 2029, respectively. Vesting of RSUs is generally subject to the continued employment or the retirement of the grantees. The RSUs are generally accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were generally valued at the closing market price of the Company’s Class A Common Stock on the date of grant.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in the above are one-time awards granted in the first quarter of fiscal 2026, in respect of approximately 0.5 million shares of Class A Common Stock scheduled to cliff vest in fiscal 2028 with a weighted average grant-date fair value per share of $91.77 made under the PRGP Incentive Program which was implemented in an effort to incentivize and retain leaders who are critical to the success of the PRGP.

Performance Share Units

For the PSUs granted in fiscal 2023 with a performance period ended June 30, 2025, the target goals set at the time of issuance were not achieved, resulting in no shares of the Company’s Class A Common Stock issued related to these awards.

Long-term Performance Share Units

On September 2, 2025, the Company issued 68,578 shares of the Company’s Class A Common Stock to its former Chief Executive Officer in accordance with the terms of PSUs granted in March 2021. The total fair value of PSUs at the time of issuance was $6.2 million.

On September 3, 2024, the Company issued 195,940 shares of the Company’s Class A Common Stock to its former Chief Executive Officer in accordance with the terms of PSUs granted in February 2018. The total fair value of PSUs at the time of issuance was $18 million.

Long-term Price-Vested Units

On September 2, 2025, the Company issued 85,927 shares of the Company’s Class A Common Stock to its former Chief Executive Officer in accordance with the terms of price-vested unit awards ("PVUs") granted in March 2021. The total fair value of PVUs at the time of issuance was $~~7.7~~8 million.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – NET EARNINGS (LOSS) PER COMMON SHARE

Net earnings (loss) per common share (“basic EPS”) is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. Net earnings (loss) per common share assuming dilution (“diluted EPS”) is computed by reflecting potential dilution from stock-based awards using the treasury stock method. For the ~~three~~nine ~~and six~~ months ended ~~December~~March 31, ~~2024~~2025, the effects of potentially dilutive stock options, PSUs and RSUs were excluded from the computation of diluted EPS as they were anti-dilutive due to the net loss incurred during the period.

A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows:


	Three Months Ended March 31,				Nine Months Ended March 31,
(In millions, except per share data)	2026		2025		2026		2025
Numerator:
Net earnings (loss)	$	89	$	159	$	298	$	(587)

Denominator:
Weighted average common shares outstanding – Basic	362.7		360.3		362.0		359.9
Effect of dilutive stock options	0.2		—		0.1		—
Effect of PSUs	—		0.2		—		—
Effect of RSUs	2.5		0.9		2.4		—
Weighted average common shares outstanding – Diluted	365.4		361.4		364.5		359.9

Net earnings (loss) per common share:
Basic	$	.25	$	.44	$	.82	$	(1.63)
Diluted	$	.24	$	.44	$	.82	$	(1.63)

	Three Months EndedDecember 31,				Six Months EndedDecember 31,
(In millions, except per share data)	2025		2024		2025		2024
Numerator:
Net earnings (loss)	$	162	$	(590)	$	209	$	(746)
Denominator:
Weighted average common shares outstanding – Basic	362.1		360.0		361.7		359.8
Effect of dilutive stock options	0.1		—		0.1		—
Effect of PSUs	—		—		—		—
Effect of RSUs	2.6		—		2.4		—
Weighted average common shares outstanding – Diluted	364.8		360.0		364.2		359.8
Net earnings (loss) per common share:
Basic	$	.45	$	(1.64)	$	.58	$	(2.07)
Diluted	$	.44	$	(1.64)	$	.57	$	(2.07)

The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows:

	Three Months Ended December 31,		Six Months Ended December 31,
(In millions)	2025	2024	2025	2024
Stock options	7.9	8.5	8.2	8.1
RSUs and PSUs	—	2.9	0.4	2.1

As of December 31, 2025 and 2024, 0.5 million and 0.6 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the computation of diluted EPS as the number of shares ultimately issued is contingent on the achievement of applicable performance targets of the Company, as discussed in Note 19 – Stock Programs in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows:


	Three Months Ended March 31,		Nine Months Ended March 31,
(In millions)	2026	2025	2026	2025
Stock options	7.0	8.9	7.8	8.4
RSUs and PSUs	—	0.2	0.2	1.8

As of March 31, 2026 and 2025, 0.5 million and 0.6 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the computation of diluted EPS as the number of shares ultimately issued is contingent on the achievement of applicable performance targets of the Company, as discussed in Note 19 – Stock Programs in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

NOTE 11 – EQUITY

Total Stockholders’ Equity

	Three Months EndedDecember 31,				Six Months EndedDecember 31,
	Three Months EndedMarch 31,				Nine Months EndedMarch 31,
(In millions, except per share data)	~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
Common stock, beginning of the period	$	6	$	6	$	6	$	6
Stock-based compensation	—		—		—		—
Common stock, end of the period	6		6		6		6
Paid-in capital, beginning of the period	7,~~141~~245		6,~~778~~889		7,012		6,685
Common stock dividends	1		12		45		46
Stock-based compensation	~~103~~78		~~110~~75		~~229~~307		~~200~~275
Paid-in capital, end of the period	7,~~245~~324		6,~~889~~966		7,~~245~~324		6,~~889~~966
Retained earnings, beginning of the period	11,~~591~~624		1312,~~031~~313		11,672		13,427
Common stock dividends	(~~129~~128)		(128)		(~~257~~385)		(~~368~~496)
Net earnings (loss)	~~162~~89		~~(590)~~159		~~209~~298		(~~746~~587)
Retained earnings, end of the period	11,~~624~~585		12,~~313~~344		11,~~624~~585		12,~~313~~344
Accumulated other comprehensive loss, beginning of the period	(1,~~141~~080)		(1,~~057~~341)		(1,127)		(1,140)
Other comprehensive earnings (loss)	61		(284)		47		(201)
Other comprehensive (loss) income	(76)		68		(29)		(133)
Accumulated other comprehensive loss, end of the period	(1,~~080~~156)		(1,~~341~~273)		(1,~~080~~156)		(1,~~341~~273)
Treasury stock, beginning of the period	(13,~~707~~764)		(13,~~674~~698)		(13,698)		(13,664)
Stock-based compensation	(572)		~~(24)~~—		(6668)		(34)
Treasury stock, end of the period	(13,~~764~~766)		(13,698)		(13,~~764~~766)		(13,698)
Total equity	$	43,~~031~~993	$	4,~~169~~345	$	43,~~031~~993	$	4,~~169~~345
Cash dividends declared per common share	$	.35	$	.35	$	1.7005	$	1.0136

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of quarterly cash dividends declared per share on the Company’s Class A and Class B Common Stock during the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026:

Date Declared

Record Date

Payable Date

Amount per Share

August 19, 2025

September 2, 2025

September 16, 2025

.35

October 29, 2025

November 28, 2025

December 15, 2025

.35

February 4, 2026

February 27, 2026

March 16, 2026

.35

On ~~February~~April 430, 2026, a dividend was declared in the amount of $.35 per share on the Company’s Class A and Class B Common Stock. The dividend is payable in cash on ~~March~~June 1615, 2026 to stockholders of record at the close of business on ~~February~~May 2729, 2026.

Common Stock

Beginning in December 2022, the Company suspended the repurchase of shares of its Class A Common Stock under its publicly announced program. The Company may resume repurchases in the future.

During the ~~six~~nine months ended ~~December~~ March 31, ~~2025~~2026, 11.0 million shares of the Company’s Class B Common Stock were converted into the same amount of shares of the Company’s Class A Common Stock.

Accumulated Other Comprehensive Loss

The following table represents changes in accumulated other comprehensive loss, net of tax, by component for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026:

(In millions)	Net CashFlow ~~HedgeGain (Loss)~~Hedge		Cross-Currency Swap Contracts - Fair Value Hedge ~~Gain~~(1)		~~AmountsIncluded~~Amounts inIncluded ~~Net~~inNet Periodic Benefit Cost		TranslationAdjustments			Total
Balance at June 30, 2025	$	(11)	$	6	$	(204)	$	(918)		$	(1,127)
OCI before reclassifications(2)	1312		611		—1		~~(32)~~18			~~(13)~~42
Amounts reclassified to Net earnings	—6		(47)		36		—			~~(1)~~5
Net current-period OCI	1318		24		37		~~(32)~~18			~~(14)~~47
Balance at September 30, 2025	2		8		(201)		(950)			(1,141)
Balance at December 31, 2025	7		10		(197)		(900)			(1,080)
OCI before reclassifications(2)	~~(1)~~6		51		1		50(88)		(3)	55(80)
Amounts reclassified to Net earnings	6		(34)		32		—			64
Net current-period OCI	512		2(3)		43		50(88)			61(76)
Balance at December 31, 2025	$	7	$	10	$	(197)	$	(900)		$	(1,080)
Balance at March 31, 2026	$	19	$	7	$	(194)	$	(988)		$	(1,156)

(1)The gain recognized in AOCI, net of tax from cross-currency swap contracts represents the amount excluded from effectiveness testing.

(2)The tax provision included in Net Cash Flow Hedge ~~Gain (Loss)~~, Cross-Currency Swap Contracts - Fair Value Hedge, ~~Gain~~Amounts Included in Net Period Benefit Cost and Translation Adjustments for the ~~three~~six months ended ~~September~~December 3031, 2025 was $4 million, $3 million, $21 million and $59 million, respectively. For the three months ended ~~December~~March 31, ~~2025~~2026, the tax provision (benefit) included in Net Cash Flow Hedge ~~Gain (Loss)~~, Cross-Currency Swap Contracts - Fair Value Hedge ~~Gain~~, Amounts Included in Net Periodic Benefit Cost and Translation Adjustments was $1 million, $1 million, $(1) million and $41 million, respectively.

(3)See Note 4 – Derivative Financial Instruments for gains (losses) relating to net investment hedges.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table represents the effects of reclassification adjustments from AOCI into net earnings (loss) for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025:

	Amount Reclassified from AOCI								Affected Line Item ~~inConsolidatedStatements~~inConsolidated ofStatements ~~Earnings~~ofEarnings (Loss)
	Three Months EndedDecember 31,				Six Months EndedDecember 31,
	Three Months EndedMarch 31,				Nine Months EndedMarch 31,
(In millions)	~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
(Loss) Gain on Cash Flow Hedges
Foreign currency forward contracts	$	(98)	$	147	$	(917)	$	2431	Net sales
Interest rate contracts	1—		1—		1		1		Interest expense
Total (loss) gain on cash flow hedges, before tax	(8)		157		(816)		2532
Benefit (provision) for income taxes	2		(31)		24		(67)		Provision (benefit) for income taxes
Total (loss) gain on cash flow hedges, net of tax	(6)		126		(612)		1925		Net earnings (loss)
Gain on Cross-Currency Swap Contracts - Fair Value Hedge
Cross-currency swap contracts	45		5		914		914		Selling, general and administrative
Provision for income taxes	(1)		(1)		(23)		(23)		Provision (benefit) for income taxes
Total gain on cross-currency swap contracts - fair value hedge, net of tax	34		4		711		711		Net earnings (loss)
Retirement Plan and Other Retiree Benefit Adjustments
Amortization of prior service cost	21		1		34		34		Other components of net periodic benefit cost
Amortization of actuarial loss	(54)		(34)		(1014)		(711)		Other components of net periodic benefit cost
Total retirement plan and other retiree benefit adjustments, before tax	(3)		(23)		(710)		(47)		Other components of net periodic benefit cost
Benefit for income taxes	—1		1—		12		1		Provision (benefit) for income taxes
Total retirement plan and other retiree benefit adjustments, net of tax	(32)		(13)		(68)		(36)		Net earnings (loss)
Total reclassification adjustments, net	$	(64)	$	157	$	(59)	$	2330	Net earnings (loss)

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – STATEMENT OF CASH FLOWS

Supplemental cash flow information for the ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 is as follows:

(In millions)	2025		2024
	Nine Months Ended
(In millions)	March 31, 2026		March 31, 2025
Cash:
Cash paid during the period for interest	$	~~168~~229	$	~~179~~243
Cash paid during the period for income taxes	$	~~295~~431	$	~~327~~468
Non-cash investing and financing activities:
Property, plant and equipment accrued but unpaid	$	2523	$	2426
Right-of-use assets obtained in exchange for new/modified operating lease liabilities	$	~~226~~204	$	~~311~~401

NOTE 13 – SEGMENT DATA AND RELATED INFORMATION

Operating segments include components of an enterprise for which separate financial information is available that are regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Although the Company operates in one business segment, beauty products, the chief operating decision maker evaluates performance based on its four major product categories: skin care, makeup, fragrance and hair care. These product categories meet the definition of operating and reportable segments and, accordingly, additional financial data is provided below. Royalty revenue associated with the license of the TOM FORD trademark as well as sales and related results of ancillary products and services that do not fit within the Company's definitions of skin care, makeup, fragrance and hair care are included in the other category.

Segment net sales and operating income (loss) is before the impacts of restructuring and other activities and the impacts from the other category described above. Returns and charges associated with restructuring and other activities are not allocated to the Company's segments because they are centrally directed and controlled, are not included in internal measures of segment performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.

The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; thus, no additional information is produced for the chief operating decision maker or included herein.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information about the Company's four operating segments for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 is as follows:

(In millions)	Three Months Ended ~~December~~March 31, ~~2025~~2026
	Skin Care		Makeup		Fragrance		Hair Care		Total
Net sales									$	43,~~229~~712
Less: Other category net sales									3128
Less: Returns associated with restructuring and other activities									—
Segment net sales	$	1,856	$	1,072	$	628	$	128	$	3,684
Segment net sales	$	2,054	$	1,164	$	812	$	168	$	4,198
Cost of sales	427		264		138		34		863
Cost of sales	471		296		173		39		979
Selling, general and administrative expenses	958		776		456		90		2,280
Selling, general and administrative expenses	1,129		850		534		111		2,624
Other segment items(1)	27		35		13		9		84
Segment operating income	$	454	$	18	$	105	$	18	$	595
Segment operating income (loss)	$	444	$	(3)	$	21	$	(5)	$	457
Other category operating income									1316
Charges associated with restructuring and other activities									(~~207~~224)
Operating income									~~401~~249
Reconciliation to earnings before income taxes:
Interest expense									(8582)
Interest income and investment income, net									2115
Other components of net periodic benefit cost									(43)
Earnings before income taxes									$	~~333~~179
Segment depreciation and amortization	$	96100	$	5458	$	3834	$	87	$	~~196~~199
Other category									12
Depreciation and amortization									$	~~197~~201
(1) Other segment items reflect the securities class action litigation settlement.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions)	Three Months Ended ~~December~~March 31, ~~2024~~2025
	Skin Care		Makeup		Fragrance		Hair Care		Total
Net sales									$	43,~~004~~550
Less: Other category net sales									3025
Less: Returns associated with restructuring and other activities									—
Segment net sales	$	1,807	$	1,035	$	557	$	126	$	3,525
Segment net sales	$	1,921	$	1,150	$	744	$	159	$	3,974
Cost of sales	438		287		120		35		880
Cost of sales	462		280		159		41		942
Selling, general and administrative expenses	1,008		734		405		104		2,251
Selling, general and administrative expenses	1,153		823		482		121		2,579
Segment operating income (loss)	$	361	$	14	$	32	$	(13)	$	394
Impairment of goodwill and other intangible assets	—		258		549		—		807
Other category operating income									9
Segment operating income (loss)	$	306	$	(211)	$	(446)	$	(3)	$	(354)
Charges associated with restructuring and other activities									(97)
Other category operating loss									(45)
Operating income									306
Charges associated with restructuring and other activities									(181)
Reconciliation to earnings before income taxes:
Operating loss									(580)
Interest expense									(87)
Reconciliation to loss before income taxes:
Interest income and investment income, net									27
Interest expense									(90)
Other components of net periodic benefit cost									(5)
Interest income and investment income, net									23
Earnings before income taxes									$	241
Other components of net periodic benefit cost									(3)
Segment depreciation and amortization	$	104	$	60	$	32	$	7	$	203
Loss before income taxes									$	(650)
Other category									1
Segment depreciation and amortization	$	99	$	59	$	39	$	8	$	205
Depreciation and amortization									$	204
Other category									2
Depreciation and amortization									$	207

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions)	~~Six~~Nine Months Ended ~~December~~March 31, ~~2025~~2026
	Skin Care		Makeup		Fragrance		Hair Care		Total
Net sales									$	711,~~710~~422
Less: Other category net sales									5684
Less: Returns associated with restructuring and other activities									1
Segment net sales	$	35,~~629~~485	$	23,~~194~~266	$	12,~~533~~161	$	~~297~~425	$	711,~~653~~337
Cost of sales	~~890~~1,317		~~576~~840		~~353~~491		75109		12,~~894~~757
Selling, general and administrative expenses	23,~~098~~056		12,~~615~~391		~~989~~1,445		~~216~~306		47,~~918~~198
Segment operating income	$	641	$	3	$	191	$	6	$	841
Other segment items(1)	27		35		13		9		84
Other category operating income									22
Segment operating income	$	1,085	$	—	$	212	$	1	$	1,298
Charges associated with restructuring and other activities									(293)
Other category operating income									38
Operating income									570
Charges associated with restructuring and other activities									(517)
Operating income									819
Reconciliation to earnings before income taxes:
Interest expense									(~~171~~253)
Interest income and investment income, net									5166
Other components of net periodic benefit cost									(811)
Earnings before income taxes									$	~~442~~621
Segment depreciation and amortization	$	~~187~~287	$	~~113~~171	$	79114	$	1522	$	~~394~~594
Other category									34
Depreciation and amortization									$	~~397~~598
(1) Other segment items reflect the securities class action litigation settlement.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions)	~~Six~~Nine Months Ended ~~December~~March 31, ~~2024~~2025
	Skin Care		Makeup		Fragrance		Hair Care		Total
Net sales									$	710,~~365~~915
Less: Other category net sales									5580
Less: Returns associated with restructuring and other activities									—
Segment net sales	$	5,257	$	3,223	$	1,931	$	424	$	10,835
Segment net sales	$	3,450	$	2,188	$	1,374	$	298	$	7,310
Cost of sales	1,324		862		428		117		2,731
Cost of sales	886		575		308		81		1,850
Selling, general and administrative expenses	3,149		2,326		1,308		341		7,124
Selling, general and administrative expenses	2,141		1,592		903		238		4,874
Impairment of goodwill and other intangible assets	—		258		549		—		807
Other segment items(1)	—		159		—		—		159
Segment operating income (loss)	$	~~423~~784	$	(~~396~~382)	$	(~~386~~354)	$	(2134)	$	~~(380)~~14
Other category operating loss									(3425)
Charges associated with restructuring and other activities									(~~287~~384)
Operating loss									(~~701~~395)
Reconciliation to loss before income taxes:
Interest expense									(~~182~~269)
Interest income and investment income, net									5885
Other components of net periodic benefit cost									(510)
Loss before income taxes									$	(~~830~~589)
Segment depreciation and amortization	$	~~195~~298	$	~~123~~183	$	77109	$	1724	$	~~412~~614
Other category									35
Depreciation and amortization									$	~~415~~619
(1) Other segment items include Talcum litigation settlement agreements
(1) Other segment items reflect Talcum litigation settlement agreements.

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THE ESTÉE LAUDER COMPANIES INC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

RESULTS OF OPERATIONS

The Estée Lauder Companies Inc. is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. We are a steward of over 20 luxury and prestige brands globally. Our products are sold in approximately 150 countries and territories. We operate as a wholesaler, with our products sold in brick-and-mortar locations and on various e-commerce platforms, including those operated by department stores, duty-free retailers, specialty-multi retailers, online pure players, upscale perfumeries and pharmacies, and top-tier salons and spas. Additionally, we operate a direct-to-consumer business across freestanding stores, our brands' websites and third-party online platforms.

	Three Months Ended December 31,								Six Months Ended December 31,
	Three Months Ended March 31,								Nine Months Ended March 31,
	2025				2024				2025				2024
	2026				2025				2026				2025
	$		%		$		%		$		%		$		%
($ in millions)	$		%		$		%		$		%		$		%
Net sales	$	43,~~229~~712	100.0	%	$	43,~~004~~550	100.0	%	$	711,~~710~~422	100.0	%	$	710,~~365~~915	100.0	%
Cost of sales	~~994~~876		23.56		~~957~~889		2325.90		12,~~921~~797		24.95		12,~~885~~774		25.64
Gross profit	32,~~235~~836		76.54		32,~~047~~661		7675.10		58,~~789~~625		75.15		58,~~480~~141		74.46
Operating expenses:
Selling, general and administrative	2,~~627~~279		6261.14		2,~~585~~258		6463.6		47,~~923~~202		63.91		47,~~883~~141		6665.34
Restructuring and other charges	~~207~~224		46.90		~~181~~97		42.57		~~296~~520		34.86		~~278~~375		3.84
Impairment of goodwill and other intangible assets	—		—		861		21.5		—		—		861		11.7
Securities class action litigation settlement	84		2.3		—		—		84		0.7		—		—
Talcum litigation settlement agreements	—		—		—		—		—		—		159		2.2
Impairment of goodwill and other intangible assets	—		—		—		—		—		—		861		7.9
Total operating expenses	2,834		67.0		3,627		90.6		5,219		67.7		6,181		83.9
Talcum litigation settlement agreements	—		—		—		—		—		—		159		1.5
Operating income (loss)	401		9.5		(580)		(14.5)		570		7.4		(701)		(9.5)
Total operating expenses	2,587		69.7		2,355		66.3		7,806		68.3		8,536		78.2
Interest expense	85		2.0		90		2.2		171		2.2		182		2.5
Operating income (loss)	249		6.7		306		8.6		819		7.2		(395)		(3.6)
Interest income and investment income, net	21		0.5		23		0.6		51		0.7		58		0.8
Interest expense	82		2.2		87		2.5		253		2.2		269		2.5
Other components of net periodic benefit cost	4		0.1		3		0.1		8		0.1		5		0.1
Interest income and investment income, net	15		0.4		27		0.8		66		0.6		85		0.8
Earnings (loss) before income taxes	333		7.9		(650)		(16.2)		442		5.7		(830)		(11.3)
Other components of net periodic benefit cost	3		0.1		5		0.1		11		0.1		10		0.1
Provision (benefit) for income taxes	171		4.0		(60)		(1.5)		233		3.0		(84)		(1.1)
Earnings (loss) before income taxes	179		4.8		241		6.8		621		5.4		(589)		(5.4)
Net earnings (loss)	$	162	3.8	%	$	(590)	(14.7)	%	$	209	2.7	%	$	(746)	(10.1)	%
Provision (benefit) for income taxes	90		2.4		82		2.3		323		2.8		(2)		—
Net earnings (loss)	$	89	2.4	%	$	159	4.5	%	$	298	2.6	%	$	(587)	(5.4)	%

~~Not~~Percentages not adjusted for differences caused by rounding

The following table is a comparative summary of operating results for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025, for our product categories and geographic regions and reflects the basis of presentation described in Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies and Note 13 – Segment Data and Related Information, for our product categories that meet the definition of reportable segments, for all periods presented. Royalty revenue from license arrangements, and products and services that do not fit within our definitions of skin care, makeup, fragrance and hair care have been included in the “other” category.

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THE ESTÉE LAUDER COMPANIES INC.

	Three Months EndedDecember 31,				Six Months EndedDecember 31,
	Three Months EndedMarch 31,				Nine Months EndedMarch 31,
(In millions)	~~2025~~2026		~~2024~~2025		~~2025~~2026		~~2024~~2025
NET SALES
By Product Category:
Skin Care	$	21,~~054~~856	$	1,~~921~~807	$	35,~~629~~485	$	35,~~450~~257
Makeup	1,~~164~~072		1,~~150~~035		23,~~194~~266		23,~~188~~223
Fragrance	~~812~~628		~~744~~557		12,~~533~~161		1,~~374~~931
Hair Care	~~168~~128		~~159~~126		~~297~~425		~~298~~424
Other	3128		3025		5684		5580
	4,229		4,004		7,709		7,365
	3,712		3,550		11,421		10,915
Returns associated with restructuring and other activities	—		—		1		—
Net sales	$	43,~~229~~712	$	43,~~004~~550	$	711,~~710~~422	$	710,~~365~~915
By Geographic Region(1):
The Americas	$	1,~~218~~076	$	1,~~209~~063	$	23,~~392~~468	$	23,~~406~~469
Europe, United Kingdom and Ireland and Emerging Markets ("EUKEM")	~~1,183~~859		~~1,085~~785		2,~~084~~943		12,~~953~~738
Asia/Pacific	~~900~~1,003		~~888~~1,006		12,~~773~~776		12,~~694~~700
Mainland China	~~928~~774		~~822~~696		12,~~460~~234		12,~~312~~008
	4,229		4,004		7,709		7,365
	3,712		3,550		11,421		10,915
Returns associated with restructuring and other activities	—		—		1		—
Net sales	$	43,~~229~~712	$	43,~~004~~550	$	711,~~710~~422	$	710,~~365~~915
OPERATING INCOME (LOSS)
By Product Category:
Skin Care	$	~~454~~444	$	~~306~~361	$	~~641~~1,085	$	~~423~~784
Makeup	18(3)		~~(211)~~14		3—		(~~396~~382)
Fragrance	~~105~~21		~~(446)~~32		~~191~~212		(~~386~~354)
Hair Care	18(5)		(313)		61		(2134)
Other	1316		~~(45)~~9		2238		(3425)
	608		(399)		863		(414)
	473		403		1,336		(11)
Charges associated with restructuring and other activities	(~~207~~224)		(~~181~~97)		(~~293~~517)		(~~287~~384)
Operating income (loss)	$	~~401~~249	$	~~(580)~~306	$	~~570~~819	$	(~~701~~395)
By Geographic Region(1)(2):
By Geographic Region(1):
The Americas	$	~~104~~21	$	~~(771)~~67	$	~~191~~212	$	(~~856~~789)
EUKEM	~~156~~32		~~145~~28		~~162~~194		~~155~~183
Asia/Pacific	~~200~~261		~~152~~232		~~350~~611		~~228~~460
Mainland China	~~148~~159		7576		~~160~~319		59135
	608		(399)		863		(414)
	473		403		1,336		(11)
Charges associated with restructuring and other activities	(~~207~~224)		(~~181~~97)		(~~293~~517)		(~~287~~384)
Operating income (loss)	$	~~401~~249	$	~~(580)~~306	$	~~570~~819	$	(~~701~~395)

(1) The net sales and operating results from ~~the~~our ~~Company’s~~ travel retail business are included in the Asia/Pacific region.

(2) Operating results by geographic region for the fiscal 2025 second quarter (quarter-to-date period) have been adjusted to reflect the correction of a regional misclassification in the amounts furnished in the Form 8-K on October 2, 2025 related to a one-time charge during the fiscal 2025 first quarter. The misclassification was offset in the fiscal 2025 first quarter furnished amounts, and the adjusted amounts were reflected in the fiscal 2026 first quarter Form 10-Q. No other periods were impacted and there is no impact on the consolidated financial results or results by product category.

Period-over-period changes in our net sales are generally attributable to the impacts from (i) pricing on our base portfolio, including changes in mix and those due to strategic pricing actions, (ii) volume, including changes driven by the impact of new product innovation, (iii) acquisitions and/or divestitures, and/or (iv) foreign currency translation. The percentages disclosed for these impacts are calculated on an individual basis.

The net sales impact from pricing consists of changes in list prices, due to strategic pricing actions, and mix shifts within and among product categories, geographic regions, brands and distribution channels. The prices at which we sell our products vary by brand, distribution channel (e.g., wholesale or direct-to-consumer) and may also vary by country. Our brands and products cover a broad array of pricing tiers. Prices of skin care and fragrance products are typically higher than makeup and hair care products.

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THE ESTÉE LAUDER COMPANIES INC.

New product innovation includes the introduction of new products, as well as changes related to existing products or where they are sold, including reformulations, regional expansion, repackaging and sets. A product is considered "new innovation" for the twelve-month period following the initial shipment date. Our innovation is launched at different price points than existing products and value derived from innovation may vary from year to year. We continually introduce new products, support new and established products through advertising, merchandising and sampling and phase out existing products that no longer meet the needs of our consumers or our objectives. The economics of developing, producing, launching, supporting and discontinuing products impact our sales and operating performance each period. The introduction of new products often has some cannibalizing effect on sales of existing products, inclusive of potential sales returns, which we take into account in our business planning. The impact of new product introductions, including timing compared to introductions in prior periods, also affects our results.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period helps investors and others compare operating performance between periods. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP. See Reconciliations of Non-GAAP Financial Measures beginning on page 5657 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

We operate on a global basis, with the majority of our net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates affect our results of operations. Therefore, we present certain net sales, operating results and diluted net earnings (loss) per common share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of our underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current-period results using prior-year monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.

Outlook

WeWhile we have ~~experienced~~seen ~~challenges~~improvements within our business, ~~and~~ we ~~expect~~are mindful of areas of volatility and uncertainty tothat ~~continue~~may impact our results. ~~Although~~We ~~there~~continue ~~are~~to ~~signs~~face ofchallenges ~~stabilization~~in key markets in ~~Mainland~~the ~~China~~West, ~~challenges~~including ~~persist~~in some markets in Western Europe, ~~including~~and ~~subdued~~the ~~sentiment~~United States. Within our Asia travel retail business, we continue to experience ~~volatility,~~a ~~including the incremental~~ transitory headwind from the change of duty-free retailers servicing the Beijing and Shanghai airports, including the related online businesses. ~~Additionally,~~We ~~within~~are also monitoring the ~~United~~conflict ~~States~~in wethe ~~continue~~Middle East as it relates to ~~experience~~our ~~headwinds~~business ~~from~~in ~~challenges~~the domestic markets and travel retail locations in ~~department~~the ~~stores,~~region. ~~including~~Net sales from locations impacted by the ~~recent~~conflict ~~announcement~~in the Middle East accounted for approximately 2% of aconsolidated ~~retailer~~net ~~bankruptcy~~sales in fiscal 2025. We continue to monitor and assess the impact that these challenges may have on net sales and profitability, including impacts to our effective tax rate from changes to our geographical mix of earnings.

We are continuing to monitor and assess the potential effects of ~~new~~changing ~~and~~tariff ~~existing~~conditions ~~tariffs~~ in the United States as well as in other markets in which we operate. These tariffs have led to significant volatility and uncertainty in global markets and difficulty in forecasting demand. We have implemented and are continuing to implement and consider additional mitigation measures. Our strategy remains optimizing our global supply chain network, by sourcing and manufacturing in the geography of sale where feasible. We also continue to leverage trade programs where available and monitor for additional opportunities as countries continue to update their trade programs. We continue to anticipate higher tariff rates to have an adverse effect on fiscal 2026 profitability and cash flows, and depending on actual rates and countries imposing tariffs such adverse impacts could be material.

On February 20, 2026, the U.S. Supreme Court ruled that the U.S. tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the U.S. were unauthorized. The ruling did not address potential refunds, however on March 4, 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to begin refunding all tariffs imposed under IEEPA. As of March 31, 2026, despite the ruling by the U.S. Court of International Trade, there continues to be uncertainty as to the ultimate recovery of any funds as a result of a potential appeal of this ruling, as well as uncertainty associated with the process, timing and amount of any potential refunds. As such, we have determined that the totality of uncertainties prevents us from reasonably asserting the probability of refund recovery at this time.

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We continue to believe that the best way to increase long-term stockholder value is to provide superior products and services in the most efficient and effective manner while recognizing shifts in consumers’ behaviors and shopping practices. Accordingly, our long-term strategy has numerous initiatives across product categories, brands, geographic regions, channels of distribution and functions designed to grow our sales, provide cost efficiencies, leverage our strengths, such as our history of outstanding creativity and innovation, high quality products and services, and engaging communications, and make us more productive and profitable. ~~With~~Following the transition of leadership in the second and third quarters of fiscal 2025, ~~as previously announced~~ we ~~have~~are ~~embarked~~executing onagainst "Beauty Reimagined," aour previously announced strategic vision which focuses on accelerating best-in-class consumer coverage, creating transformative innovation, boosting consumer-facing investments, fueling sustainable growth through bold efficiencies and reimagining the way we work, including through the expansion of the Profit Recovery and Growth Plan ("PRGP") during the fiscal 2025 third quarter, as discussed below.

We continue to monitor the effects of the global macro environment, including the risk of recession; currency volatility; inflationary pressures; supply chain challenges; social and political issues; competitive pressures; legal and regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues. We are also mindful of inflationary pressures (including those caused by tariffs) on our cost base and are monitoring the impact on consumer preferences, the impact of changes being made in the organization, including those related to Beauty Reimagined and the PRGP, as well as the potential impact of changes expected to be made as part of the PRGP on suppliers, retailers and others, and challenges relating to successfully outsourcing select services. Declines in net sales and profitability have, and may continue to, adversely impact the goodwill and other intangible assets associated with our brands, as well as long-lived assets, potentially resulting in impairments.

In December 2021, the Organization for Economic Cooperation and Development issued "Pillar Two" Global Anti-Base Erosion model rules for countries to enact into domestic law that would establish a 15% global minimum tax applied on a country-by-country basis for multinational companies. We are continuing to monitor and evaluate the potential impact of incorporating the global minimum tax in additional countries that have yet to enact the legislation.

On July 4, 2025, new U.S tax legislation was enacted known as the "One Big Beautiful Bill Act". This legislation includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business tax provisions. The legislation has multiple effective dates, and we are continuing to evaluate the potential impact of the provisions that are expected to be effective in future fiscal years.

Our ability to recognize deferred tax assets, inclusive of utilizing net operating loss carryforwards, tax credits, and other carryforwards is dependent on the generation of sufficient taxable income in future periods. Accordingly, there can be no assurance that additional valuation allowances on our deferred tax assets will not be required should our financial performance be negatively impacted in the future. Such valuation allowance could be material.

Restructuring Program Component of the Profit Recovery and Growth Plan

As announced on November 1, 2023, we launched the PRGP to help progressively rebuild our profit margins in fiscal years 2025 and 2026.

As a component of the PRGP, on February 5, 2024, we announced a two-year restructuring program. We committed to this course of action on February 1, 2024.

After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, we committed to the expansion of the PRGP, including an expansion of the restructuring program.

The expanded component of the restructuring program began during our fiscal 2025 third quarter. The focus of the overall expanded restructuring program (collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models, all to help rebuild operating margin and also fuel reinvestment in consumer-facing areas to drive sustainable sales growth. Specific initiatives under the Restructuring Program are expected to be approved by the end of fiscal 2026 and substantially completed by the end of fiscal 2027.

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In connection with the Restructuring Program, ~~as of December 31, 2025~~ we now estimate a final net reduction in the range of approximately 59,~~800~~000 to 710,000 positions globally, ~~which~~an isincrease ~~about~~from ~~9-11~~the previous range of 5,800 to 7,000. Over 70% of ~~our~~the ~~positions~~increase ~~including~~is ~~temporary~~attributable ~~and~~to ~~part-time~~the ~~employees~~reduction asin point-of-sale ~~June~~demonstration 30roles at select unproductive doors in our department store and freestanding store channels, ~~2023~~as we continue to evolve our focus towards high-growth channels. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.

We now expect that the Restructuring Program will result in restructuring and other charges totaling between $1,~~200~~500 million and $1,~~600~~700 million, before taxes, an increase from the previous range of $1,200 million and $1,600 million, before taxes, consisting of employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.

Once fully implemented, we now expect the Restructuring Program to yield annual target gross benefits of between $1,000 million and $1,200 million, before taxes, an increase from the previous range of $800 million and $1,000 million, before taxes, a portion of which is expected to be reinvested in consumer-facing activities. The net benefits of the PRGP, which includes the Restructuring Program, are expected to enable a return to a double-digit operating margin over the next few years.

Further information about the Restructuring Program Component of the Profit Recovery and Growth Plan, is described in Notes to Consolidated Financial Statements, Note 3 – Charges Associated with Restructuring and Other Activities herein.

	Three Months EndedDecember 31,				Six Months EndedDecember 31,
($ in millions)		2025			2024		2025			2024
As Reported:
Net sales		$	4,229		$	4,004	$	7,710		$	7,365
$ Change from prior-year period		225					345
% Change from prior-year period		6		%			5		%
Non-GAAP Financial Measure(1):
% Change from prior-year period in constant currency		4		%			3		%

Securities Class Action Litigation Settlement

On December 7, 2023 and January 22, 2024, purported securities class action complaints were filed in the United States District Court for the Southern District of New York against the Company and its then Chief Executive Officer and Chief Financial Officer. The actions were consolidated on February 20, 2024. On March 22, 2024, plaintiffs filed a consolidated amended complaint alleging violations of Sections 10(1b)~~See “Reconciliations~~ and 20(a) of ~~Non-GAAP~~the ~~Financial~~Securities ~~Measures” beginning~~Exchange Act of 1934 based on ~~page 56~~alleged ~~for~~materially ~~reconciliations~~false and misleading statements between ~~non-GAAP~~February ~~financial~~3, ~~measures~~2022 and October 31, 2023. On March 31, 2025, the ~~most~~Court ~~directly~~denied ~~comparable~~defendants’ Umotion to dismiss.S On April 2, 2026, the parties reached an agreement in principle to settle the securities class action litigation. ~~GAAP~~In ~~measures~~light of these discussions, we recorded a loss contingency of $84 million, net of the estimated probable insurance recoveries, in the consolidated statements of earnings (loss) relating to a potential settlement of the securities class action.

NET SALES

Reported net sales increased across all product categories for the three and six months ended December 31, 2025, with the exception of hair care, which remained virtually flat, for the six months ended December 31, 2025. The increase in net sales in both periods was primarily driven by the skin care and fragrance product categories.


	Three Months Ended March 31,				Nine Months Ended March 31,
($ in millions)		2026			2025		2026			2025
As Reported:
Net sales		$	3,712		$	3,550	$	11,422		$	10,915
$ Change from prior-year period		162					507
% Change from prior-year period		5		%			5		%

Non-GAAP Financial Measure(1):
% Change from prior-year period in constant currency		2		%			3		%

~~By geographic region, reported net sales increased across all geographic regions for the three and six months ended December~~(1)See ~~31,~~“Reconciliations ~~2025, with the exception~~ of ~~The~~Non-GAAP ~~Americas,~~Financial ~~for~~Measures” beginning ~~the~~on ~~six months ended December~~page ~~31,~~57 ~~2025. The increase in net sales~~ for ~~the~~reconciliations ~~three~~between ~~and~~non-GAAP ~~six~~financial ~~months~~measures ~~ended December 31, 2025 was primarily driven by Mainland China~~ and ~~EUKEM, and~~ the ~~increase~~most indirectly ~~net~~comparable ~~sales~~U.S. ~~for~~GAAP ~~the six months ended December 31, 2025 was also driven by Asia/Pacific~~measures.

Reported net sales ~~were~~increased ~~impacted~~across byall ~~approximately~~product ~~$74~~categories ~~million~~for the three and ~~$99~~nine ~~million~~months ofended ~~favorable~~March 31, ~~foreign~~2026. ~~currency~~The ~~translation~~increase in net sales was primarily driven by fragrance, skin care and makeup for the three months ended March 31, 2026, and ~~six~~primarily driven by fragrance and skin care for the nine months ended ~~December~~March 31, ~~2025, respectively~~2026.

~~Reported~~By geographic region, reported net sales increased 6%across all geographic regions for the three and nine months ended ~~December~~March 31, ~~2025~~2026, ~~driven~~with bythe exception of Asia/Pacific for the ~~increase~~three ~~from~~months ~~volume~~ended ofMarch 31, 3%2026, and The Americas for the ~~favorable~~nine ~~impact~~months ~~from~~ended ~~foreign~~March 31, ~~currency~~2026, ~~translation~~with ofeach 2%remaining ~~and~~virtually ~~the~~flat. The increase ~~from~~in ~~pricing~~net ofsales ~~1%,~~for ~~reflecting~~ the ~~favorable~~three ~~impact~~and ~~from~~nine ~~strategic~~months ~~price~~ended ~~actions~~March 31, ~~partially~~2026 ~~offset~~was primarily driven by ~~changes~~Mainland inChina ~~mix~~and EUKEM.

Reported net sales increased 5% for the six months ended December 31, 2025, driven by the increase from volume of 2%, the increase from pricing of 1%, reflecting the favorable impact from strategic price actions and changes in mix, and the favorable impact from foreign currency translation of 1%.

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~~Returns~~Reported ~~associated~~net ~~with~~sales ~~restructuring~~were ~~and~~impacted other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select areas of the business. Accordingly, the following discussions of Net sales by ~~Product~~approximately ~~Categories~~$101 ~~and~~million ~~Geographic Regions exclude the impacts of return adjustments associated with restructuring~~ and ~~other activities of~~ $1200 million ~~for~~of ~~the~~favorable ~~six~~foreign ~~months~~currency ~~ended~~translation ~~December 31, 2025. There were no returns associated with restructuring and other activities~~ for the three ~~months ended December 31, 2025~~ and ~~the~~nine ~~three and six~~ months ended ~~December~~March 31, ~~2024~~2026, respectively.

Reported net sales increased 5% for the three months ended March 31, 2026, driven by the favorable impact from foreign currency translation of 3%, the increase from volume of 1% and the increase from pricing of 1%, reflecting the favorable impact from strategic price actions, partially offset by changes in mix.

Reported net sales increased 5% for the nine months ended March 31, 2026, driven by the favorable impact from foreign currency translation of 2%, the increase from volume of 2% and the increase from pricing of 1%, reflecting the favorable impact from strategic price actions, partially offset by changes in mix.

Returns associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select areas of the business. Accordingly, the following discussions of Net sales by Product Categories and Geographic Regions exclude the impacts of return adjustments associated with restructuring and other activities of $1 million for the nine months ended March 31, 2026. There were no returns associated with restructuring and other activities for the three months ended March 31, 2026 and the three and nine months ended March 31, 2025.

Product Categories

Reported net sales for our product categories for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 were as follows:

	Three Months Ended December 31,										Six Months Ended December 31,
	Three Months Ended March 31,										Nine Months Ended March 31,
($ in millions)	~~2025~~2026		~~2024~~2025		$ Change		% Change		% Change in Constant Currency(1)		~~2025~~2026		~~2024~~2025		$ Change		% Change		% Change in Constant Currency(1)
Skin Care	$	21,~~054~~856	$	1,~~921~~807	$	~~133~~49	73	%	6—	%	$	35,~~629~~485	$	35,~~450~~257	$	~~179~~228	54	%	43	%
Makeup	1,~~164~~072		1,~~150~~035		1437		14		~~(1)~~—		23,~~194~~266		23,~~188~~223		643		—1		(1)
Fragrance	~~812~~628		~~744~~557		6871		913		610		12,~~533~~161		1,~~374~~931		~~159~~230		12		10
Hair Care	~~168~~128		~~159~~126		92		62		5—		~~297~~425		~~298~~424		(1)		—		~~(1)~~—
Other	3128		3025		13		312		312		5684		5580		14		25		25
	4,229		4,004		225		6		4		7,709		7,365		344		5		3
	3,712		3,550		162		5		2		11,421		10,915		506		5		3
Returns associated with restructuring and other activities	—		—		—		—		—		1		—		1		100		100
Net sales	$	43,~~229~~712	$	43,~~004~~550	$	~~225~~162	65	%	42	%	$	711,~~710~~422	$	710,~~365~~915	$	~~345~~507	5	%	3	%

(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 5657 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Skin Care

Reported skin care net sales increased $~~133~~49 million, or 73%, ~~and~~for ~~$179~~the ~~million~~three months ended March 31, or2026, 5including the favorable impact of foreign currency translation of 3%,. ~~for~~Including the ~~three~~favorable ~~and~~impact ~~six~~of ~~months~~foreign ~~ended~~currency ~~December 31~~translation, ~~2025,~~the ~~respectively,~~increase ~~reflecting~~in skin care net sales was primarily driven by higher net sales from La Mer, ~~Estée~~reflecting ~~Lauder~~the ~~and~~benefit ~~The~~from ~~Ordinary,~~new ~~combined,~~product oflaunches ~~approximately $153 million~~ and ~~$214~~growth ~~million,~~from ~~for~~The ~~the~~Treatment ~~respective~~Lotion ~~periods~~franchise.

~~Net~~Reported ~~sales~~skin ~~from~~care Lanet ~~Mer~~sales increased in$228 ~~both~~million, ~~periods~~or 4% for the nine months ended March 31, ~~primarily~~2026, reflecting higher net sales infrom ~~Mainland~~La ~~China~~Mer, ~~and~~Estée inLauder ~~our~~and ~~Asia~~The ~~travel~~Ordinary, ~~retail~~combined, ~~business.~~of ~~The~~approximately ~~increase~~$301 inmillion. ~~net~~Net sales infrom ~~Mainland~~La ~~China~~Mer ~~was~~increased, ~~primarily~~reflecting ~~driven by~~ growth ~~attributable~~in tohero ~~key~~product ~~shopping~~franchises, ~~moments~~as ~~and~~well ~~holiday,~~as ~~reflecting~~ the ~~benefits~~benefit from ~~key~~new ~~campaigns~~product ~~to drive sales~~launches. The increase in net sales infrom ~~our~~Estée ~~Asia~~Lauder ~~travel~~reflected ~~retail~~growth ~~business was primarily~~ attributable to ~~the~~new ~~low~~product ~~net~~launches ~~sales~~and ~~base~~key ~~in the prior-year periods which reflected (i) the challenging retail environment~~campaigns, ~~including~~benefitting ~~low consumer sentiment and conversion~~ from ~~Chinese~~key ~~consumers,~~shopping asmoments ~~well~~and ~~as (ii) our prior-year efforts to improve in-trade inventory levels~~holiday. ~~These~~Net ~~increases~~sales ~~in our Asia travel retail business were partially offset by impacts associated with the transitory headwind~~ from ~~the~~The ~~change~~Ordinary ~~of duty-free retailers servicing the Beijing and Shanghai airports~~increased, ~~including~~primarily ~~the~~reflecting ~~related~~targeted ~~online~~expanded ~~businesses~~consumer reach.

~~Net~~Partially ~~sales~~offsetting ~~from~~the ~~Estée~~increase ~~Lauder increased~~ in ~~both periods, primarily driven by higher~~ net sales infor ~~Mainland~~the ~~China~~nine ~~and~~months inended ~~our Asia travel retail business~~March 31, ~~reflecting~~2026 ~~the~~were ~~aforementioned~~lower ~~growth as discussed above for La Mer. Also contributing to the increase in~~ net sales infrom ~~Mainland~~Origins, ~~China~~reflecting ~~for~~our ~~Estée~~retail ~~Lauder~~softness, ~~was~~including the impact ~~from~~of ~~new~~door ~~product launches which benefited the growth during key shopping moments~~ and ~~holiday.~~market closures.

The increase in net sales from The Ordinary in both periods primarily reflected targeted expanded consumer reach.

Skin care net sales were impacted by approximately $27 million and $34 million of favorable foreign currency translation for the three and six months ended December 31, 2025, respectively.

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~~Reported~~Skin ~~skin~~ care net sales ~~increased~~were 7%impacted ~~for the three months ended December 31, 2025, driven~~ by ~~the~~approximately ~~increase~~$46 ~~from~~million ~~volume~~and of$80 ~~4%,~~million ~~the increase from pricing~~ of ~~2%, reflecting the~~ favorable ~~impact~~foreign ~~from~~currency ~~strategic~~translation ~~pricing~~for ~~actions~~the ~~and~~three ~~changes in mix,~~ and ~~the~~nine ~~favorable~~months ~~impact~~ended ~~from~~March 31, ~~foreign~~2026, ~~currency translation of 1%~~respectively.

Reported skin care net sales increased 53% for the ~~six~~three months ended ~~December~~ March 31, ~~2025~~2026, driven by the increase from pricing of 24%, reflecting changes in mix and the favorable impact from strategic pricing actions, and ~~changes~~the infavorable ~~mix,~~impact ~~the~~from ~~increase~~foreign ~~from~~currency ~~volume~~translation of 23%, ~~and~~partially ~~the~~offset ~~favorable~~by ~~impact~~the decrease from ~~foreign~~volume ~~currency translation~~ of 14%.

Reported skin care net sales increased 4% for the nine months ended March 31, 2026, driven by the increase from pricing of 3%, reflecting changes in mix and the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 2%. The impact from volume was flat period-over-period.

Makeup

Reported makeup net sales increased ~~slightly~~$37 million, or 4% for the three ~~and six~~ months ended ~~December~~March 31, ~~2025~~2026, ~~increasing~~including bythe ~~$14~~favorable ~~million,~~impact orof ~~1%,~~foreign ~~and~~currency $6translation ~~million,~~of ~~or less than 1~~3%,. ~~respectively,~~Including ~~including~~ the favorable impact of foreign currency translation, ofthe ~~2% in both periods. The~~ increase in makeup net sales ~~reflected~~was primarily driven by higher net sales from ~~M·A·C~~Estée ~~and~~Lauder, ~~Clinique~~reflecting inthe ~~both~~launch ~~periods,~~of ~~combined,~~its next-generation of ~~approximately~~Double ~~$50~~Wear ~~million~~Stay-in-Place ~~and~~Longwear ~~$53~~Matte ~~million,~~Foundation ~~respectively~~during the fiscal 2026 third quarter.

~~The~~Reported ~~increase~~makeup in net sales ~~from~~increased ~~M·A·C~~$43 inmillion, ~~both~~or ~~periods~~1% ~~reflects~~for ~~higher~~the ~~net~~nine ~~sales~~months ~~from~~ended ~~shipments~~March 31, to2026, ~~support~~including the ~~launch~~favorable impact of ~~the~~foreign ~~brand~~currency intranslation ~~select~~of U2%.S. ~~Sephora~~Including ~~locations~~the asfavorable ~~well~~impact asof ~~online~~foreign ~~and~~currency translation, the increase in ~~Sephora~~makeup atnet ~~Kohl's~~sales ~~expected~~was inprimarily ~~the~~driven ~~March~~by ~~2026,~~an asincrease ~~well~~in asnet sales from M·A·C, reflecting higher net sales in the lip subcategory, driven by the success of Lipglass Air, Lip Pencil and ~~Lipglass~~Powder ~~Air~~Kiss Lipstick. ~~Net~~Also ~~sales~~contributing ~~from~~to ~~Clinique~~the ~~increased~~increase in ~~both~~M·A·C ~~periods,~~net ~~reflecting~~sales were higher net sales infrom shipments to support the ~~face~~launch of the brand in select U.S. Sephora locations as well as online and ~~eye~~in ~~subcategories~~Sephora at Kohl's.

~~Partially~~Makeup ~~offsetting the makeup~~ net sales ~~increase for the three months ended December 31, 2025~~ were ~~lower~~impacted ~~net~~by ~~sales~~approximately ~~from~~$35 ~~Estée~~million ~~Lauder,~~and ~~primarily~~$71 ~~driven~~million byof ~~the~~favorable ~~impact~~foreign ofcurrency ~~estimated~~translation ~~returns~~ for the ~~existing~~three ~~Double~~and ~~Wear~~nine ~~Stay-in-Place~~months ~~Long-Wear~~ended ~~Matte~~March 31, ~~Foundation in advance of the February~~ 2026, ~~launch of its next-generation of Double Wear matte innovation~~respectively.

~~Partially~~Reported ~~offsetting the~~ makeup net sales ~~increase~~increased 4% for the ~~six~~three months ended ~~December~~ March 31, ~~2025~~2026, ~~were~~driven ~~lower~~by ~~net~~the ~~sales~~increase from ~~Estée~~volume ~~Lauder,~~of ~~Bobbi~~5% ~~Brown Cosmetics~~ and ~~Too~~the ~~Faced,~~favorable ~~combined,~~impact ~~of approximately $46 million. The decrease in net sales~~ from ~~Estée~~foreign ~~Lauder~~currency ~~was~~translation ~~primarily driven by the aforementioned impact~~ of ~~estimated returns as discussed above~~3%. ~~The~~Partially ~~decrease~~offsetting inthese ~~net~~increases ~~sales from Bobbi Brown~~ was ~~primarily driven by lower net sales in~~ the ~~face~~decrease ~~subcategory~~from ~~reflecting~~pricing ~~the unfavorable year-over-year impact~~ of ~~new~~5%, ~~product launch shipments and lower net sales in the eye subcategory~~ reflecting achanges ~~reduction~~ in ~~color palettes. Net sales from Too Faced decreased~~mix, ~~reflecting~~partially ~~lower~~offset ~~net~~by ~~sales~~the infavorable ~~the~~impact ~~face~~from ~~and~~strategic ~~eye~~pricing ~~subcategories~~actions.

~~Makeup~~Reported makeup net sales ~~were~~increased ~~impacted~~1% byfor ~~approximately~~the ~~$26~~nine ~~million~~months ~~and~~ended ~~$36~~March ~~million~~31, 2026, driven by the increase from volume of 3% and the favorable impact from foreign currency translation ~~for~~of ~~the~~2%. ~~three~~Partially ~~and~~offsetting ~~six~~these ~~months~~increases ~~ended~~was ~~December 31~~the decrease from pricing of 4%, ~~2025~~reflecting changes in mix, ~~respectively~~partially offset by the favorable impact from strategic pricing actions.

Reported makeup net sales increased 1% for the three months ended December 31, 2025, driven by the increase from volume of 4% and the favorable impact from foreign currency translation of 2%. Partially offsetting these increases was the decrease from pricing of 5%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.

Reported makeup net sales increased slightly, less than 1%, for the six months ended December 31, 2025, driven by the increase from volume of 2% and the favorable impact from foreign currency translation of 2%. Largely offsetting these increases was the decrease from pricing of 3%, reflecting changes in mix partially offset by the favorable impact from strategic pricing actions.

Fragrance

Reported fragrance net sales increased $6871 million, or 913%, and $~~159~~230 million, or 12%, for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026, respectively, ~~primarily~~reflecting ~~driven by~~ higher net sales from Le Labo, TOM FORD and LeKilian ~~Labo~~Paris, combined, of approximately $5551 million and $~~112~~185 million, for the respective periods. Net sales from TOM FORD increased in both periods, primarily driven by growth in the Private Blend and Signature franchises, reflecting the benefit from new product launches which created halo benefits on existing products. Le Labo net sales increased in both periods, led by the Classic Collection, reflecting growth from targeted expanded consumer reach and new product launches.

~~Fragrance~~Le Labo net sales ~~were~~increased ~~impacted~~in both periods, led by ~~approximately~~the ~~$20~~Classic ~~million~~Collection, reflecting growth from targeted expanded consumer reach and ~~$28~~the ~~million~~benefit offrom ~~favorable~~new ~~foreign~~product ~~currency~~launches. ~~translation~~The ~~for~~net sales increase from TOM FORD in both periods reflected the ~~three~~benefit from new product launches which created halo benefits on existing products, with overall growth in both the Private Blend and ~~six~~Signature ~~months~~franchises. ~~ended~~Net ~~December 31~~sales from Kilian Paris increased in both periods, ~~2025~~driven by the Angels' Share and Love, ~~respectively~~don't be shy franchises including growth attributable to new product launches and key campaigns, as well as growth from targeted expanded consumer reach.

~~Reported~~Fragrance ~~fragrance~~ net sales ~~increased~~were 9%impacted ~~for the three months ended December 31, 2025, driven~~ by ~~the~~approximately ~~increase~~$18 ~~from~~million ~~pricing of 5%, reflecting changes in mix~~ and ~~the~~$46 ~~favorable~~million ~~impact~~of ~~from strategic pricing actions, the~~ favorable ~~impact from~~ foreign currency translation offor 3%the three and ~~the~~nine ~~increase~~months ~~from~~ended ~~volume~~March 31, of2026, 1%respectively.

Reported fragrance net sales increased 13% for the three months ended March 31, 2026, driven by the increase from volume of 7%, the favorable impact from foreign currency translation of 3%, and the increase from pricing of 2%, reflecting the favorable impact from strategic pricing actions, partially offset by changes in mix.

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THE ESTÉE LAUDER COMPANIES INC.

Reported fragrance net sales increased 12% for the ~~six~~nine months ended ~~December~~ March 31, ~~2025~~2026, driven by the increase from ~~pricing~~volume of 5%, ~~reflecting~~the ~~changes~~increase infrom ~~mix~~pricing ~~and~~of 4%, reflecting the favorable impact from strategic pricing actions, ~~the~~and ~~increase~~changes ~~from~~in ~~volume~~mix, ~~of 4%~~ and the favorable impact from foreign currency translation of 2%.

Hair Care

Reported hair care net sales increased $92 million, or 62%, including the impact of foreign currency translation of 2%, for the three months ended ~~December~~March 31, ~~2025~~2026, ~~primarily~~and ~~driven~~increased by$1 ~~higher~~million, ~~net~~or ~~sales~~less ~~from~~than ~~The Ordinary~~1%, ~~reflecting~~including the ~~impacts~~impact ~~from~~of ~~targeted~~foreign ~~expanded~~currency ~~consumer~~translation ~~reach~~of 1%, ~~including~~for the ~~launch~~nine inmonths ~~Amazon's~~ended UMarch 31, 2026.S. ~~Premium~~Including ~~Beauty~~the ~~store~~favorable ~~during~~impact of foreign currency translation, the ~~fiscal~~increase ~~2025~~in ~~third~~hair ~~quarter~~care net sales in both periods was primarily driven by higher net sales from The Ordinary, ~~and~~reflecting the growth ~~from~~of the Multi-Peptide Serum for Hair Density and impacts from targeted expanded consumer reach.

~~Reported~~Partially offsetting the hair care net sales ~~decreased~~increase ~~slightly, $1 million, or less than 1%,~~ for the ~~six~~nine months ended ~~December~~March 31, ~~2025,~~2026 ~~primarily~~were ~~reflecting~~ lower net sales from Aveda, ~~and~~reflecting ~~higher net sales from The Ordinary. The decrease in net sales from Aveda reflected~~ the brand’s strategies to improve long-term performance, including (i) planned reductions in online promotional activity and (ii) the exit from underperforming doors, including freestanding stores. These declines were partially offset by the impact from its launch in Amazon's U.S. Premium Beauty store during the fiscal 2025 fourth quarter. ~~The increase in net sales from The Ordinary reflected the aforementioned growth as discussed above.~~

Hair care net sales were impacted by approximately $12 million and $3 million of favorable foreign currency translation for ~~each of~~ the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026, respectively.

Reported hair care net sales increased 62% for the three months ended ~~December~~ March 31, ~~2025~~2026, driven by the increase from pricing of 82%, reflecting ~~changes in mix and~~ the favorable impact from strategic pricing actions and changes in mix, and the favorable impact from foreign currency translation of 12%. These increases were partially offset by the decrease from volume of 32%.

Reported hair care net sales ~~decreased~~were ~~slightly,~~virtually ~~less~~flat ~~than 1%,~~ for the ~~six~~nine months ended ~~December~~ March 31, ~~2025~~2026, driven by the ~~decrease~~increase from ~~volume~~pricing of 86%, ~~largely~~reflecting ~~offset~~changes byin mix and the ~~increase~~favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 71%,. ~~reflecting~~These ~~changes~~increases inwere ~~mix~~offset ~~and~~by the ~~favorable~~decrease ~~impact~~ from ~~strategic~~volume ~~pricing~~of ~~actions~~6%.

Geographic Regions

Reported net sales by geographic region for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 were as follows:

	Three Months Ended December 31,										Six Months Ended December 31,
	Three Months Ended March 31,										Nine Months Ended March 31,
($ in millions)	~~2025~~2026		~~2024~~2025		$ Change		% Change		% Change in Constant Currency(2)		~~2025~~2026		~~2024~~2025		$ Change		% Change		% Change in Constant Currency(2)
The Americas	$	1,~~218~~076	$	1,~~209~~063	$	913	1	%	—	%	$	23,~~392~~468	$	23,~~406~~469	$	(141)	~~(1)~~—	%	~~(1)~~—	%
EUKEM	~~1,183~~859		~~1,085~~785		9874		9		23		2,~~084~~943		12,~~953~~738		~~131~~205		7		12
Asia/Pacific(1)	~~900~~1,003		~~888~~1,006		12(3)		1—		2(1)		12,~~773~~776		12,~~694~~700		7976		53		53
Mainland China	~~928~~774		~~822~~696		~~106~~78		1311		136		12,~~460~~234		12,~~312~~008		~~148~~226		11		119
	4,229		4,004		225		6		4		7,709		7,365		344		5		3
	3,712		3,550		162		5		2		11,421		10,915		506		5		3
Returns associated with restructuring and other activities	—		—		—		—		—		1		—		1		100		100
Net sales	$	43,~~229~~712	$	43,~~004~~550	$	~~225~~162	65	%	42	%	$	711,~~710~~422	$	710,~~365~~915	$	~~345~~507	5	%	3	%

(1)The net sales from ~~the~~our ~~Company’s~~ travel retail business are included in the Asia/Pacific region.

(2)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 5657 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported net sales increased for the three months ended March 31, 2026, primarily driven by higher net sales in Mainland China and our Priority Emerging Markets, combined, of approximately $121 million. The increase in net sales in Mainland China reflected growth attributable to key shopping moments, including the benefits from key campaigns to drive sales and new product launches. Net sales in our Priority Emerging Markets within EUKEM and The Americas increased collectively, reflecting growth in all product categories, supported by targeted expanded consumer reach, successful campaigns and new product launches.

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THE ESTÉE LAUDER COMPANIES INC.

Reported net sales increased for the ~~three~~nine months ended ~~December~~March 31, ~~2025~~2026, primarily driven by higher net sales in Mainland China, and our Priority Emerging Markets, ~~and~~reflecting the ~~United~~aforementioned ~~Kingdom~~growth as discussed above, and higher net sales in our travel retail business, combined, of approximately $~~181~~443 million. The increase in net sales in ~~Mainland~~our ~~China~~travel ~~was~~retail ~~primarily~~business was driven by ~~growth~~Asia travel retail, reflecting favorability attributable to ~~key~~the ~~shopping~~low ~~moments~~prior-year ~~and~~period ~~holiday,~~net ~~reflecting~~sales base which reflected (i) the ~~benefits~~challenging ~~from~~retail ~~key~~environment, ~~campaigns~~including tolow ~~drive~~consumer ~~sales~~sentiment and ~~new~~conversion ~~product~~from ~~launches.~~Chinese ~~Net~~consumers, ~~sales~~as inwell as (ii) our ~~Priority~~prior-year ~~Emerging~~efforts ~~Markets~~to ~~within~~improve ~~The~~in-trade ~~Americas~~inventory ~~and~~levels. ~~EUKEM~~Also ~~increased~~contributing ~~collectively,~~to ~~reflecting~~the growth in ~~all~~Asia ~~product~~travel ~~categories,~~retail ~~supported~~was bythe ~~targeted~~favorable ~~expanded~~impact ~~consumer~~of ~~reach~~higher traffic in certain areas of the business, ~~successful~~including ~~campaigns~~during ~~and~~key ~~new~~shopping ~~product~~moments, ~~launches.~~supported ~~The~~by ~~increase~~key incampaigns ~~net~~to ~~sales~~drive ingrowth. ~~the~~These ~~United~~increases ~~Kingdom~~were ~~reflected~~partially offset by impacts associated with the ~~favorable~~transitory ~~impact~~headwind from ~~foreign~~the ~~currency~~change ~~translation~~of ~~and~~duty-free ~~growth~~retailers ~~from~~servicing ~~The~~the ~~Ordinary~~Beijing and Shanghai airports, ~~reflecting~~including ~~targeted~~the ~~expanded~~related ~~consumer~~online ~~reach~~businesses.

Reported net sales in The Americas increased 1% for the ~~six~~three months ended ~~December~~March 31, ~~2025~~2026, ~~reflecting~~driven ~~higher~~by ~~net~~the ~~sales~~increase infrom ~~Mainland~~volume ~~China,~~of ~~primarily~~4% ~~driven~~and by the ~~aforementioned~~favorable ~~growth~~impact asfrom ~~discussed~~foreign ~~above,~~currency ~~and~~translation ~~higher~~of ~~net~~1%. ~~sales~~These inincreases ~~our~~were ~~travel~~partially ~~retail~~offset ~~business~~by the decrease from pricing of 3%, ~~combined~~reflecting changes in mix, ofpartially ~~approximately~~offset ~~$244~~by ~~million.~~the ~~The~~favorable ~~increase~~impact infrom strategic pricing actions. Reported net sales in ~~our~~EUKEM ~~travel~~increased ~~retail~~9% ~~business~~for ~~was~~the ~~driven~~three bymonths ~~Asia~~ended ~~travel~~March ~~retail~~31, ~~reflecting~~2026, ~~favorability~~driven ~~attributable~~by to the ~~low~~increase ~~prior-year~~from ~~period~~volume ~~net~~of ~~sales~~7% ~~base~~and ~~which~~the ~~reflected~~favorable ~~(i)~~impact ~~the~~of ~~challenging~~foreign ~~retail~~currency ~~environment,~~translation ~~including~~of ~~low~~7%. ~~consumer~~These ~~sentiment~~increases ~~and~~were ~~conversion~~partially offset by the decrease from ~~Chinese~~pricing ~~consumers~~of 5%, asreflecting ~~well~~changes asin ~~(ii)~~mix, ~~our~~partially ~~prior-year~~offset ~~efforts~~by tothe ~~improve~~favorable ~~in-trade~~impact ~~inventory~~from ~~levels~~strategic pricing actions. ~~These~~Reported ~~increases~~net ~~were~~sales ~~partially~~in ~~offset~~Asia/Pacific bywere ~~impacts~~virtually ~~associated~~flat ~~with~~for the ~~transitory~~three ~~headwind~~months ~~from~~ended March 31, 2026, driven by the ~~change~~decrease from volume of ~~duty-free~~4%, ~~retailers~~offset ~~servicing~~by the ~~Beijing~~increase ~~and~~from ~~Shanghai~~pricing ~~airports~~of 3%, ~~including~~reflecting the ~~related~~favorable ~~online~~impact ~~businesses.~~from ~~Also~~strategic ~~contributing~~pricing toactions ~~the~~and ~~increase~~changes in mix. Reported net sales in ~~our~~Mainland ~~travel~~China ~~retail~~increased ~~business~~11% ~~were~~for ~~higher~~the ~~net~~three ~~sales~~months ended March 31, 2026, driven by an increase from ~~our~~pricing ~~Europe~~of 10%, ~~the~~reflecting ~~Middle~~changes ~~East~~in &mix ~~Africa~~and ~~travel~~the ~~retail~~favorable ~~business~~impact from strategic pricing actions, ~~primarily~~and ~~driven~~the favorable impact from foreign currency translation of 5%. These increases were partially offset by ~~growth~~the indecrease ~~fragrance~~from volume of 4%.

Reported net sales in The Americas ~~increased~~were 1%virtually flat for the ~~three~~nine months ended ~~December~~ March 31, ~~2025~~2026, driven by the ~~increase from volume of 6%, partially offset by the~~ decrease from pricing of 62%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. This decrease was offset by the increase from volume of 2%. Reported net sales in EUKEM increased 97% for the ~~three~~nine months ended ~~December~~ March 31, ~~2025~~2026, driven by the ~~increase~~favorable ~~from~~impact ~~volume~~of foreign currency translation of 76% and the ~~favorable~~increase ~~impact~~from ofvolume ~~foreign currency translation~~ of 74%. These increases were partially offset by the decrease from pricing of 42%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. Reported net sales in Asia/Pacific increased 13% for the ~~three~~nine months ended ~~December~~ March 31, ~~2025~~2026, driven by ~~the~~an increase from pricing of 96%, reflecting changes in mix and the favorable impact from strategic pricing actions, partially offset by the decrease from volume of 83% ~~and the unfavorable impact from foreign currency translation of 1%~~. Reported net sales in Mainland China increased 1311% for the ~~three~~nine months ended ~~December~~ March 31, ~~2025~~2026, driven by the increase from pricing of 96%, reflecting changes in mix and the favorable impact from strategic pricing actions, ~~and~~ the increase from volume of 43% and the favorable impact from foreign currency translation of 2%.

Reported net sales in The Americas decreased 1% for the six months ended December 31, 2025, driven by the decrease from pricing of 2%, reflecting changes in mix, partially offset by the favorable impact of strategic pricing actions. This decrease was partially offset by the increase from volume of 2%. Reported net sales in EUKEM increased 7% for the six months ended December 31, 2025, driven by the favorable impact of foreign currency translation of 5% and the increase from volume of 2%. These increases were partially offset by the decrease from pricing of 1%, reflecting changes in mix, partially offset by the favorable impact from strategic pricing actions. Reported net sales in Asia/Pacific increased 5% for the six months ended December 31, 2025, driven by an increase from pricing of 7%, reflecting changes in mix and the favorable impact from strategic pricing actions, partially offset by the decrease from volume of 2% and the unfavorable impact of foreign currency translation of 1%. Reported net sales in Mainland China increased 11% for the six months ended December 31, 2025, driven by the increase from volume of 7% and the increase from pricing of 4%, reflecting changes in mix and the favorable impact from strategic pricing actions.

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THE ESTÉE LAUDER COMPANIES INC.

GROSS MARGIN

Gross margin increased to 76.54% and 75.15% for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026, as compared with 7675.10% and 74.46% in the prior-year periods.

	Favorable (Unfavorable) Basis Points
	December 31, 2025
	March 31, 2026
	Three Months Ended	~~Six~~Nine Months Ended
As Reported:
Mix of business	~~(35)~~75	—25
Obsolescence charges	8580	6065
Manufacturing costs and other	1020	2520
Foreign exchange transactions	(2035)	(2530)
Charges associated with restructuring and other activities	—	10
As Reported Gross Margin Basis Point Variance	40140	7090
Non-GAAP Financial Measure Adjustments
Charges associated with restructuring and other activities	—	(10)
Non-GAAP Gross Margin Basis Point Variance	40140	6080

The increase in gross margin for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 reflected net benefits from the PRGP, ~~largely~~including ~~offset~~reductions byin ~~unfavorable~~excess ~~impacts~~inventory, inaccretive ~~manufacturing~~new ~~costs~~product launches and ~~other~~lower promotional activity in both periods, ~~reflecting~~as well as the favorable impact of ~~tariffs~~cost ~~and~~efficiencies ~~inflation~~within on our ~~costs,~~global assupply ~~well~~chain asnetwork, ~~changes~~primarily in ~~our~~the ~~mix~~nine ofmonths ~~business~~ended March 31, 2026. ~~The~~Additionally, ~~PRGP~~in ~~benefits~~both ~~were~~periods, ~~driven~~favorability byin manufacturing costs and other benefited from the year-over-year favorable impact of ~~cost~~the ~~efficiencies~~recognition ~~within~~of manufacturing variances associated with reduced manufacturing volumes on our ~~global~~standard ~~supply~~cost ~~chain~~within ~~network~~cost ~~and~~of ~~reductions~~sales in ~~excess~~the ~~inventory~~fiscal 2025 third quarter, with offsets to overall favorability driven by the impact of tariffs and inflation on our costs.

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THE ESTÉE LAUDER COMPANIES INC.

OPERATING EXPENSES

Operating expenses as a percentage of net sales ~~was~~were 6769.07% and 6768.73% for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026, as compared with 9066.63% and 8378.92% in the prior-year periods.

	Favorable (Unfavorable) Basis Points
	December 31, 2025
	March 31, 2026
	Three Months Ended	~~Six~~Nine Months Ended
As Reported:
General and administrative expenses	~~100~~160	~~110~~120
Advertising, marketing, promotion and product development	9070	~~110~~100
Selling	40(20)	3020
Shipping	1020	20
Store operating costs	~~(10)~~—	(10)
Stock-based compensation	4020	—10
Foreign exchange transactions	(2030)	(3020)
Charges associated with restructuring and other activities	(40330)	—(120)
Impairment of goodwill and other intangible assets	2,150	1,170
Securities class action litigation settlement	(230)	(70)
Talcum litigation settlement agreements	—	220
Impairment of goodwill and other intangible assets	—	790
As Reported Operating Expense Margin Basis Point Variance	2,360	1,620
Talcum litigation settlement agreements	—	150
As Reported Operating Expense Margin Basis Point Variance	(340)	990
Non-GAAP Financial Measure Adjustments:
Impact of restructuring and other activities	40330	10110
Impairment of goodwill and other intangible assets	(2,150)	(1,170)
Securities class action litigation settlement	230	70
Talcum litigation settlement agreements	—	(220)
Impairment of goodwill and other intangible assets	—	(790)
Non-GAAP Operating Expense Margin Basis Point Variance	250	240
Talcum litigation settlement agreements	—	(150)
Non-GAAP Operating Expense Margin Basis Point Variance	220	230

The ~~favorability~~increase in our operating expense margin for the three ~~and six~~ months ended ~~December~~March 31, ~~2025~~2026 reflected the year-over-year unfavorable impact of ~~the~~restructuring ~~increase~~and inother ~~net~~activities ~~sales,~~and asthe ~~well~~securities asclass ~~lower~~action ~~expenses~~litigation ~~within~~settlement. ~~non-consumer-facing~~Partially ~~areas~~offsetting ofthese ~~the~~increases ~~business~~was ~~collectively,~~favorability ~~primarily~~reflecting ~~within~~the ~~marketing,~~impact ~~product~~of ~~development~~the ~~and~~increase ~~general~~in ~~and~~net ~~administrative expenses~~sales, ~~reflecting~~as ~~lower~~well ~~employee-related costs realized through initiatives~~ as ~~part of~~ the ~~PRGP.~~favorable ~~The~~year-over-year ~~decrease~~impact inwithin general and administrative expenses ~~also~~associated ~~includes~~with the ~~favorable~~timing ~~year-over-year~~of ~~impact~~recognition of ~~a change in policy related to~~ local government subsidies in China, ~~which~~in ~~negatively impacted~~ the fiscal ~~2025~~2026 ~~second~~third quarter~~, partially offset by higher employee incentive costs~~. ~~Partially~~Additionally, ~~offsetting~~we ~~these expense reductions were~~ increased investments in consumer-facing areas of the business to drive sales, including selling, advertising, store operating costs, ~~selling~~ and promotion expenses., offsetting a portion of the favorability from the increase in net sales.

The favorability in our operating expense margin for the nine months ended March 31, 2026 reflected the impact of the increase in net sales, as well as the favorable year-over-year impact within general and administrative expenses associated with the timing of recognition of local government subsidies in China in the fiscal 2026 third quarter, with additional favorability associated with the impact of the change in policy related to local government subsidies in China that impacted the fiscal 2025 second quarter. Also contributing to the overall favorability were lower expenses within non-consumer facing areas of the business collectively, including lower employee-related costs realized through initiatives as part of the PRGP, with these benefits partially offset by higher employee incentive costs. Partially offsetting the overall favorability in our operating expense margin, including the benefit from the increase in net sales, were increased investments in consumer-facing areas of the business to drive sales, including advertising, selling, store operating costs and promotion expenses.

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OPERATING RESULTS

	Three Months EndedDecember 31,						Six Months EndedDecember 31,
	Three Months EndedMarch 31,						Nine Months EndedMarch 31,
($ in millions)	~~2025~~2026			~~2024~~2025			~~2025~~2026			~~2024~~2025
As Reported:
Operating income (loss)	$	~~401~~249		$	~~(580)~~306		$	~~570~~819		$	(~~701~~395)
$ Change from prior-year period	~~981~~(57)						1,~~271~~214
% Change from prior-year period	~~100+%~~(19)		%				100+%
Operating margin	96.57		%	~~(14~~8.5)6		%	7.42		%	(93.56)		%
Non-GAAP Financial Measure(1):
% Change in operating income (loss) from the prior-year period adjusting for the impact of charges associated with restructuring and other activities, the impact of impairment of goodwill and other intangible assets and talcum litigation settlement agreements	32		%				42		%
% Change in operating income (loss) from the prior-year period adjusting for the impact of charges associated with restructuring and other activities, the securities class action litigation settlement, impairment of goodwill and other intangible assets and talcum litigation settlement agreements	38		%				41		%

(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 5657 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

The ~~increase~~decrease in reported operating margin for the three ~~and six~~ months ended ~~December~~March 31, ~~2025~~2026 ~~was~~reflected ~~driven by~~ the ~~favorable~~unfavorable operating expense margin, which includes the ~~year-over-year~~unfavorable ~~impact~~impacts offrom ~~the~~restructuring ~~goodwill~~ and other ~~intangible~~activities ~~asset~~and ~~impairment~~the ~~charges~~securities inclass ~~the~~action ~~fiscal~~litigation ~~2025~~settlement. ~~second~~Partially ~~quarter~~offsetting ofthe ~~$861~~increased ~~million,~~operating asexpense ~~well~~margin aswas the increase in net sales and increase in gross margin, as discussed above.

~~Charges~~The ~~associated~~increase ~~with~~in ~~restructuring~~reported ~~and~~operating ~~other~~margin ~~activities~~for ~~are~~the ~~not~~nine ~~allocated~~months toended ~~our~~March 31, ~~product~~2026 ~~categories~~was ordriven ~~geographic~~by ~~regions~~the ~~because~~favorable ~~they~~operating ~~are~~expense ~~centrally directed and controlled~~margin, ~~are~~which ~~not~~includes ~~included~~the infavorable ~~internal measures of product category or geographic region performance and result from activities that are deemed a Company~~year-~~wide~~over-year ~~initiative~~impact ~~to redesign, resize and reorganize select areas~~ of the ~~business.~~goodwill ~~Accordingly, the following discussions of Operating income (loss) by Product Categories~~ and ~~Geographic~~ ~~Regions exclude~~other ~~the~~intangible ~~impact~~asset ofimpairment charges ~~associated~~in ~~with restructuring and other activities for~~ the ~~three~~fiscal ~~months ended December 31,~~ 2025 ~~and~~second ~~2024~~quarter of $~~207~~861 million ~~and $181 million~~, ~~respectively,~~as ~~and~~well ~~for~~as the ~~six~~increase ~~months~~in ~~ended~~net ~~December 31,~~sales ~~2025~~ and ~~2024~~increase ofin ~~$293~~gross ~~million~~margin, ~~and~~as ~~$287~~discussed ~~million, respectively~~above.

Charges associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select areas of the business. Accordingly, the following discussions of Operating income (loss) by Product Categories and Geographic Regions exclude the impact of charges associated with restructuring and other activities for the three months ended March 31, 2026 and 2025 of $224 million and $97 million, respectively, and for the nine months ended March 31, 2026 and 2025 of $517 million and $384 million, respectively.

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THE ESTÉE LAUDER COMPANIES INC.

Product Categories

Reported Operating income (loss) for our product categories for the three and ~~six~~nine months ended ~~December~~March 31, ~~2025~~2026 and ~~2024~~2025 were as follows:

	Three Months Ended December 31,
	Three Months Ended March 31,
($ in millions)	~~2025~~2026		~~2024~~2025		$ Change		% Change(As reported)		% Change (Non-GAAP)(1)		Non-GAAP Financial Measure(1)
Skin Care	$	~~454~~444	$	~~306~~361	$	~~148~~83	4823	%	4830	%	Adjusted for the impact of the securities class action litigation settlement
Makeup	18(3)		~~(211)~~14		~~229~~(17)		(100+)		~~(62)~~100+		Adjusted for the impact of ~~impairment~~the ofsecurities ~~goodwill~~class ~~and~~action ~~other~~litigation ~~intangible assets~~settlement
Fragrance	~~105~~21		~~(446)~~32		~~551~~(11)		~~100+~~(34)		26		Adjusted for the impact of ~~other~~the ~~intangible~~securities ~~asset~~class ~~impairments~~action litigation settlement
Hair Care	18(5)		(313)		218		~~100+~~62		100+		Adjusted for the impact of the securities class action litigation settlement
Other	1316		~~(45)~~9		587		~~100+~~78		4478		~~Adjusted for the impact of other intangible asset impairments~~
	608		(399)		1,007		100+		32
	473		403		70		17		38	%
Charges associated with restructuring and other activities	(~~207~~224)		(~~181~~97)		(26127)		(14100+)		80
Operating income (loss)	$	401	$	(580)	$	981	100+%		100+%
Operating income	$	249	$	306	$	(57)	(19)	%

(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 5657 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

	Six Months Ended December 31,
	Nine Months Ended March 31,
($ in millions)	~~2025~~2026		~~2024~~2025		$ Change		% Change(As reported)		% Change (Non-GAAP)(1)		Non-GAAP Financial Measure(1)
Skin Care	$	~~641~~1,085	$	~~423~~784	$	~~218~~301	5238	%	5242	%	Adjusted for the impact of the securities class action litigation settlement
Makeup	3—		(~~396~~382)		~~399~~382		100+		~~(86)~~—		Adjusted for the impact of the securities class action litigation settlement, impairment of goodwill and other intangible assets and talcum litigation settlement agreements
Fragrance	~~191~~212		(~~386~~354)		~~577~~566		100+		1715		Adjusted for the impact of the securities class action litigation settlement and other intangible asset impairments
Hair Care	61		(2134)		2735		100+		100+		Adjusted for the impact of the securities class action litigation settlement
Other	2238		(3425)		5663		100+		1031		Adjusted for the impact of other intangible asset impairments
	863		(414)		1,277		100+		42
	1,336		(11)		1,347		100+		41	%
Charges associated with restructuring and other activities	(~~293~~517)		(~~287~~384)		(6133)		(235)		78
Operating income (loss)	$	~~570~~819	$	(~~701~~395)	$	1,~~271~~214	100+%		~~100+%~~

(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 5657 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Skin Care

Reported skin care operating income increased $148 million, or 48%, and $218 million, or 52%, for the three and six months ended December 31, 2025, respectively, reflecting an increase in net sales, as well as lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

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THE ESTÉE LAUDER COMPANIES INC.

Skin Care

Reported skin care operating income increased $83 million, or 23%, and $301 million, or 38%, for the three and nine months ended March 31, 2026, respectively, reflecting an increase in net sales. Also contributing to the increase for the nine months ended March 31, 2026 was lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, partially offset by higher employee incentive costs. In both periods, the increase in operating income was partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

Makeup

Reported makeup operating results ~~increased~~decreased $~~229~~17 million, or over 100%, ~~and $399 million, or over 100%,~~ for the three ~~and six~~ months ended ~~December~~March 31, ~~2025~~2026, ~~respectively,~~reflecting ~~primarily~~an ~~reflecting~~increase ~~the~~in ~~favorable~~investments ~~year~~in consumer-~~over-year~~facing ~~impacts~~areas of ~~other intangible asset impairment charges in~~ the ~~prior-year~~business, ~~periods~~including ~~relating~~ to ~~TOM~~support ~~FORD~~new product launches and ~~Too~~key ~~Faced~~campaigns, ~~combined,~~as ofwell ~~$245~~as ~~million~~the ~~and~~unfavorable aallocated ~~goodwill~~impact ~~impairment~~of ~~charge~~the ~~relating~~securities toclass ~~Too~~action ~~Faced~~litigation ~~of $13 million~~settlement. ~~Also~~Largely ~~contributing~~offsetting to the ~~increase~~decrease in ~~makeup~~ operating results ~~for the six months ended December 31, 2025~~ was ~~the~~an ~~favorable~~increase ~~year-over-year impact of the charge~~ in ~~the~~net ~~fiscal~~sales ~~2025~~and ~~first~~lower ~~quarter~~cost ~~associated with the talcum litigation settlement agreements~~ of ~~$159 million~~sales.

Reported makeup operating results increased $382 million, or 100%, for the nine months ended March 31, 2026, reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior-year period relating to TOM FORD and Too Faced, combined, of $245 million and a goodwill impairment charge relating to Too Faced of $13 million, as well as the favorable year-over-year impact of the charge in the fiscal 2025 first quarter associated with the talcum litigation settlement agreements of $159 million. Partially offsetting the increase in operating results was an increase in investments in consumer-facing areas of the business, including to support new product launches and key campaigns.

Fragrance

Reported fragrance operating ~~results~~income ~~increased~~decreased $~~551~~11 million, or ~~over 100~~34%, ~~and $577 million, or over 100%,~~ for the three ~~and six~~ months ended ~~December~~March 31, ~~2025~~2026, ~~respectively,~~ reflecting ~~the~~an ~~favorable~~increase ~~year~~in investments in consumer-~~over-year~~facing ~~impact~~areas of the ~~other~~business, ~~intangible~~including ~~asset~~to ~~impairment~~support ~~charge~~key incampaigns, ~~the~~new ~~prior-year~~product ~~periods~~launches ofand ~~$549~~targeted ~~million~~expanded ~~relating~~consumer toreach, ~~TOM FORD and~~ an increase in ~~net~~cost of sales, ~~partially~~as ~~offset~~well byas anthe ~~increase~~unfavorable inallocated ~~investments~~impact ~~in consumer-facing areas~~ of the ~~business,~~securities ~~including~~class toaction ~~support~~litigation ~~key campaigns~~settlement, ~~new~~partially ~~product~~offset ~~launches~~by ~~and~~an ~~targeted~~increase ~~expanded~~in ~~consumer~~net ~~reach~~sales.

Reported fragrance operating results increased $566 million, or over 100%, for the nine months ended March 31, 2026, reflecting the favorable year-over-year impact of the other intangible asset impairment charge in the prior-year period of $549 million relating to TOM FORD and an increase in net sales, partially offset by an increase in investments in consumer-facing areas of the business, including to support key campaigns, new product launches and targeted expanded consumer reach.

Hair Care

Reported hair care operating results increased $218 million, or ~~over 100~~62%, for the three months ended ~~December~~ March 31, ~~2025~~2026, ~~primarily~~ reflecting lower operating expenses, as well as an increase in net sales. ~~and~~These ~~lower~~increases ~~non-consumer-facing~~to ~~expenses,~~operating ~~including~~results ~~the~~were ~~reduction~~partially inoffset ~~employee-related~~by ~~costs~~the ~~realized~~unfavorable ~~through~~allocated ~~initiatives~~impact ~~as part~~ of the ~~PRGP~~securities class action litigation settlement.

Reported hair care operating ~~income~~results increased $2735 million, or over 100%, for the ~~six~~nine months ended ~~December~~ March 31, ~~2025~~2026, ~~primarily~~ reflecting lower non-consumer-facing expenses, including the reduction in employee-related costs realized through initiatives as part of the PRGP, lower consumer-facing investments and lower cost of sales. These increases to operating results were partially offset by the unfavorable allocated impact of the securities class action litigation settlement.

Geographic Regions

	Three Months Ended December 31,
($ in millions)	2025		2024(1)		$ Change		% Change(As Reported)	% Change (Non-GAAP)(2)		Non-GAAP Financial Measure(2)
The Americas	$	104	$	(771)	$	875	100+%	15	%	Adjusted for the impact of impairment of goodwill and other intangible assets
EUKEM	156		145		11		8	8
Asia/Pacific(3)	200		152		48		32	32
Mainland China	148		75		73		97	97
	608		(399)		1,007		100+	32
Charges associated with restructuring and other activities	(207)		(181)		(26)		(14)	80
Operating income (loss)	$	401	$	(580)	$	981	100+%	100+%

(1)Operating results by geographic region for the fiscal 2025 second quarter (quarter-to-date period) have been adjusted to reflect the correction of a regional misclassification in the amounts furnished in the Form 8-K on October 2, 2025 related to a one-time charge during the fiscal 2025 first quarter. The misclassification was offset in the fiscal 2025 first quarter furnished amounts, and the adjusted amounts were reflected in the fiscal 2026 first quarter Form 10-Q. No other periods were impacted and there is no impact on the consolidated financial results or results by product category.

(2)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 56 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

(3)The operating results from the Company’s travel retail business are included in the Asia/Pacific region.

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THE ESTÉE LAUDER COMPANIES INC.

	Six Months Ended December 31,
($ in millions)	2025		2024		$ Change		% Change(As Reported)	% Change (Non-GAAP)(1)		Non-GAAP Financial Measure(1)
The Americas	$	191	$	(856)	$	1,047	100+%	16	%	Adjusted for the impact of impairment of goodwill and other intangible assets and talcum litigation settlement agreements
EUKEM	162		155		7		5	5
Asia/Pacific(2)	350		228		122		54	54
Mainland China	160		59		101		100+	100+
	863		(414)		1,277		100+	42
Charges associated with restructuring and other activities	(293)		(287)		(6)		(2)	78
Operating income (loss)	$	570	$	(701)	$	1,271	100+%	100+%

Geographic Regions

(1)See “Reconciliations of Non-GAAP Financial Measures” beginning on page 56 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.


	Three Months Ended March 31,
($ in millions)	2026		2025		$ Change		% Change (As Reported)		% Change (Non-GAAP)(1)		Non-GAAP Financial Measure(2)

The Americas	$	21	$	67	$	(46)	(69)	%	57	%	Adjusted for the impact of the securities class action litigation settlement
EUKEM	32		28		4		14		14
Asia/Pacific(2)	261		232		29		13		13
Mainland China	159		76		83		100+		100+
	473		403		70		17		38	%
Charges associated with restructuring and other activities	(224)		(97)		(127)		(100+)
Operating income	$	249	$	306	$	(57)	(19)	%

(21)~~The~~See ~~operating~~“Reconciliations ~~results~~of ~~from~~Non-GAAP ~~the~~Financial ~~Company’s~~Measures” ~~travel~~beginning ~~retail~~on ~~business~~page 57 ~~are~~for ~~included~~reconciliations inbetween non-GAAP financial measures and the ~~Asia/Pacific~~most ~~region~~directly comparable U.S. GAAP measures.

~~Reported operating results in~~ (2)The Americas increased $875 million, or over 100%, and $1,047 million, or over 100%, for the three and six months ended December 31, 2025, respectively, reflecting the favorable year-over-year impacts of other intangible asset impairment charges in the prior-year periods relating to TOM FORD and Too Faced, combined, of $848 million and a goodwill impairment charge relating to Too Faced of $13 million. Also contributing to the increase in The Americas operating results ~~for~~from ~~the~~our ~~six~~travel ~~months~~retail ~~ended~~business ~~December~~are ~~31,~~included ~~2025 was the favorable year-over-year impact of the charge~~ in the ~~fiscal~~Asia/Pacific ~~2025 first quarter associated with the talcum litigation settlement agreements of $159 million~~region.

Reported operating income in EUKEM increased $11 million, or 8%, and $7 million, or 5%, for the three and six months ended December 31, 2025, respectively, including the favorable impact of foreign currency translation of 11% and 12% for the respective periods. The increase in operating income reflected higher net sales, offset in part by higher cost of sales and an increase in investments in consumer-facing areas of the business, including to support targeted expanded consumer reach, key campaigns and new product launches.


	Nine Months Ended March 31,
($ in millions)	2026		2025		$ Change		% Change (As Reported)	% Change (Non-GAAP)(1)		Non-GAAP Financial Measure(1)

The Americas	$	212	$	(789)	$	1,001	100+%	28	%	Adjusted for the impact of the securities class action litigation settlement, impairment of goodwill and other intangible assets and talcum litigation settlement agreements
EUKEM	194		183		11		6	6
Asia/Pacific(2)	611		460		151		33	33
Mainland China	319		135		184		100+	100+
	1,336		(11)		1,347		100+	41	%
Charges associated with restructuring and other activities	(517)		(384)		(133)

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