Estee Lauder Companies Inc (EL)
Profitability ratios
Return on sales
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 73.97% | 71.66% | 71.31% | 75.73% | 76.36% |
| Operating profit margin | -5.48% | 6.21% | 9.48% | 17.87% | 16.15% |
| Pretax margin | -7.26% | 4.95% | 8.78% | 17.12% | 20.54% |
| Net profit margin | -7.91% | 2.50% | 6.32% | 13.47% | 17.70% |
The analysis of Estee Lauder Companies Inc.’s profitability ratios over the specified period reveals notable trends and shifts.
Starting with the gross profit margin, the data indicates a slight decline from 76.36% as of June 30, 2021, to 71.31% by June 30, 2023. However, there is a modest recovery observed in the subsequent years, reaching 73.97% by June 30, 2025. This pattern suggests that while the company faced some compression in gross profitability during 2022 and 2023, it managed to regain some margin in the later years.
In contrast, the operating profit margin demonstrates a more pronounced decline. It rose from 16.15% in 2021 to a peak of 17.87% in 2022, but then experienced a sharp decline to 9.48% in 2023, followed by further decreases to 6.21% in 2024. By 2025, the operating margin turns negative at -5.48%, indicating operational losses in that year. This trend points to escalating operational challenges, potentially driven by increasing expenses or strategic shifts impacting operating efficiency.
Similarly, the pretax margin reflects a declining trajectory, falling from 20.54% in 2021 to 8.78% in 2023, and diminishing further to 4.95% in 2024. The negative pretax margin of -7.26% in 2025 underscores a significant deterioration in profitability before taxes, aligning with the operational difficulties suggested by the operating margin.
The net profit margin also exhibits a declining trend from 17.70% in 2021 to 6.32% in 2023. The subsequent years detail a continued decline, with the margin dropping to 2.50% in 2024 and turning negative at -7.91% in 2025. The negative net profit margin in 2025 indicates that the company ultimately incurred net losses, which is a concerning signal of declining profitability and potential profitability issues in that fiscal year.
Overall, while there was some stability in gross profit margin, the profitability ratios encompassing operating, pretax, and net margins have significantly deteriorated over the analyzed period, culminating in negative margins in 2025. This pattern suggests financial challenges impacting the company's ability to sustain profitability at various levels of its income statement.
Return on investment
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | -3.95% | 4.47% | 6.44% | 15.16% | 11.92% |
| Return on assets (ROA) | -5.70% | 1.80% | 4.30% | 11.43% | 13.06% |
| Return on total capital | -41.76% | 21.74% | 28.95% | 54.96% | 57.85% |
| Return on equity (ROE) | -29.31% | 7.34% | 18.01% | 42.75% | 47.38% |
The analysis of Estee Lauder Companies Inc.'s profitability ratios over the period from June 30, 2021, to June 30, 2025, reveals significant fluctuations and noteworthy trends across key metrics, including Operating Return on Assets (Operating ROA), Return on Assets (ROA), Return on Total Capital (ROTC), and Return on Equity (ROE).
Starting with Operating ROA, the company experienced a marked increase from 11.92% in June 2021 to a peak of 15.16% in June 2022. However, this ratio declined sharply in subsequent years, falling to 6.44% in June 2023, then further to 4.47% in June 2024, before turning negative at -3.95% in June 2025. This trend indicates a deterioration in the company's operating efficiency in generating profit from its operating assets, especially in the most recent years.
Similarly, the ROA reflects a decline from 13.06% in 2021 to 11.43% in 2022, followed by a significant drop to 4.30% in 2023. The downward trend continued into 2024, with the ratio decreasing to 1.80%, and culminated in a negative value of -5.70% in 2025. This overall decline suggests increasing challenges in leveraging assets effectively to produce net profit, with the most recent period indicating potential losses relative to total assets.
The Return on Total Capital shows a substantial decrease from 57.85% in 2021 to 54.96% in 2022, then to 28.95% in 2023, followed by a decline to 21.74% in 2024. The most notable aspect is the dramatic negative shift to -41.76% in 2025, implying that the company's overall capital investment is no longer generating positive returns and may be incurring losses or suffering from declining profitability.
Finally, the Return on Equity (ROE), a key indicator of shareholders' returns, decreased from 47.38% in 2021 to 42.75% in 2022, then to 18.01% in 2023. The decline continued into 2024, with ROE at 7.34%, and further plummeted to a negative -29.31% in 2025. This pattern indicates a substantial erosion of shareholders' returns, potentially stemming from reduced net income, increased equity base, or both.
Overall, the profitability ratios display a trajectory of initial strength and high profitability in 2021 and 2022, followed by a pronounced decline starting in 2023. The most recent data points to significant challenges in generating consistent profits, with some ratios turning negative in 2025, reflecting deteriorating financial performance and potential concerns about long-term sustainability.