Executive Summary
The Estee Lauder Companies (0JTM.L) reported a challenging QQ2 2025 with a substantial net loss and negative operating profit despite operating cash flow being positive. Revenue stood at $4.004 billion, a YoY decline of 6.4% and QoQ growth of 19.1% driven by seasonal factors and mix shifts, while gross profit was $3.047 billion (gross margin ~76.1%). The quarter showcased a sharp deterioration in profitability, as operating income was -$580 million and net income -$590 million, translating to an EPS of -$1.64. On the balance sheet, liquidity remains robust with cash and short-term investments of ~$2.586 billion and total debt of ~$9.383 billion, yielding a net debt position of ~$6.797 billion. Free cash flow reached ~$925 million, underpinning a healthy cash generation cushion despite earnings weakness. The firm finished the period with tangible cash generation but continued leverage and working-capital challenges (inventory days ~188, receivables days ~36). These dynamics imply near-term earnings volatility even as the company preserves liquidity to fund strategic investments and shareholder returns when profitability recovers.
No earnings transcript is available in the provided data, so management commentary quotes could not be incorporated. The forward-looking view therefore emphasizes observable cash flow strength, balance-sheet durability, and the need for margin restoration through cost discipline, mix optimization, and growth in high-margin categories; subject to macro consumer demand improvement and competitive dynamics.
Key Performance Indicators
QoQ: -379.34% | YoY:-201.05%
QoQ: -278.21% | YoY:-288.50%
QoQ: -281.40% | YoY:-288.51%
Key Insights
Revenue: $4.004B (YoY -6.4%, QoQ +19.1%) • Gross Profit: $3.047B (YoY -2.5%, QoQ +25.2%) • Gross Margin: ~76.1% • Operating Income: -$0.58B (YoY delta highly negative, QoQ sharply negative) • Net Income: -$0.59B (YoY -288.5%, QoQ -278.2%) • EPS: -$1.64 (YoY -288.5%, QoQ -281.4%) • EBITDA: -$0.353B; EBITDAR Margin: -8.82% • Operating Cash Flow: $1.057B • Free Cash Flow: ~$0.925B • Cash at End of Period: $2.586B • Total Debt: $9.383B; Net Debt: $6.797B • Current Ratio: 1.371;...
Financial Highlights
Revenue: $4.004B (YoY -6.4%, QoQ +19.1%) • Gross Profit: $3.047B (YoY -2.5%, QoQ +25.2%) • Gross Margin: ~76.1% • Operating Income: -$0.58B (YoY delta highly negative, QoQ sharply negative) • Net Income: -$0.59B (YoY -288.5%, QoQ -278.2%) • EPS: -$1.64 (YoY -288.5%, QoQ -281.4%) • EBITDA: -$0.353B; EBITDAR Margin: -8.82% • Operating Cash Flow: $1.057B • Free Cash Flow: ~$0.925B • Cash at End of Period: $2.586B • Total Debt: $9.383B; Net Debt: $6.797B • Current Ratio: 1.371; Quick Ratio: 0.973; Cash Ratio: 0.514 • Debt/Assets: 0.475; Debt/Equity: 2.25 • Interest Coverage: 6.14 • DSO: 36.34 days; DIO: 188.28 days; CCC: 224.61 days • P/S: 6.72; P/BV: 6.43; P/E: negative; Dividend Yield: 0.47% (net basis)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.00B |
-6.43% |
19.13% |
| Gross Profit |
3.05B |
-2.50% |
25.24% |
| Operating Income |
-580.00M |
-201.05% |
-379.34% |
| Net Income |
-590.00M |
-288.50% |
-278.21% |
| EPS |
-1.64 |
-288.51% |
-281.40% |
Key Financial Ratios
operatingProfitMargin
8.62%
operatingCashFlowPerShare
$2.94
freeCashFlowPerShare
$2.57
dividendPayoutRatio
-21.4%
priceEarningsRatio
-11.36
Management Commentary
Not available in the provided data. No earnings transcripts or management quotes were supplied to extract themes or statements. Inference-based thematic synthesis is limited to the quantitative results and the general market context highlighted in the numbers.
Forward Guidance
No formal forward guidance was provided in the supplied data. Given the results, investors should monitor for: (1) any updated management communications on margin restoration initiatives (cost controls, SG&A optimization, and supply-chain efficiency); (2) cadence of gross margin improvement through product mix optimization and price realization; (3) progression of direct-to-consumer and e-commerce penetration as a longer-term margin lever; (4) debt-reduction or refinancing plans to address elevated leverage and interest expense; (5) working-capital improvements to reduce inventory days and receivables days. Realistic expectations hinge on macro consumer health stabilizing and continued brand-driven revenue mix shifts toward higher-margin skincare and prestige categories. Key monitorables: quarterly EBITDA trajectory, operating cash flow progression, capex intensity, and any liquidity management actions that could impact shareholder returns.