Sep. 15 at 8:13 PM
S&P Global Ratings revised its outlook on Estée Lauder to stable from negative and affirmed all ratings, including its long-term issuer credit rating of A- and short-term and commercial paper ratings of A-2. The revision reflects improving operating performance and credit metrics as the beauty company’s recovery efforts gain traction.
S&P now expects adjusted leverage to fall to 1.9x in fiscal 2027 from 2.6x in fiscal 2026, better than its previous 2.4x forecast. Estée Lauder has posted four consecutive quarters of revenue growth and expanding gross margins, while stronger-than-expected fiscal fourth-quarter results supported the outlook change. S&P forecasts revenue growth of about 4% in fiscal 2027 and adjusted EBITDA margin expansion of more than 500 basis points to 21.4%.
Cash flow is expected to remain pressured by more than
$500 million in restructuring payments, working-capital investments and higher capital spending, alongside roughly
$540 million in dividends.
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