Estee Lauder Companies Inc (EL)

Return on equity (ROE)

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Net income	US$ in thousands	-1,133,000	390,000	1,006,000	2,390,000	2,870,000
Total stockholders’ equity	US$ in thousands	3,865,000	5,314,000	5,585,000	5,590,000	6,057,000
ROE		-29.31%	7.34%	18.01%	42.75%	47.38%

June 30, 2025 calculation

ROE = Net income ÷ Total stockholders’ equity
= $-1,133,000K ÷ $3,865,000K
= -29.31%

The analysis of Estee Lauder Companies Inc.'s return on equity (ROE) over the specified period reveals a significant downward trend. As of June 30, 2021, the ROE stood at 47.38%, indicating a highly efficient utilization of shareholder equity resulting in substantial profitability. By June 30, 2022, the ROE declined slightly to 42.75%, but remained at a robust level, suggesting sustained profitability and effective management.

However, a notable decline is observed in the subsequent year—by June 30, 2023, the ROE had fallen sharply to 18.01%. This reduction reflects a considerable decrease in net income relative to shareholder equity, potentially attributable to factors such as increased expenses, reduced revenues, or one-time charges impacting net profitability. The decline continued markedly into June 30, 2024, with the ROE dropping further to 7.34%, approaching a marginal level of return for shareholders and indicating potential challenges in maintaining previous profitability levels.

Most recently, by June 30, 2025, the ROE has entered negative territory at -29.31%. This negative figure signifies that the company incurred losses that exceeded shareholders' equity during that period, a strong indicator of financial distress or extraordinary losses impacting profitability severely. It also suggests that the company's management strategies may require reevaluation, and financial stability may be at risk if the trend persists.

Overall, the ROE trend demonstrates a marked deterioration over the four-year span, transitioning from a highly profitable state to a period of significant losses. This decline warrants further investigation into underlying causes, such as changes in net income, equity structure, operational challenges, or macroeconomic factors affecting the company's performance.