Estée Lauder (EL) Shares Fall as Tariff Concerns Eclipse Q2 Beat

Estée Lauder Companies Inc. shares plummeted over 11% in premarket trading on Thursday, February 5, 2026, despite reporting fiscal second-quarter results that exceeded Wall Street expectations. The cosmetics giant delivered earnings per share of $0.89, beating the analyst consensus of $0.83 and marking a 43% year-over-year increase, while revenue rose 5.8% to $4.23 billion.

However, investor enthusiasm was dampened by the company’s warning that newly enacted tariffs would slice approximately $100 million from profitability, primarily affecting the second half of fiscal 2026. The sharp decline underscores how geopolitical trade concerns can overshadow otherwise solid operational performance in the prestige beauty sector.

Strong Q2 Performance Overshadowed by Tariff Impact

Estée Lauder’s fiscal Q2 2026 results demonstrated the company’s ongoing turnaround momentum, with organic sales climbing 4% during the quarter. The beauty conglomerate achieved prestige market share gains in critical markets, including Mainland China, where it posted a second consecutive quarter of double-digit retail sales growth with gains across every product category.

In the United States, the company also captured volume share gains in total prestige beauty, signaling renewed competitive strength in its home market.

By product category, fragrance led growth with a 9% increase, followed by skin care at 7%, while makeup lagged with just 1% growth. The company’s performance reflected successful execution of its turnaround strategy, with CEO Stéphane de La Faverie expressing confidence in restoring organic sales growth and expanding operating margins for the first time in four years.

Despite these operational wins, the looming tariff burden cast a shadow over the otherwise positive quarter.

The company raised its fiscal 2026 outlook, projecting full-year revenue between $14.76 billion and $15.04 billion (midpoint $14.90 billion) compared to the consensus estimate of $14.98 billion.

However, earnings per share guidance of $2.05 to $2.25 (midpoint $2.15) came in slightly below the $2.19 consensus, primarily due to the anticipated tariff impact and increased consumer-facing investments planned for the second half of the fiscal year.

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Shares Slide as Tariff Impact Reshapes 2026 Expectations

As of 8:52 AM EST on February 5, 2026, Estée Lauder shares traded at $107.79 in premarket activity, down $11.89 or 9.93% from the previous close of $116.27. The dramatic premarket decline erased gains from the prior session when the stock closed up 2.87%.

At the regular session close on February 4, EL stood at $119.61, reflecting the volatility surrounding the earnings announcement and subsequent tariff disclosure.

The stock’s year-to-date performance had been strong prior to the announcement, with shares up 14.22% compared to the S&P 500’s 0.54% gain. Over the past year, Estée Lauder had surged 75.21%, significantly outperforming the broader market’s 13.99% return as investors anticipated the company’s turnaround.

However, the longer-term picture remained challenging, with shares down 53.12% over three years and 49.22% over five years, highlighting the extended period of struggles the company has faced.

Analyst sentiment remained cautiously optimistic despite the tariff concerns. RBC Capital analyst Nik Modi reiterated an Outperform rating with a $113 price target, stating that “the worst is in the past for Estée Lauder and that a steady recovery is underway.” The analyst firm believes further upside exists as the company’s turnaround progresses and leverage from its profit recovery and growth program becomes more evident.

With a market capitalization of $43.1 billion and average analyst price target of $109.75, the stock trades near consensus expectations, though the tariff uncertainty introduces significant near-term risk to the recovery narrative.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.