Can Estee Lauder's Fragrance Strength Drive Top-Line Growth?
The Estee Lauder Companies Inc. (EL) has pointed to fragrance as a meaningful driver of organic sales growth. In the first quarter of fiscal 2026, fragrance was the company’s strongest-performing category, posting a 13% organic net sales increase. This growth played a meaningful role in driving Estee Lauder’s return to positive organic sales growth of 3% for the quarter.The momentum was led by the luxury segment, which accounts for the majority of Estee Lauder’s fragrance portfolio. Brands such as Le Labo and Tom Ford continued to gain traction, supported by strong consumer demand for premium scents. Le Labo delivered particularly strong growth in Mainland China, reflecting both brand strength and continued consumer interest in high-end fragrance. New launches and extensions from brands including Jo Malone London and KILIAN PARIS also supported category performance.To support fragrance growth, Estee Lauder has been expanding its distribution and innovation capabilities. During the fiscal first quarter, the company opened 14 net new freestanding fragrance stores across key markets, led by Le Labo and Jo Malone London, increasing brand visibility and consumer access. In addition, the company opened a Fragrance Atelier in Paris in October 2025 to support the development of next-generation luxury and prestige fragrances.Management expects fragrance to remain a faster-growing category within prestige beauty in fiscal 2026. While broader category trends remain mixed, fragrance continues to provide a relatively stable source of growth within Estee Lauder’s portfolio.How EL’s Peers Are Approaching Fragrance GrowthCoty Inc.’s (COTY) continues to position fragrance as its core growth engine despite near-term revenue pressure. In the first quarter of fiscal 2026, Coty highlighted fragrances as a key driver of sequential improvement, supported by strong demand for prestige scents and new launches such as BOSS Bottled Beyond. Coty also noted that the prestige fragrance market grew mid-single digits, with its U.S. prestige fragrance sell-out aligning with market growth. Overall, fragrance remains central to Coty’s category strategy as it works through near-term volatility.e.l.f. Beauty, Inc. (ELF) treats fragrance as a complementary category rather than a core growth driver. The company has expanded selectively into fragrance and personal-care extensions as part of its broader lifestyle strategy, leveraging strong brand engagement and accessible price points. e.l.f. Beauty’s primary focus remains on driving growth in color cosmetics through rapid innovation, frequent new launches and strong marketing execution. Management continues to emphasize market-share gains, brand momentum and disciplined expansion within e.l.f. Beauty’s core cosmetics portfolio.EL’s Price Performance, Valuation & EstimatesShares of Estee Lauder have gained 9.3% in the past month compared with the industry growth of 8.5%.Image Source: Zacks Investment ResearchFrom a valuation standpoint, Estee Lauder trades at a forward price-to-earnings ratio of 44.19X, up from the industry average of 30.07X.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Estee Lauder’s fiscal 2026 and 2027 earnings implies year-over-year growth of 43.1% and 35.9%, respectively.Image Source: Zacks Investment ResearchEstee Lauder currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Estee Lauder Companies Inc. (EL): Free Stock Analysis Report Coty (COTY): Free Stock Analysis Report e.l.f. Beauty (ELF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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