Executive Summary
The Estee Lauder Companies Inc (0JTM.L) reported QQ1 2025 revenue of $3.361 billion with a gross profit of $2.433 billion, delivering a gross margin of 72.39%. Despite a solid gross margin, the quarter featured an operating loss of $121 million and a net loss of $156 million, translating to an EPS of -$0.43. EBITDA stood at $157 million, while the company generated negative operating cash flow of $670 million and free cash flow of -$811 million as working capital consumed a material portion of cash during the quarter. The balance sheet shows a sizable debt burden (total debt of $10.01 billion, net debt of $7.66 billion) and modest liquidity with cash and cash equivalents of $2.35 billion at quarter-end. Key leverage metrics remain tight (interest coverage ~1.47x) and the cash conversion cycle extended, signaling near-term liquidity and profitability headwinds. This combination of top-line softness, margin pressure from operating costs, and aggressive working capital deployment elevates risk while underscoring the potential for value if EL can stabilize demand, control costs, and monetize its premium brand portfolio over the mid-term.
Key Performance Indicators
QoQ: -13.17% | YoY:-4.46%
QoQ: -12.42% | YoY:-0.61%
QoQ: 48.07% | YoY:-223.47%
QoQ: 45.07% | YoY:-603.23%
QoQ: 45.57% | YoY:-577.78%
Key Insights
Revenue: $3.361B, YoY -4.46%, QoQ -13.17%.
Gross Profit: $2.433B, YoY -0.61%, QoQ -12.42% (Gross Margin ~72.39%).
Operating Income: -$0.121B, YoY change -223.47%, QoQ +48.07% (still negative).
Net Income: -$0.156B, YoY -603.23%, QoQ +45.07% (net loss persists).
EPS: -$0.43, YoY -577.78%, QoQ +45.57%.
EBITDA: $0.157B, EBITDA Margin ~4.67% (EBITDA/Revenue).
Operating Cash Flow: -$0.670B; Free Cash Flow: -$0.811B.
Cash & Equivalents: $2.350B; Total Debt: $10.010B; Net Debt: $7.660B.
Current Rat...
Financial Highlights
Revenue: $3.361B, YoY -4.46%, QoQ -13.17%.
Gross Profit: $2.433B, YoY -0.61%, QoQ -12.42% (Gross Margin ~72.39%).
Operating Income: -$0.121B, YoY change -223.47%, QoQ +48.07% (still negative).
Net Income: -$0.156B, YoY -603.23%, QoQ +45.07% (net loss persists).
EPS: -$0.43, YoY -577.78%, QoQ +45.57%.
EBITDA: $0.157B, EBITDA Margin ~4.67% (EBITDA/Revenue).
Operating Cash Flow: -$0.670B; Free Cash Flow: -$0.811B.
Cash & Equivalents: $2.350B; Total Debt: $10.010B; Net Debt: $7.660B.
Current Ratio: 1.315x; Quick Ratio: 0.904x; Cash Ratio: 0.428x.
Days Sales Outstanding: 52.94; Days Inventory Outstanding: 218.70; Days Payables Outstanding: 110.08; Cash Conversion Cycle: 161.56 days.
P/BV: ~7.09x; P/S: ~10.73x; P/E (negative); Dividend Yield: ~0.66%; Dividend Payout Ratio: negative (net loss).
Note: EBITDA and EBITDARatio reflect a modest operating earnings cushion but do not offset the net loss; cash burn driven by working capital and high operating expenses.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.36B |
-4.46% |
-13.17% |
| Gross Profit |
2.43B |
-0.61% |
-12.42% |
| Operating Income |
-121.00M |
-223.47% |
48.07% |
| Net Income |
-156.00M |
-603.23% |
45.07% |
| EPS |
-0.43 |
-577.78% |
45.57% |
Key Financial Ratios
operatingProfitMargin
4.02%
operatingCashFlowPerShare
$-1.86
freeCashFlowPerShare
$-2.26
dividendPayoutRatio
-153.8%
priceEarningsRatio
-57.77
Management Commentary
No earnings call transcript data provided in the supplied materials. As a result, no management quotes or theme-based highlights could be extracted. Once transcript text is available, a themes-by-quote synthesis (strategy, operations, market conditions) with context and significance can be added.
Forward Guidance
No formal forward guidance was embedded in the provided data. Given QQ1 2025 results, the near-term focus implied by the numbers centers on stabilizing topline momentum, containing operating costs, and restoring positive cash flow. Management should address: (1) revenue recovery through product mix optimization, price/mremiumization, and accelerated Direct-to-Consumer (DTC) and e-commerce penetration, particularly in high-growth APAC markets; (2) cost containment and SG&A discipline to protect margins; (3) working capital optimization to reduce cash burn and improve free cash flow; (4) deleveraging or at least stabilizing leverage given total debt of $10.01B and constrained interest coverage. Potential catalysts to watch include a rebound in key prestige categories, efficiency gains from supply chain improvements, and better working capital management in upcoming quarters. Key factors investors should monitor: trajectory of revenue growth by region/category, gross margin stability, OpEx discipline, cash conversion cycle, and progress toward deleveraging.