The Estée Lauder Companies reported QQ4 2024 revenue of $3.871 billion, up 7.3% year over year but down 1.8% versus the prior quarter. The quarter delivered robust gross margins at approximately 71.8%, underscoring pricing power and a strong product mix, yet the company posted an operating loss of $233 million and a net loss of $284 million, resulting in a negative earnings per share of $0.79. EBITDA was modest at $26 million, with an EBITDAR margin near 0.67%, signaling ongoing operating leverage challenges in the near term.
Cash generation remained healthy with operating cash flow of $889 million and free cash flow of $672 million for QQ4 2024. The balance sheet shows ample liquidity (cash and equivalents of $3.395 billion) but a substantial debt load (total debt of $9.826 billion; net debt of $6.431 billion) and leverage metrics that remain elevated (debt to capitalization about 0.649; debt to equity ~1.85). Despite earnings weakness, the company generated positive free cash flow, supporting deleveraging and potential capital allocation flexibility over time. Valuation metrics imply a premium to book and sales, reflecting the strength of Esteé Lauder’s brand portfolio, but the lack of near-term profitability weighs on earnings-based multiples.
Overall, the QQ4 2024 results illustrate a high-quality brand engine generating solid cash flow in a challenged profitability environment. The key question for investors is whether the company can translate brand strength and direct-to-consumer (DTC) growth into meaningful margin expansion and earnings recovery while managing leverage in a uneven macro backdrop.