COVER PAGE
COVER PAGE - shares | 9 Months Ended | |
Mar. 31, 2024 | Apr. 24, 2024 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 1-14064 | |
Entity Registrant Name | Estée Lauder Companies Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 11-2408943 | |
Entity Address, Address Line One | 767 Fifth Avenue | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10153 | |
City Area Code | 212 | |
Local Phone Number | 572-4200 | |
Title of 12(b) Security | Class A Common Stock, $.01 par value | |
Trading Symbol | EL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001001250 | |
Amendment Flag | false | |
Common Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 233,021,911 | |
Common Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 125,542,029 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||||
Net sales | $ 3,940 | $ 3,751 | $ 11,737 | $ 12,301 |
Cost of sales | 1,107 | 1,159 | 3,331 | 3,401 |
Gross profit | 2,833 | 2,592 | 8,406 | 8,900 |
Operating expenses | ||||
Selling, general and administrative | 2,284 | 2,281 | 7,177 | 7,155 |
Restructuring and other charges | 18 | 14 | 26 | 24 |
Impairment of other intangible assets | 0 | 0 | 0 | 207 |
Total operating expenses | 2,302 | 2,295 | 7,203 | 7,386 |
Operating income | 531 | 297 | 1,203 | 1,514 |
Interest expense | 94 | 58 | 287 | 156 |
Interest income and investment income, net | 45 | 37 | 126 | 78 |
Other components of net periodic benefit cost | (4) | (4) | (9) | (9) |
Earnings before income taxes | 486 | 280 | 1,051 | 1,445 |
Provision for income taxes | 151 | 125 | 356 | 403 |
Net earnings | 335 | 155 | 695 | 1,042 |
Net loss (earnings) attributable to redeemable noncontrolling interest | (5) | 1 | (21) | (3) |
Net earnings attributable to The Estée Lauder Companies Inc. | $ 330 | $ 156 | $ 674 | $ 1,039 |
Net earnings attributable to The Estée Lauder Companies Inc. per common share | ||||
Basic (in dollars per share) | $ 0.92 | $ 0.44 | $ 1.88 | $ 2.90 |
Diluted (in dollars per share) | $ 0.91 | $ 0.43 | $ 1.87 | $ 2.88 |
Weighted average common shares outstanding | ||||
Basic (in shares) | 359.1 | 357.9 | 358.8 | 357.8 |
Diluted (in shares) | 360.8 | 361.2 | 360.4 | 360.9 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 335 | $ 155 | $ 695 | $ 1,042 |
Other comprehensive income (loss): | ||||
Net cash flow hedge gain (loss) | 21 | (43) | (7) | (50) |
Cross-currency swap contract gain (loss) | (4) | (11) | 10 | (11) |
Retirement plan and other retiree benefit adjustments | 24 | 0 | 22 | 0 |
Translation adjustments | (185) | (7) | (89) | (101) |
Benefit (provision) for income taxes on components of other comprehensive income | (29) | 16 | (29) | 23 |
Total other comprehensive loss, net of tax | (173) | (45) | (93) | (139) |
Comprehensive income | 162 | 110 | 602 | 903 |
Comprehensive loss (income) attributable to redeemable noncontrolling interest: | ||||
Net loss (earnings) | (5) | 1 | (21) | (3) |
Translation adjustments | 15 | (1) | 13 | 26 |
Total comprehensive loss (income) attributable to redeemable noncontrolling interest | 10 | 0 | (8) | 23 |
Comprehensive income attributable to The Estée Lauder Companies Inc. | $ 172 | $ 110 | $ 594 | $ 926 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Current assets | ||
Cash and cash equivalents | $ 3,701 | $ 4,029 |
Accounts receivable, net | 1,854 | 1,452 |
Inventory and promotional merchandise | 2,307 | 2,979 |
Prepaid expenses and other current assets | 672 | 679 |
Total current assets | 8,534 | 9,139 |
Property, plant and equipment, net | 3,133 | 3,179 |
Other assets | ||
Operating lease right-of-use assets | 1,836 | 1,797 |
Goodwill | 2,453 | 2,486 |
Other intangible assets, net | 5,438 | 5,602 |
Other assets | 1,306 | 1,212 |
Total other assets | 11,033 | 11,097 |
Total assets | 22,700 | 23,415 |
Current liabilities | ||
Current debt | 505 | 997 |
Accounts payable | 1,197 | 1,670 |
Operating lease liabilities | 363 | 357 |
Other accrued liabilities | 3,351 | 3,216 |
Total current liabilities | 5,416 | 6,240 |
Noncurrent liabilities | ||
Long-term debt | 7,265 | 7,117 |
Long-term operating lease liabilities | 1,707 | 1,698 |
Other noncurrent liabilities | 1,728 | 1,943 |
Total noncurrent liabilities | 10,700 | 10,758 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 840 | 832 |
Equity | ||
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at March 31, 2024 and June 30, 2023; shares issued: 470,884,456 at March 31, 2024 and 469,668,085 at June 30, 2023; Class B shares authorized: 304,000,000 at March 31, 2024 and June 30, 2023; shares issued and outstanding: 125,542,029 at March 31, 2024 and 125,542,029 at June 30, 2023 | 6 | 6 |
Paid-in capital | 6,465 | 6,153 |
Retained earnings | 13,950 | 13,991 |
Accumulated other comprehensive loss | (1,014) | (934) |
Stockholders' equity before treasury stock | 19,407 | 19,216 |
Less: Treasury stock, at cost; 237,870,661 Class A shares at March 31, 2024 and 237,590,199 Class A shares at June 30, 2023 | (13,663) | (13,631) |
Total equity | 5,744 | 5,585 |
Total liabilities, redeemable noncontrolling interest and equity | $ 22,700 | $ 23,415 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2024 | Jun. 30, 2023 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Treasury stock (in shares) | 237,870,661 | 237,590,199 |
Common Class A | ||
Common stock, shares authorized | 1,300,000,000 | 1,300,000,000 |
Common stock, shares issued | 470,884,456 | 469,668,085 |
Common Class B | ||
Common stock, shares authorized | 304,000,000 | 304,000,000 |
Common stock, shares issued | 125,542,029 | 125,542,029 |
Common stock, shares outstanding | 125,542,029 | 125,542,029 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities | ||
Net earnings | $ 695 | $ 1,042 |
Adjustments to reconcile net earnings to net cash flows from operating activities: | ||
Depreciation and amortization | 614 | 548 |
Deferred income taxes | (165) | (70) |
Non-cash stock-based compensation | 276 | 234 |
Net loss on disposal of property, plant and equipment | 7 | 8 |
Non-cash restructuring and other charges | 6 | 20 |
Pension and post-retirement benefit expense | 38 | 40 |
Pension and post-retirement benefit contributions | (75) | (20) |
Impairment of other intangible assets | 0 | 207 |
Other non-cash items | 13 | (9) |
Changes in operating assets and liabilities: | ||
Increase in accounts receivable, net | (404) | (254) |
Decrease (increase) in inventory and promotional merchandise | 653 | (154) |
Decrease (increase) in other assets, net | 19 | (69) |
Decrease in accounts payable | (289) | (313) |
Increase (decrease) in other accrued and noncurrent liabilities | 106 | (151) |
Decrease in operating lease assets and liabilities, net | (23) | (42) |
Net cash flows provided by operating activities | 1,471 | 1,017 |
Cash flows from investing activities | ||
Capital expenditures | (702) | (652) |
Purchases of other intangible assets | 0 | (8) |
Purchases of investments | (8) | (5) |
Settlement of net investment hedges | (25) | 138 |
Net cash flows used for investing activities | (735) | (527) |
Cash flows from financing activities | ||
Proceeds (repayments) of current debt, net | (215) | 2,228 |
Proceeds from issuance of long-term debt, net | 649 | 0 |
Debt issuance costs | (4) | 0 |
Repayments of commercial paper (maturities after three months) | (785) | 0 |
Repayments and redemptions of long-term debt | (7) | (261) |
Net proceeds from stock-based compensation transactions | 29 | 68 |
Payments to acquire treasury stock | (34) | (258) |
Settlement of cross-currency swap | 18 | 0 |
Dividends paid to stockholders | (710) | (687) |
Net cash flows provided by (used for) financing activities | (1,059) | 1,090 |
Effect of exchange rate changes on Cash and cash equivalents | (5) | (6) |
Net decrease in Cash and cash equivalents | (328) | 1,574 |
Cash and cash equivalents at beginning of period | 4,029 | 3,957 |
Cash and cash equivalents at end of period | $ 3,701 | $ 5,531 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements furnished reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Certain prior year amounts in the notes to the consolidated financial statements have been reclassified to conform to current year presentation. Management Estimates The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Descriptions of the Company’s significant accounting policies are discussed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. Currency Translation and Transactions All assets and liabilities of foreign subsidiaries and affiliates are translated at period-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation losses, net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $192 million and $5 million, net of tax, during the three months ended March 31, 2024 and 2023, respectively, and $103 million and $66 million, net of tax, during the nine months ended March 31, 2024 and 2023, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings. These subsidiaries are not material to the Company’s consolidated financial statements or liquidity. The Company enters into foreign currency forward contracts and may enter into option contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. Additionally, the Company enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 5 – Derivative Financial Instruments for further discussion . The Company categorizes these instruments as entered into for purposes other than trading. The accompanying consolidated statements of earnings include net exchange gains on foreign currency transactions of $23 million and $25 million during the three months ended March 31, 2024 and 2023, respectively, and $52 million and $59 million during the nine months ended March 31, 2024 and 2023, respectively. Concentration of Credit Risk The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries. The Company grants credit to qualified customers. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments. The Company’s largest customer during the three and nine months ended March 31, 2024 sells products primarily in China travel retail. This customer accounted for $395 million or 10%, and $165 million, or 4%, of the Company's consolidated net sales for the three months ended March 31, 2024 and 2023, respectively, and $750 million, or 6%, and $887 million, or 7%, for the nine months ended March 31, 2024 and 2023, respectively. This customer accounted for $189 million, or 10%, and $49 million, or 3%, of the Company's accounts receivable at March 31, 2024 and June 30, 2023, respectively. Inventory and Promotional Merchandise Inventory and promotional merchandise consists of the following: (In millions) March 31, 2024 June 30, 2023 Raw materials $ 776 $ 876 Work in process 312 362 Finished goods 960 1,404 Promotional merchandise 259 337 $ 2,307 $ 2,979 Property, Plant and Equipment Property, plant and equipment consists of the following: (In millions) March 31, 2024 June 30, 2023 Assets (Useful Life) Land and improvements (1) $ 70 $ 70 Buildings and improvements (10 to 40 years) 884 843 Machinery and equipment (3 to 10 years) 1,187 1,071 Computer hardware and software (4 to 10 years) 1,727 1,651 Furniture and fixtures (5 to 10 years) 136 136 Leasehold improvements 2,408 2,310 Construction in progress 677 827 7,089 6,908 Less accumulated depreciation and amortization (3,956) (3,729) $ 3,133 $ 3,179 (1) Land improvements are depreciated over a 10 year useful life. Depreciation and amortization of property, plant and equipment was $166 million and $147 million during the three months ended March 31, 2024 and 2023, respectively, and $491 million and $421 million during the nine months ended March 31, 2024 and 2023, respectively. Depreciation and amortization related to the Company’s manufacturing process is included in Cost of sales, and all other depreciation and amortization is included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings. Income Taxes The effective rate for income taxes for the three and nine months ended March 31, 2024 and 2023 are as follows: Three Months Ended Nine Months Ended 2024 2023 2024 2023 Effective rate for income taxes 31.1 % 44.6 % 33.9 % 27.9 % Basis-point change from the prior-year period (1,350) 600 For the three months ended March 31, 2024, the decrease in the effective tax rate was primarily attributable to a lower effective tax rate on the Company's foreign operations due to the timing of the estimated change in the Company's full year geographical mix of earnings in the current and prior-year periods, partially offset by the unfavorable impact associated with previously issued stock-based compensation. For the nine months ended March 31, 2024, the increase in the effective tax rate was primarily attributable to a higher effective tax rate on the Company's foreign operations, due to the Company's geographical mix of earnings for fiscal 2024, and the unfavorable impact associated with previously issued stock-based compensation. On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act, including a tax provision implementing a 15% corporate alternative minimum tax based on global adjusted financial statement income. The corporate alternative minimum tax became effective beginning with the Company's first quarter of fiscal 2024 and did not have an impact on the Company's consolidated financial statements for the three and nine months ended March 31, 2024. As of March 31, 2024 and June 30, 2023, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $64 million and $63 million, respectively. The total amount of unrecognized tax benefits at March 31, 2024 that, if recognized, would affect the effective tax rate was $54 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three and nine months ended March 31, 2024 in the accompanying consolidated statements of earnings was $1 million and $3 million, respectively. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at each of March 31, 2024 and June 30, 2023, was $18 million and $15 million, respectively. On the basis of the information available as of March 31, 2024, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months. During the fiscal 2024 second quarter, the Company formally concluded the compliance process with respect to its fiscal 2022 income tax return under the U.S. Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”), which had no impact on the Company’s consolidated financial statements for the three and nine months ended March 31, 2024. Supplier Finance Programs Under its supplier finance programs, the Company agrees to pay the banks the stated amount of confirmed invoices from its designated suppliers on the due dates of the invoices. The Company may terminate the agreements upon written notice (with notice periods ranging from 30 to 60 days) or immediately upon a breach. The supplier invoices that have been confirmed as valid under the programs require payment in full within 90 days of the invoice date. Outstanding obligations confirmed as valid totaling $54 million and $52 million as of March 31, 2024 and June 30, 2023, respectively, are included in accounts payable in the accompanying consolidated balance sheets. Other Accrued and Noncurrent Liabilities Other accrued liabilities consist of the following: (In millions) March 31, 2024 June 30, 2023 Advertising, merchandising and sampling $ 283 $ 235 Employee compensation 507 546 Accrued sales incentives 400 321 Deferred revenue 306 323 Payroll and other non-income taxes 307 297 Accrued income taxes 315 222 Sales return accrual 289 289 Other 944 983 $ 3,351 $ 3,216 At March 31, 2024 and June 30, 2023, total Other noncurrent liabilities of $1,728 million and $1,943 million included $581 million and $620 million of deferred tax liabilities, respectively. Recently Adopted Accounting Standards FASB ASU No. 2022-04 – Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations In September 2022, the FASB issued authoritative guidance which is intended to enhance the transparency surrounding the use of supplier finance programs. The guidance requires companies that use supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. Effective for the Company – The guidance became effective for the Company’s first quarter fiscal 2024 and has been applied on a retrospective basis, except for the requirement to disclose rollforward information annually which is effective prospectively for the Company beginning in fiscal 2025. Impact on consolidated financial statements – The Company has supplier financing arrangements and applied the disclosure requirements as required by the amendments. Such information is included in Supplier Finance Programs above within Note 1 – Summary of Significant Accounting Policies . Reference Rate Reform (ASC Topic 848 “ ASC 848 ” ) In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”) and applies to lease and other contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that reference LIBOR or another rate that is expected to be discontinued as a result of reference rate reform. In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC 848. In December 2022, the FASB issued authoritative guidance to defer the sunset date of ASC 848 from December 31, 2022 to December 31, 2024. Effective for the Company – This guidance can only be applied for a limited time through December 31, 2024. Impact on consolidated financial statements – The Company completed its comprehensive evaluation of applying this guidance and adopted certain practical expedients for its interest rate swap agreements in the fiscal 2024 first quarter which did not have a significant impact on its consolidated financial statements. The practical expedients that were adopted permit its hedging relationships to continue without de-designation upon changes due to reference rate reform. Foreign currency forward contracts do not reference LIBOR and no practical expedients were elected but are now discounted using the Secured Overnight Financing Rate ("SOFR"). For existing lease, debt arrangements and other contracts, the Company did not adopt any ASC 848 practical expedients as it relates to these arrangements. Recently Issued Accounting Standards FASB ASU No. 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the FASB issued authoritative guidance to improve reportable segment disclosure requirements. Companies are required to disclose significant segment expenses by reportable segment if they are regularly provided to the chief operating decision maker (CODM). Companies are also required to disclose other segment items by reportable segment. The guidance clarifies that companies may disclose more than one measure of segment profit or loss used by the CODM, provided that at least one of the reported measures includes the segment profit or loss measure that is most consistent with U.S. GAAP measurement principles. All existing annual disclosures about segment profit or loss, as well as the new requirements, must now be provided on an interim basis. Additionally, on an annual basis, the CODM’s title and position is required, as well as an explanation of how the CODM uses the reported measure(s) and other disclosures. The guidance does not change how companies identify their operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2025 Form 10-K and then in interim periods beginning in the Company’s first quarter of fiscal 2026. Early adoption is permitted. The guidance should be applied retrospectively unless impracticable. Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures. FASB ASU No. 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued authoritative guidance to amend and enhance existing annual in come tax disclosures primarily focusing on two reporting areas: (1) greater disaggregation of information in the effective tax rate reconciliations and (2) disclosure of income taxes paid by the companies, disaggregated by applicable jurisdiction. Companies are required to use specific categories to prepare and disclose a tabular rate reconciliation (using both percentages and reporting currency amounts) of: • the reported income tax expense (or benefit) from continuing operations and the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal income tax rate of the jurisdiction of domicile. • reconciling items within certain categories that are equal to or greater than a specified quantitative threshold, including the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items. The guidance also requires companies to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign jurisdictions including individual jurisdictions with amounts paid equal to or greater than a specified quantitative threshold. The guidance also requires companies to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign as well as income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign jurisdictions. Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2026 Form 10-K. Early adoption is permitted. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures. SEC Final Rule Release No. 33-11275 – The Enhancement and Standardization of Climate-Related Disclosures for Investors In March 2024, the SEC adopted rules intended to enhance and standardize climate-related disclosures in registration statements and annual reports. The rules require significant effects of severe weather events and other natural conditions, amounts related to carbon offsets and renewable energy credits or certificates, as well as material impacts on financial estimates and assumptions that are due to severe weather events and other natural conditions or disclosed climate-related targets or transition plans to be disclosed in the annual financial statements in certain circumstances. Effective for the Company – On April 4, 2024, the SEC issued an order staying the final rule on climate-related disclosures pending certain legal challenges. Under the rule as currently issued, the disclosure requirements related to the annual financial statements are expected to be effective for the Company's fiscal year ending June 30, 2026 Form 10-K. The Company is not required to provide comparative information in the year of adoption. Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its annual financial statement disclosures. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The following table presents goodwill by product category and the related change in the carrying amount: (In millions) Skin Care Makeup Fragrance Hair Care Total Balance as of June 30, 2023 Goodwill $ 1,664 $ 1,116 $ 254 $ 353 $ 3,387 Accumulated impairments (139) (732) (30) — (901) 1,525 384 224 353 2,486 Translation adjustments, goodwill (32) — (1) — (33) (32) — (1) — (33) Balance as of March 31, 2024 Goodwill 1,632 1,116 253 353 3,354 Accumulated impairments (139) (732) (30) — (901) $ 1,493 $ 384 $ 223 $ 353 $ 2,453 Other Intangible Assets Other intangible assets consist of the following: March 31, 2024 June 30, 2023 (In millions) Gross Accumulated Total Net Gross Accumulated Total Net Amortizable intangible assets: Customer lists and other $ 2,000 $ 868 $ 1,132 $ 2,030 $ 766 $ 1,264 Non-amortizable intangible assets: Trademarks 4,306 4,338 Total intangible assets $ 5,438 $ 5,602 The aggregate amortization expense related to amortizable intangible assets was $36 million for the three months ended March 31, 2024 and 2023, and $109 million for the nine months ended March 31, 2024 and 2023. The estimated aggregate amortization expense for the remainder of fiscal 2024 and for each of the next four fiscal years is as follows: Fiscal (In millions) 2024 2025 2026 2027 2028 Estimated aggregate amortization expense $ 35 $ 143 $ 143 $ 126 $ 101 Impairment Analysis During the Nine Months Ended March 31, 2023 During the fiscal 2023 second quarter, given the lower-than-expected results in the overall business, the Company made revisions to the internal forecasts relating to its Smashbox reporting unit. The Company concluded that the changes in circumstances in the reporting unit triggered the need for an interim impairment review of its trademark intangible asset. The remaining carrying value of the trademark intangible asset was not recoverable and the Company recorded an impairment charge of $21 million reducing the carrying value to zero. During the fiscal 2023 second quarter, the Dr.Jart+ reporting unit experienced lower-than-expected growth within key geographic regions and channels that continue to be impacted by the spread of COVID-19 variants, resurgence in cases, and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the reporting unit. In addition, due to macro-economic factors, Dr.Jart+ has experienced lower-than-expected growth within key geographic regions. The Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels coupled with delays in future international expansion to areas that continue to be impacted by COVID-19. As a result, the Company made revisions to the internal forecasts relating to its Dr.Jart+ and Too Faced reporting units. Additionally, there were increases in the weighted average cost of capital for both reporting units as compared to the prior year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2022. The Company concluded that the changes in circumstances in the reporting units, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of their trademarks and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Dr.Jart+’s and Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of November 30, 2022. The Company concluded that the carrying value of the trademark intangible assets exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method to determine discounted projected future cash flows and recorded an impairment charge of $100 million for Dr.Jart+ and $86 million for Too Faced. The Company concluded that the carrying amounts of the long-lived assets were recoverable. After adjusting the carrying values of the trademarks, the Company completed interim quantitative impairment tests for goodwill. As the estimated fair value of the Dr.Jart+ and Too Faced reporting units were in excess of their carrying values, the Company concluded that the carrying amounts of the goodwill were recoverable and did not record a goodwill impairment charge related to these reporting units. The fair values of these reporting units were based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates for trademarks. The most significant unobservable input used to estimate the fair values of the Dr.Jart+ and Too Faced trademark intangible assets was the weighted average cost of capital, which was 11% and 13%, respectively. A summary of the impairment charges for the three and nine months ended March 31, 2023 and the remaining trademark and goodwill carrying values as of March 31, 2023, for each reporting unit, are as follows: Impairment Charges Carrying Value (In millions) Three Months Ended March 31, 2023 Nine Months Ended March 31, 2023 As of March 31, 2023 Reporting Unit Geographic Region Trademarks Goodwill Trademarks Goodwill Trademarks Goodwill Smashbox The Americas $ — $ — $ 21 $ — $ — $ — Dr.Jart+ Asia/Pacific — — 100 — 330 310 Too Faced The Americas — — 86 — 186 13 Total $ — $ — $ 207 $ — $ 516 $ 323 The impairment charges for the nine months ended March 31, 2023 were reflected in the skin care product category for Dr.Jart+ and the makeup product category for Smashbox and Too Faced. |
CHARGES ASSOCIATED WITH RESTRUC
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | 9 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES Restructuring Program Component of the Profit Recovery Plan ("Restructuring Program") As previously communicated on November 1, 2023, the Company has launched a Profit Recovery Plan to help progressively rebuild its profit margins in fiscal years 2025 and 2026. The Profit Recovery Plan is focused on rebuilding stronger, more sustainable profitability, supporting sales growth acceleration and increasing speed and agility. The plan is designed to improve gross margin, lower the cost base and reduce overhead expenses, while increasing investments in key consumer-facing activities. Upon completion of this plan, the Company expects to have improved its gross margin and expense base to drive greater operating leverage for the future. As a component of the Profit Recovery Plan, on February 5, 2024, the Company announced a two-year restructuring program. The restructuring program’s main focus includes the reorganization and rightsizing of certain areas of the Company as well as simplification and acceleration of processes. The Company committed to this course of action on February 1, 2024. In connection with the restructuring program, as of March 31, 2024, the Company estimates a net reduction in the range of approximately 1,800 to 3,000 positions globally, which is about 3-5% of its positions including temporary and part-time employees as of June 30, 2023. This reduction takes into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas. The Company plans to substantially complete specific initiatives under the restructuring program through fiscal 2026. The Company expects that the restructuring program will result in restructuring and other charges totaling between $500 million and $700 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives. Restructuring Program Approvals The Restructuring Program cumulative charges approved by the Company through March 31, 2024 were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Approved Cumulative charges through March 31, 2024 $ — $ — $ 13 $ 21 $ 34 Included in the above table, cumulative Restructuring Program restructuring initiatives approved by the Company through March 31, 2024 by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Approved Cumulative charges through March 31, 2024 $ 6 $ 4 $ — $ 3 $ 13 Specific actions taken since the Restructuring Program inception include: • Value Chain Optimization – To help rebuild gross margin profitability, as part of a broader initiative associated with reorganizing and redesigning the Company’s supply chain to be completed in phases, the Company has approved an initiative to right-size a manufacturing location to improve efficiencies and optimize asset utilization. These actions will primarily result in a net reduction in workforce, which includes employee severance, asset write-offs, and costs to decommission and relocate activities. Restructuring Program Restructuring and Other Charges The Company classifies restructuring charges as follows: Employee-Related Costs – Employee-related costs are primarily comprised of severance and other post-employment benefit costs, calculated based on salary levels, prior service and other statutory minimum benefits, if applicable. Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets (including rights associated with commercial operating leases and operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative. Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration. Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and employee outplacement for separated employees. The Company classifies other charges associated with restructuring activities as follows: Sales Returns and Cost of Sales – Product returns (offset by the related cost of sales) and inventory write-offs or write-downs as a direct result of an approved restructuring initiative to exit certain businesses or locations will be recorded as a component of Net sales and/or Cost of sales when estimable and reasonably assured. Other Charges – Other charges related to the design and implementation of approved initiatives, which are charged to Operating expenses as incurred and primarily include the following: • Consulting and other professional services for organizational design of the future structures and processes as well as the implementation thereof; • Temporary labor backfill; • Costs to establish and maintain a Project Management Office (“PMO”) for the duration of the Restructuring Program, including internal costs for employees dedicated solely to project management activities, and consulting services to assist with business case development; and • Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative. The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. Total cumulative charges recorded associated with restructuring and other activities for the Restructuring Program were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Cumulative charges through March 31, 2024 $ — $ — $ 6 $ 11 $ 17 (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Cumulative charges through March 31, 2024 $ 6 $ — $ — $ — $ 6 Accrued restructuring charges of $7 million at March 31, 2024 relating to the Restructuring Component of the Profit Recovery Plan are expected to result in cash expenditures funded from cash provided by operations of approximately $2 million, $2 million, $2 million and $1 million for the remainder of fiscal 2024 and for fiscal 2025, 2026, and 2027, respectively. Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. Restructuring Program April 2024 Approvals Subsequent to March 31, 2024, between April 1, 2024 and April 24, 2024, the Company approved certain initiatives under the Restructuring Program within the areas of PMO, Enabling Function Re-Invention, which represents a broader initiative to reorganize and right-size the Company’s go-to-market structure, and Value Chain Optimization. Once the relevant accounting criteria has been met, the Company expects to record restructuring and other charges of approximately $62 million. The following presents the restructuring initiative charges approved from April 1, 2024 to April 24, 2024: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Approval Period April 1, 2024 - April 24, 2024 $ — $ — $ 11 $ 51 $ 62 Included in the above table, cumulative Restructuring Program restructuring initiative charges approved by the Company from April 1, 2024 to April 24, 2024 by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Approved April 1, 2024 - April 24, 2024 $ 9 $ 1 $ — $ 1 $ 11 Post-COVID Business Acceleration Program The Company approved specific initiatives under the Post-COVID Business Acceleration Program (the “PCBA Program”) through fiscal 2022 and has substantially completed those initiatives through fiscal 2023. Additional information about the PCBA Program is included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. |
DEBT
DEBT | 9 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT In February 2024, the Company completed a public offering of $650 million aggregate principal amount of its 5.000% Senior Notes due February 14, 2034 (the "2034 Senior Notes"). The Company intends to use the proceeds from this offering for general corporate purposes, which may include funding a portion of the price to purchase the remaining interest in DECIEM, operating expenses, working capital, capital expenditures and redemptions and repayment of short-term or long-term borrowings, including outstanding commercial paper as it matures. These recently issued notes are summarized as follows: ($ in millions) Issue Date Price Yield Unamortized Debt Semi-annual 2034 Senior Notes (1) February 2024 99.689 % 5.04 % $ (2) $ (5) February 14/August 14 (1) In March 2022, in anticipation of the issuance of the 2034 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $300 million at a weighted average all-in rate of 2.02%. The treasury lock agreements were terminated in September 2022, and the Company recognized a gain in OCI of $31 million that is being amortized to interest expense over the life of the 2034 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2034 Senior Notes will be 4.53% over the life of the debt. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. The Company enters into foreign currency forward contracts, and may enter into option contracts, to reduce the effects of fluctuating foreign currency exchange rates. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. In addition, the Company enters into interest rate derivatives to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. The Company enters into the net investment hedges to offset the risk of changes in the U.S. dollar value of the Company’s investment in these foreign operations due to fluctuating foreign exchange rates. Time value is excluded from the effectiveness assessment and is recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses. The net gain or loss on net investment hedges is recorded within translation adjustments, as a component of accumulated OCI (“AOCI”) on the Company’s consolidated balance sheets, until the sale or substantially complete liquidation of the underlying assets of the Company’s investment. The Company also enters into foreign currency forward contracts, and may use option contracts, not designated as hedging instruments, to mitigate the change in fair value of specific assets and liabilities on the consolidated balance sheets. At March 31, 2024, the notional amount of derivatives not designated as hedging instruments was $3,449 million. The Company does not utilize derivative financial instruments for trading or speculative purposes. Costs associated with entering into derivative financial instruments have not been material to the Company’s consolidated financial results. For each derivative contract entered into, where the Company looks to obtain hedge accounting treatment, the Company formally and contemporaneously documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction, the nature of the risk being hedged, and how the hedging instruments’ effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively. This process includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. At inception, the Company evaluates the effectiveness of hedge relationships quantitatively, and has elected to perform, after initial evaluation, qualitative effectiveness assessments of certain hedge relationships to support an ongoing expectation of high effectiveness, if effectiveness testing is required. If based on the qualitative assessment, it is determined that a derivative has ceased to be a highly effective hedge, the Company will perform a quantitative assessment to determine whether to discontinue hedge accounting with respect to that derivative prospectively. The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows: Asset Derivatives Liability Derivatives Fair Value (1) Fair Value (1) (In millions) Balance Sheet March 31, 2024 June 30, 2023 Balance Sheet March 31, 2024 June 30, 2023 Derivatives Designated as Hedging Instruments: Foreign currency cash flow hedges Prepaid expenses and other current assets $ 36 $ 56 Other accrued liabilities $ 8 $ 16 Cross-currency swap contracts Prepaid expenses and other current assets 52 22 Other accrued liabilities — — Net investment hedges Prepaid expenses and other current assets 7 — Other accrued liabilities — 13 Interest rate-related derivatives Prepaid expenses and other current assets — — Other accrued liabilities 148 150 Total Derivatives Designated as Hedging Instruments 95 78 156 179 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Prepaid expenses and other current assets 7 20 Other accrued liabilities 7 20 Total derivatives $ 102 $ 98 $ 163 $ 199 (1) See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined. The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows: Amount of Gain (Loss) Location of Gain (Loss) Reclassified Amount of Gain (Loss) Reclassified from AOCI into Earnings (1) Three Months Ended Three Months Ended (In millions) 2024 2023 2024 2023 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ 36 $ (11) Net sales $ 15 $ 22 Interest rate-related derivatives — (11) Interest expense — (1) 36 (22) 15 21 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) 11 (23) — — Total derivatives $ 47 $ (45) $ 15 $ 21 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material. (2) During the three months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $3 million and $6 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain (Loss) Location of Gain (Loss) Reclassified Amount of Gain (Loss) Reclassified from AOCI into Earnings (1) Nine Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ 28 $ 7 Net sales $ 36 $ 59 Interest rate-related derivatives — 1 Interest expense (1) (1) 28 8 35 58 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (6) (38) — — Total derivatives $ 22 $ (30) $ 35 $ 58 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material. (2) During the nine months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $13 million and $19 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain (Loss) Recognized in Earnings on Derivatives Location of Gain (Loss) Recognized in Earnings on Derivatives Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Derivatives in Fair Value Hedging Relationships: Cross-currency swap contracts (1) Selling, general and administrative $ 30 $ 1 $ 19 $ 1 Interest rate swap contracts (2) Interest expense $ (17) $ 18 $ 3 $ (17) (1) Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in earnings from cross-currency swap contracts related to the amount excluded from effectiveness testing during the three months ended March 31, 2024 and 2023 was $5 million and $4 million, respectively, and for the nine months ended March 31, 2024 and 2023 was $14 million and $4 million, respectively. (2) Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows: (In millions) Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included Carrying Amount of the Cumulative Amount of Fair March 31, 2024 March 31, 2024 Long-term debt $ 845 $ (148) Intercompany debt $ — $ 62 Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows: Three Months Ended March 31 2024 2023 (In millions) Net Sales Selling, General and Administrative Interest Net Sales Selling, General and Administrative Interest Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded $ 3,940 $ 2,284 $ 94 $ 3,751 $ 2,281 $ 58 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item N/A N/A 17 N/A N/A (18) Derivatives designated as hedging instruments N/A N/A (17) N/A N/A 18 Gain (loss) on fair value hedge relationships – cross-currency swap contracts: Hedged item N/A (30) N/A N/A (1) N/A Derivatives designated as hedging instruments N/A 30 N/A N/A 1 N/A Loss on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings N/A N/A — N/A N/A (1) Gain on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings 15 N/A N/A 22 N/A N/A N/A (Not applicable) Nine Months Ended March 31 2024 2023 (In millions) Net Sales Selling, General and Administrative Interest Net Sales Selling, General and Administrative Interest Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded $ 11,737 $ 7,177 $ 287 $ 12,301 $ 7,155 $ 156 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item N/A N/A (3) N/A N/A 17 Derivatives designated as hedging instruments N/A N/A 3 N/A N/A (17) Gain (loss) on fair value hedge relationships – cross-currency swap contracts: Hedged item N/A (19) N/A N/A (1) N/A Derivatives designated as hedging instruments N/A 19 N/A N/A 1 N/A Loss on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings N/A N/A (1) N/A N/A (1) Gain on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings 36 N/A N/A 59 N/A N/A N/A (Not applicable) The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows: Amount of Gain Location of Gain Recognized in Earnings on Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Selling, general and administrative $ 18 $ 4 $ 31 $ 21 The Company's derivative instruments are subject to enforceable master netting agreements. These agreements permit the net settlement of these contracts on a per-institution basis; however, the Company records the fair value on a gross basis on its consolidated balance sheets based on maturity dates, including those subject to master netting arrangements. The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties: As of March 31, 2024 As of June 30, 2023 (In millions) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Derivative Financial Contracts Derivative assets $ 102 $ (36) $ 66 $ 98 $ (53) $ 45 Derivative liabilities (163) 36 (127) (199) 53 (146) Total $ (61) $ — $ (61) $ (101) $ — $ (101) Cash Flow Hedges The Company enters into foreign currency forward contracts, and may enter into foreign currency option contracts, to hedge anticipated transactions and receivables and payables denominated in foreign currencies, for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries. The foreign currency forward contracts entered into to hedge anticipated transactions have been designated as cash flow hedges and have varying maturities through the end of December 2025. Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes time value in the effectiveness assessment. At March 31, 2024, the Company had cash flow hedges outstanding with a notional amount totaling $2,478 million. The Company may enter into interest rate forward contracts to hedge anticipated issuance of debt for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of interest rate movements on the cost of debt issuance. For foreign currency hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses in AOCI are reclassified to Net sales when the underlying forecasted transaction occurs. If it is probable that the forecasted transaction will no longer occur, then any gains or losses in AOCI are reclassified to current-period Net sales. As of March 31, 2024, the Company’s foreign currency cash flow hedges were highly effective. The estimated net gain on the Company’s derivative instruments designated as cash flow hedges as of March 31, 2024 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $25 million. The accumulated net gain on derivative instruments designated as cash flow hedges in AOCI was $72 million and $79 million as of March 31, 2024 and June 30, 2023, respectively. Fair Value Hedges The Company enters into interest rate derivative contracts to manage the exposure to interest rate fluctuations on its funded indebtedness. At March 31, 2024, the Company has interest rate swap agreements, with notional amounts totaling $700 million and $300 million to effectively convert the fixed rate interest on its 2030 Senior Notes and 2031 Senior Notes, respectively, to variable interest rates based on the three-month fallback rate SOFR plus a margin. These interest rate swap agreements are designated as fair value hedges of the related long-term debt, and the changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. The Company enters into cross-currency swap contracts to manage the exposure of foreign exchange rate fluctuations on it’s intercompany foreign currency denominated debt. At March 31, 2024, the Company has cross-currency swap contracts with notional amounts totaling $491 million, to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. The cross-currency swap contracts are designated as fair value hedges of the related intercompany debt, and the gains and losses representing hedge components included in the assessment of effectiveness are presented in the same income statement line item as the earnings effect of the hedged transaction. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction. Any difference between the changes in the fair value of the excluded components and amounts recognized in earnings will be recognized in AOCI. The estimated net gain on the Company’s derivative instruments designated as fair value hedges as of March 31, 2024 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $14 million. The accumulated net loss on derivative instruments designated as fair value hedges in AOCI was $10 million and $20 million as of March 31, 2024 and June 30, 2023, respectively. Net Investment Hedges The Company enters into foreign currency forward contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations. The net gain or loss on these contracts is recorded within translation adjustments, as a component of AOCI on the Company’s consolidated balance sheets. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the Company’s net investment in these foreign operations. The net investment hedge contracts have varying maturities through the end of March 2025. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At March 31, 2024, the Company had net investment hedges outstanding with a notional amount totaling $1,011 million. Credit Risk As a matter of policy, the Company enters into derivative contracts only with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $102 million at March 31, 2024. To manage this risk, the Company has strict counterparty credit guidelines that are continually monitored. Accordingly, management believes risk of loss under these hedging contracts is remote. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company records certain of its financial assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The accounting for fair value measurements must be applied to nonfinancial assets and nonfinancial liabilities that require initial measurement or remeasurement at fair value, which principally consist of assets and liabilities acquired through business combinations and goodwill, indefinite-lived intangible assets and long-lived assets for the purposes of calculating potential impairment. The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 1,855 $ — $ — $ 1,855 Foreign currency forward contracts — 50 — 50 Cross-currency swap contracts — 52 — 52 Total $ 1,855 $ 102 $ — $ 1,957 Liabilities: Foreign currency forward contracts $ — $ 15 $ — $ 15 Interest rate-related derivatives — 148 — 148 DECIEM stock options — — 106 106 Total $ — $ 163 $ 106 $ 269 The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2023: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 3,241 $ — $ — $ 3,241 Foreign currency forward contracts — 76 — 76 Cross-currency swap contracts — 22 — 22 Total $ 3,241 $ 98 $ — $ 3,339 Liabilities: Foreign currency forward contracts $ — $ 49 $ — $ 49 Interest rate-related derivatives — 150 — 150 DECIEM stock options — — 99 99 Total $ — $ 199 $ 99 $ 298 The estimated fair values of the Company’s financial instruments are as follows: March 31, 2024 June 30, 2023 (In millions) Carrying Fair Carrying Fair Nonderivatives Cash and cash equivalents $ 3,701 $ 3,701 $ 4,029 $ 4,029 Current and long-term debt 7,770 7,276 8,114 7,665 DECIEM stock options 106 106 99 99 Deferred consideration payable 341 340 341 338 Derivatives Cross-currency swap contracts - asset, net 52 52 22 22 Foreign currency forward contracts – asset, net 35 35 27 27 Interest rate-related derivatives – liability, net (148) (148) (150) (150) The following table presents the Company’s impairment charges for the nine months ended March 31, 2023 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, due to a change in circumstances that triggered an interim impairment test during the three months ended December 31, 2022: (In millions) Impairment charges Date of Fair Value Measurement Fair Value (1) Other intangible assets, net (trademarks) Dr.Jart+ $ 100 November 30, 2022 $ 330 Too Faced 86 November 30, 2022 186 Smashbox 21 December 31, 2022 — Total $ 207 $ 516 (1) See Note 2 - Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. The following methods and assumptions were used to estimate the fair value of the Company’s financial instruments for which it is practicable to estimate that value: Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy). Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of cash equivalent instruments. Foreign currency forward contracts – The fair values of the Company’s foreign currency forward contracts were determined using an industry-standard valuation model, which is based on an income approach. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from an independent pricing service. To determine the fair value of contracts under the model, the difference between the contract price and the current forward rate was discounted using SOFR forward curves. Cross-currency swap contracts – The fair values of the Company’s cross-currency swap contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as yield curves and currency spot and forward rates, were obtained from independent pricing services. Interest rate-related derivatives – The fair values of the Company’s interest rate contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as treasury yield curves, swap yield curves and SOFR forward curves, were obtained from independent pricing services. Current and long-term debt – The fair value of the Company’s debt was estimated based on the current rates offered to the Company for debt with the same remaining maturities. To a lesser extent, debt also includes finance lease obligations for which the carrying amount approximates the fair value. The Company’s debt is classified within Level 2 of the valuation hierarchy. Deferred consideration payable – The deferred consideration payable consists primarily of deferred payments associated with the fiscal 2023 fourth quarter acquisition of TOM FORD. The fair value of the payments treated as deferred consideration payable are calculated based on the net present value of cash payments using an estimated borrowing rate based on quoted prices for a similar liability. The Company’s deferred consideration payable is classified within Level 2 of the valuation hierarchy. DECIEM stock options – The stock option liability represents the employee stock options issued by DECIEM in replacement and exchange for certain vested and unvested DECIEM employee stock options previously issued by DECIEM, in connection with the Company's acquisition of DECIEM. The DECIEM stock options are subject to the terms and conditions of DECIEM's 2021 Stock Option Plan. The DECIEM stock option liability is measured using the Monte Carlo Method, which requires certain assumptions. Significant changes in the projected future operating results would result in a higher or lower fair value measurement. Changes to the discount rates or volatilities would have a lesser effect. These inputs are categorized as Level 3 of the valuation hierarchy. The DECIEM stock options are remeasured to fair value at each reporting date through the period when the options are exercised or repurchased (i.e., when they are settled), which is expected in the fiscal 2024 fourth quarter, with an offsetting entry to compensation expense. See Note 10 – Stock Programs for discussion . Changes in the DECIEM stock option liability for the nine months ended March 31, 2024 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows: (In millions) Fair Value DECIEM stock option liability as of June 30, 2023 $ 99 Changes in fair value, net of foreign currency remeasurements 8 Translation adjustments and other, net (1) DECIEM stock option liability as of March 31, 2024 $ 106 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company’s revenue recognition accounting policies are described in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Accounts Receivable Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $27 million and $30 million as of March 31, 2024 and June 30, 2023, respectively. Payment terms are short-term in nature and are generally less than one year. Changes in the allowance for credit losses are as follows: (In millions) March 31, 2024 Balance at June 30, 2023 $ 16 Provision for expected credit losses (3) Write-offs, net & other 2 Balance at March 31, 2024 $ 15 The remaining balance of the allowance for doubtful accounts and customer deductions of $12 million and $14 million as of March 31, 2024 and June 30, 2023, respectively, relates to non-credit losses, which are primarily due to customer deductions. Deferred Revenue Changes in deferred revenue during the period are as follows: Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Deferred revenue, beginning of period $ 610 $ 353 $ 572 $ 362 Revenue recognized that was included in the deferred revenue balance at the beginning of the period (26) (50) (275) (330) Revenue deferred (released) during the period (38) (15) 255 261 Other (4) 26 (10) 21 Deferred revenue, end of period $ 542 $ 314 $ 542 $ 314 Transaction Price Allocated to the Remaining Performance Obligations At March 31, 2024, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions, gift card liabilities and the Marcolin license arrangement related to TOM FORD that are unsatisfied (or partially unsatisfied) is $306 million. The remaining balance of deferred revenue at March 31, 2024 will be recognized beyond the next twelve months, of which $226 million relates to the non-refundable upfront payment received as part of the Marcolin licensing arrangement that is being recognized on a straight-line basis over the estimated economic life of the license, which is 20 years. Royalty Revenue – License Arrangements The Company’s contractually guaranteed minimum royalty amounts due during future periods under its existing license arrangements is disclosed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. |
PENSION AND POST-RETIREMENT BEN
PENSION AND POST-RETIREMENT BENEFIT PLANS | 9 Months Ended |
Mar. 31, 2024 | |
Retirement Benefits [Abstract] | |
PENSION AND POST-RETIREMENT BENEFIT PLANS | PENSION AND POST-RETIREMENT BENEFIT PLANS The Company maintains pension plans covering substantially all of its full-time employees for its U.S. operations and a majority of its international operations. The Company also maintains post-retirement benefit plans that provide certain medical and dental benefits to eligible employees. Descriptions of these plans are included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. The components of net periodic benefit cost for the three months ended March 31, 2024 and 2023 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2024 2023 2024 2023 2024 2023 Service cost $ 9 $ 10 $ 7 $ 7 $ — $ — Interest cost 12 10 5 3 2 2 Expected return on plan assets (14) (14) (7) (5) — — Amortization of: Actuarial loss (gain) 1 — (2) — — — Prior service cost — — (1) — (1) — Special termination benefits — — — 1 — — Net periodic benefit cost $ 8 $ 6 $ 2 $ 6 $ 1 $ 2 The components of net periodic benefit cost for the nine months ended March 31, 2024 and 2023 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2024 2023 2024 2023 2024 2023 Service cost $ 27 $ 28 $ 20 $ 20 $ 1 $ — Interest cost 35 30 14 10 6 6 Expected return on plan assets (41) (42) (19) (13) — — Amortization of: Actuarial loss (gain) 3 2 (6) (2) — — Prior service cost — — (1) — (1) — Special termination benefits — — — 1 — — Net periodic benefit cost $ 24 $ 18 $ 8 $ 16 $ 6 $ 6 The amounts recognized in the consolidated balance sheets related to the Company’s pension and post-retirement benefit plans consist of the following: (In millions) March 31, 2024 June 30, 2023 Other assets $ 113 $ 115 Other accrued liabilities (35) (34) Other noncurrent liabilities (334) (395) Funded status (256) (314) Accumulated other comprehensive loss 212 235 Net amount recognized $ (44) $ (79) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Commitment In April 2024, the Company notified the minority interest holders that it was exercising its option to purchase the remaining interests in DECIEM, pursuant to the terms of the net Put (Call) Option for a purchase price based on the performance of DECIEM. This will result in the settlement of the DECIEM stock options and the redeemable noncontrolling interest balances during the fiscal 2024 fourth quarter. Legal Proceedings The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability matters (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, securities, tax, and privacy. Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings, including the matters referred to below, are not material to the Company’s consolidated financial statements. On December 7, 2023 and January 22, 2024, the Company and its Chief Executive Officer and Chief Financial Officer were named as defendants in separate purported securities class action complaints filed in the United States District Court for the Southern District of New York. On February 20, 2024, those two purported securities class actions were consolidated into one action. On March 22, 2024, plaintiffs filed their consolidated amended class action complaint, which alleges that defendants made materially false and misleading statements during the period February 3, 2022 to October 31, 2023 in press releases, the Company’s public filings and during conference calls with analysts that artificially inflated the price of the Company’s stock in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Defendants intend to defend the action vigorously. On February 1, 2024 and March 15, 2024, shareholder derivative action complaints were filed against certain of the Company’s officers, all the Company’s directors as of those dates and certain of the Company’s former directors as of those dates in the United States District Court for the Southern District of New York. In April 2024, both complaints were voluntarily dismissed without prejudice; and, subsequently, one of the former derivative plaintiffs made a litigation demand, requesting, among other things, that the Company's Board of Directors investigate potential claims on behalf of the Company based on the same alleged course of conduct identified in the securities case complaint (which were also reflected in the dismissed shareholder derivative actions complaints) described above. |
STOCK PROGRAMS
STOCK PROGRAMS | 9 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK PROGRAMS | STOCK PROGRAMS Additional information relating to the Company's stock programs and the DECIEM stock options are included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. The Company's Stock Programs Total net stock-based compensation expense is attributable to the granting of, and the remaining requisite service periods of stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, including long-term price-vested units and share units. Compensation expense attributable to net stock-based compensation was $87 million and $69 million for the three months ended March 31, 2024 and 2023, respectively, and was $276 million and $234 million for the nine months ended March 31, 2024 and 2023, respectively. Stock Options During the nine months ended March 31, 2024, the Company granted stock options in respect of approximately 1.8 million shares of Class A Common Stock with a weighted average exercise price per share of $155.92 and a weighted average grant date fair value per share of $52.83. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The aggregate intrinsic value of stock options exercised during the nine months ended March 31, 2024 was $25 million. Restricted Stock Units During the nine months ended March 31, 2024, the Company granted RSUs in respect of approximately 1.6 million shares of Class A Common Stock with a weighted average grant date fair value per share of $155.84 that, at the time of grant, are scheduled to vest at 0.6 million, 0.6 million, and 0.4 million shares per year, in fiscal 2025, fiscal 2026 and fiscal 2027, respectively. Vesting of RSUs is generally subject to the continued employment or the retirement of the grantees. The RSUs are generally accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were generally valued at the closing market price of the Company’s Class A Common Stock on the date of grant. Performance Share Units During the nine months ended March 31, 2024, the Company granted PSUs with a target payout of approximately 0.2 million shares of Class A Common Stock with a grant date fair value per share of $156.39, which will be settled in stock subject to the achievement of the Company’s net sales, diluted net earnings per common share and return on invested capital goals for the three fiscal years ending June 30, 2026, all subject to continued employment or the retirement of the grantees. For PSUs granted, no settlement will occur for results below the applicable minimum threshold. PSUs are accompanied by dividend equivalent rights that will be payable in cash upon settlement of the PSUs and, as such, were valued at the closing market value of the Company’s Class A Common Stock on the date of grant. In August 2023, less than 0.1 million shares of the Company’s Class A Common Stock were issued, and related accrued dividends were paid, relative to the target goals set at the time of the issuance, in settlement of 0.2 million PSUs with a performance period ended June 30, 2023. DECIEM Stock Options The DECIEM stock options are liability-classified awards as they are expected to be settled in cash and are remeasured to fair value at each reporting date through date of settlement. Total stock-based compensation expense is attributable to the exchange or replacement of and the remaining requisite service period of stock options. The total stock option expense (income), net of foreign currency remeasurements, for the three months ended March 31, 2024 and 2023 was $5 million and $1 million, respectively, and for the nine months ended March 31, 2024 and 2023 was $8 million and $(2) million, respectively. There is no related income tax benefit on the DECIEM stock-based compensation expense. There were no DECIEM stock options exercised during the nine months ended March 31, 2024. The DECIEM stock options are reported as a stock option liability of $106 million and $99 million in Other accrued liabilities in the accompanying consolidated balance sheets at March 31, 2024 and June 30, 2023, respectively, as they are expected to be settled in the fiscal 2024 fourth quarter. The fair value of the stock options were calculated by incorporating significant assumptions including the starting equity value, actual and projected net sales and EBITDA and the following key assumptions into the Monte Carlo Method: March 31, 2024 June 30, 2023 Risk-free rate 5.00% 4.90% Term to mid of last twelve-month period 0.08 years 0.46 years Operating leverage adjustment 0.45 0.45 Net sales discount rate 7.90% 7.80% EBITDA discount rate 11.40% 11.30% EBITDA volatility 31.80% 32.00% Net sales volatility 14.30% 14.40% |
NET EARNINGS ATTRIBUTABLE TO TH
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE | 9 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE | NET EARNINGS ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC. PER COMMON SHARE Net earnings attributable to The Estée Lauder Companies Inc. per common share (“basic EPS”) is computed by dividing net earnings attributable to The Estée Lauder Companies Inc. by the weighted average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. Net earnings attributable to The Estée Lauder Companies Inc. per common share assuming dilution (“diluted EPS”) is computed by reflecting potential dilution from stock-based awards using the treasury stock method. A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows: Three Months Ended Nine Months Ended (In millions, except per share data) 2024 2023 2024 2023 Numerator: Net earnings attributable to The Estée Lauder Companies Inc. $ 330 $ 156 $ 674 $ 1,039 Denominator: Weighted average common shares outstanding – Basic 359.1 357.9 358.8 357.8 Effect of dilutive stock options 0.8 2.5 0.9 2.4 Effect of PSUs 0.2 0.1 0.1 0.1 Effect of RSUs 0.7 0.7 0.6 0.6 Weighted average common shares outstanding – Diluted 360.8 361.2 360.4 360.9 Net earnings attributable to The Estée Lauder Companies Inc. per common share: Basic $ .92 $ .44 $ 1.88 $ 2.90 Diluted $ .91 $ .43 $ 1.87 $ 2.88 The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows: Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Stock options 5.8 2.2 5.7 2.1 RSUs and PSUs 0.1 — 0.5 — As of March 31, 2024 and 2023, 0.4 million and 0.4 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the calculation of diluted EPS because the number of shares ultimately issued is contingent on the achievement of certain performance targets of the Company, as discussed in Note 10 – Stock Programs . |
EQUITY AND REDEEMABLE NONCONTRO
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST | 9 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST | EQUITY AND REDEEMABLE NONCONTROLLING INTEREST Total Stockholders’ Equity – The Estée Lauder Companies Inc. Three Months Ended Nine Months Ended (In millions, except per share data) 2024 2023 2024 2023 Common stock, beginning of the period $ 6 $ 6 $ 6 $ 6 Stock-based compensation — — — — Common stock, end of the period 6 6 6 6 Paid-in capital, beginning of the period 6,367 6,000 6,153 5,796 Common stock dividends 2 1 5 3 Stock-based compensation 96 102 307 304 Paid-in capital, end of the period 6,465 6,103 6,465 6,103 Retained earnings, beginning of the period 13,858 14,342 13,991 13,912 Common stock dividends (238) (237) (715) (690) Net earnings attributable to The Estée Lauder Companies Inc. 330 156 674 1,039 Retained earnings, end of the period 13,950 14,261 13,950 14,261 Accumulated other comprehensive loss, beginning of the period (856) (829) (934) (762) Other comprehensive loss attributable to The Estée Lauder Companies Inc. (158) (46) (80) (113) Accumulated other comprehensive loss, end of the period (1,014) (875) (1,014) (875) Treasury stock, beginning of the period (13,663) (13,617) (13,631) (13,362) Acquisition of treasury stock — — — (184) Stock-based compensation — (1) (32) (72) Treasury stock, end of the period (13,663) (13,618) (13,663) (13,618) Total equity $ 5,744 $ 5,877 $ 5,744 $ 5,877 Redeemable noncontrolling interest, beginning of the period $ 850 $ 819 $ 832 $ 842 Net earnings (loss) attributable to redeemable noncontrolling interest 5 (1) 21 3 Translation adjustments (15) 1 (13) (26) Redeemable noncontrolling interest, end of the period $ 840 $ 819 $ 840 $ 819 Cash dividends declared per common share $ .66 $ .66 $ 1.98 $ 1.92 The following is a summary of quarterly cash dividends declared per share on the Company’s Class A and Class B Common Stock during the nine months ended March 31, 2024: Date Declared Record Date Payable Date Amount per Share August 17, 2023 August 31, 2023 September 15, 2023 $ .66 October 31, 2023 November 30, 2023 December 15, 2023 $ .66 February 2, 2024 February 29, 2024 March 15, 2024 $ .66 On April 30, 2024, a dividend was declared in the amount of $.66 per share on the Company’s Class A and Class B Common Stock. The dividend is payable in cash on June 17, 2024 to stockholders of record at the close of business on May 31, 2024. Common Stock Beginning in December 2022, we temporarily suspended the repurchase of shares of our Class A Common Stock. We may resume repurchases in the future. Accumulated Other Comprehensive Loss The following table represents changes in accumulated other comprehensive loss, net of tax, by component for the nine months ended March 31, 2024: (In millions) Net Cash Cross-Currency Swap Contracts (2) Amounts Translation Total Balance at June 30, 2023 $ 59 $ (15) $ (177) $ (801) $ (934) OCI before reclassifications (3) 21 19 23 (103) (1) (40) Amounts reclassified to Net earnings (26) (11) (3) — (40) Net current-period OCI (5) 8 20 (103) (80) Balance at March 31, 2024 $ 54 $ (7) $ (157) $ (904) $ (1,014) (1) See Note 5 – Derivative Financial Instruments for gains (losses) relating to net investment hedges. (2) The gain recognized in AOCI, net of tax from cross-currency swap contracts represents the amount excluded from effectiveness testing. (3) The tax provision included in Net Cash Flow Hedge Gain (Loss), Cross-Currency Swap Contracts, Amounts Included in Net Periodic Benefit Cost and Translation Adjustments are $7 million, $5 million, $5 million, and $26 million, respectively. The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three and nine months ended March 31, 2024 and 2023: Amount Reclassified from AOCI Affected Line Item in Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Gain (Loss) on Cash Flow Hedges Foreign currency forward contracts $ 15 $ 22 $ 36 $ 59 Net sales Interest rate-related derivatives — (1) (1) (1) Interest expense 15 21 35 58 Provision for income taxes (5) (5) (9) (14) Provision for income taxes 10 16 26 44 Net earnings Cross-Currency Swap Contracts Gain on cross-currency swap contracts 5 4 14 4 Selling, general and administrative Provision for income taxes (1) (1) (3) (1) Provision for income taxes 4 3 11 3 Net earnings Retirement Plan and Other Retiree Benefit Adjustments Amortization of prior service cost 2 — 2 — Other components of net periodic benefit cost (1) Amortization of actuarial gain 1 — 3 — Other components of net periodic benefit cost (1) 3 — 5 — Provision for income taxes (1) — (2) — Provision for income taxes 2 — 3 — Net earnings Total reclassification adjustments, net $ 16 $ 19 $ 40 $ 47 Net earnings (1) See Note 8 – Pension and Post-Retirement Benefit Plans for additional information. |
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS | 9 Months Ended |
Mar. 31, 2024 | |
Supplemental Cash Flow Elements [Abstract] | |
STATEMENT OF CASH FLOWS | STATEMENT OF CASH FLOWS Supplemental cash flow information for the nine months ended March 31, 2024 and 2023 is as follows: (In millions) 2024 2023 Cash: Cash paid during the period for interest $ 244 $ 142 Cash paid during the period for income taxes $ 441 $ 387 Non-cash investing and financing activities: Property, plant and equipment accrued but unpaid $ 35 $ 239 Right-of-use assets obtained in exchange for new/modified operating lease liabilities $ 351 $ 197 |
SEGMENT DATA AND RELATED INFORM
SEGMENT DATA AND RELATED INFORMATION | 9 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
SEGMENT DATA AND RELATED INFORMATION | SEGMENT DATA AND RELATED INFORMATION Reportable operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the “Chief Executive”) in deciding how to allocate resources and in assessing performance. Although the Company operates in one business segment, beauty products, management also evaluates performance on a product category basis. Product category performance is measured based upon net sales before returns associated with restructuring and other activities, and operating income (loss) before charges associated with restructuring and other activities. Returns and charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. The accounting policies for the Company’s reportable segments are substantially the same as those for the consolidated financial statements, as described in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; thus, no additional information is produced for the Chief Executive or included herein. There has been no significant variance in the total or long-lived asset values associated with the Company’s segment data since June 30, 2023. During the fiscal 2024 second quarter, the Company identified and corrected prior-period misclassifications of net sales and operating income between certain of the Company’s product categories in its segment footnote. As a result, product category net sales and operating income have been adjusted from the amounts previously reported for the three and nine months ended March 31, 2023, for comparability purposes. Also presented below, product category net sales and operating income for the fiscal years ended June 30, 2023 and 2022 are adjusted to reflect the misclassifications arising in those periods for comparability purposes and will be reflected within the prospective filing. The misclassifications had no impact on the current-period or prior-period consolidated statements of earnings, consolidated statements of comprehensive income, consolidated balance sheets, or the consolidated statements of cash flows, and the Company determined that the impact on the Company’s current-period and previously issued financial statements for the respective periods was not material. Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 PRODUCT CATEGORY DATA Net sales: Skin Care $ 2,060 $ 1,915 $ 5,873 $ 6,454 Makeup 1,136 1,104 3,365 3,424 Fragrance 575 577 1,948 1,907 Hair Care 143 148 464 488 Other 26 11 88 38 3,940 3,755 11,738 12,311 Returns associated with restructuring and other activities — (4) (1) (10) Net sales $ 3,940 $ 3,751 $ 11,737 $ 12,301 Operating income (loss) before charges associated with restructuring and other activities: Skin Care $ 468 $ 269 $ 920 $ 1,238 Makeup 66 (5) 56 (9) Fragrance 29 66 267 343 Hair Care (25) (24) (50) (32) Other 11 9 38 7 549 315 1,231 1,547 Reconciliation: Charges associated with restructuring and other activities (18) (18) (28) (33) Interest expense (94) (58) (287) (156) Interest income and investment income, net 45 37 126 78 Other components of net periodic benefit cost 4 4 9 9 Earnings before income taxes $ 486 $ 280 $ 1,051 $ 1,445 GEOGRAPHIC DATA (1) Net sales: The Americas $ 1,117 $ 1,089 $ 3,567 $ 3,447 Europe, the Middle East & Africa 1,647 1,474 4,488 4,972 Asia/Pacific 1,176 1,192 3,683 3,892 3,940 3,755 11,738 12,311 Returns associated with restructuring and other activities — (4) (1) (10) Net sales $ 3,940 $ 3,751 $ 11,737 $ 12,301 Operating income (loss): The Americas $ (6) $ (93) $ (243) $ (53) Europe, the Middle East & Africa 302 176 825 919 Asia/Pacific 253 232 649 681 549 315 1,231 1,547 Charges associated with restructuring and other activities (18) (18) (28) (33) Operating income $ 531 $ 297 $ 1,203 $ 1,514 (1) The net sales from the Company's travel retail business are included in the Europe, the Middle East & Africa region, and operating income attributable to these net sales are included in that region and in The Americas. The exception is for net sales and operating income of Dr.Jart+ in the travel retail channel in Korea that are reflected in Korea in the Asia/Pacific region. The tables below present the effect of the corrections for the three and nine months ended March 31, 2023, and fiscal years ended June 30, 2023 and 2022. Three Months Ended March 31, 2023 Nine Months Ended March 31, 2023 (In millions) As Previously Reported Adjustments As Adjusted As Previously Reported Adjustments As Adjusted PRODUCT CATEGORY DATA Net sales: Skin Care $ 1,922 $ (7) $ 1,915 $ 6,408 $ 46 $ 6,454 Makeup 1,088 16 1,104 3,408 16 3,424 Fragrance 585 (8) 577 1,967 (60) 1,907 Hair Care 149 (1) 148 489 (1) 488 Other 11 — 11 39 (1) 38 3,755 — 3,755 12,311 — 12,311 Returns associated with restructuring and other activities (4) — (4) (10) — (10) Net sales $ 3,751 $ — $ 3,751 $ 12,301 $ — $ 12,301 Operating income (loss): Skin Care $ 256 $ 13 $ 269 $ 1,207 $ 31 $ 1,238 Makeup (15) 10 (5) (36) 27 (9) Fragrance 89 (23) 66 399 (56) 343 Hair Care (24) — (24) (31) (1) (32) Other 9 — 9 8 (1) 7 315 — 315 1,547 — 1,547 Charges associated with restructuring and other activities (18) — (18) (33) — (33) Operating income $ 297 $ — $ 297 $ 1,514 $ — $ 1,514 Year Ended June 30, 2023 Year Ended June 30, 2022 (In millions) As Previously Reported Adjustments As Adjusted As Previously Reported Adjustments As Adjusted PRODUCT CATEGORY DATA Net sales: Skin Care $ 8,202 $ 47 $ 8,249 $ 9,886 $ 16 $ 9,902 Makeup 4,516 16 4,532 4,667 3 4,670 Fragrance 2,512 (61) 2,451 2,508 (17) 2,491 Hair Care 653 (1) 652 631 — 631 Other 54 (1) 53 49 (2) 47 15,937 — 15,937 17,741 — 17,741 Returns associated with restructuring and other activities (27) — (27) (4) — (4) Net sales $ 15,910 $ — $ 15,910 $ 17,737 $ — $ 17,737 Operating income (loss): Skin Care $ 1,204 $ 73 $ 1,277 $ 2,753 $ 23 $ 2,776 Makeup (22) 1 (21) 133 (7) 126 Fragrance 440 (70) 370 456 (15) 441 Hair Care (34) (2) (36) (28) — (28) Other 6 (2) 4 0 (1) (1) 1,594 — 1,594 3,314 — 3,314 Charges associated with restructuring and other activities (85) — (85) (144) — (144) Operating income $ 1,509 $ — $ 1,509 $ 3,170 $ — $ 3,170 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements furnished reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Certain prior year amounts in the notes to the consolidated financial statements have been reclassified to conform to current year presentation. |
Management Estimates | Management Estimates The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Descriptions of the Company’s significant accounting policies are discussed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. |
Currency Translation and Transactions | Currency Translation and Transactions All assets and liabilities of foreign subsidiaries and affiliates are translated at period-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation losses, net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $192 million and $5 million, net of tax, during the three months ended March 31, 2024 and 2023, respectively, and $103 million and $66 million, net of tax, during the nine months ended March 31, 2024 and 2023, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings. These subsidiaries are not material to the Company’s consolidated financial statements or liquidity. The Company enters into foreign currency forward contracts and may enter into option contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. Additionally, the Company enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 5 – Derivative Financial Instruments for further discussion . The Company categorizes these instruments as entered into for purposes other than trading. |
Concentration of Credit Risk | Concentration of Credit Risk The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries. The Company grants credit to qualified customers. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consists of the following: (In millions) March 31, 2024 June 30, 2023 Assets (Useful Life) Land and improvements (1) $ 70 $ 70 Buildings and improvements (10 to 40 years) 884 843 Machinery and equipment (3 to 10 years) 1,187 1,071 Computer hardware and software (4 to 10 years) 1,727 1,651 Furniture and fixtures (5 to 10 years) 136 136 Leasehold improvements 2,408 2,310 Construction in progress 677 827 7,089 6,908 Less accumulated depreciation and amortization (3,956) (3,729) $ 3,133 $ 3,179 (1) Land improvements are depreciated over a 10 year useful life. Depreciation and amortization of property, plant and equipment was $166 million and $147 million during the three months ended March 31, 2024 and 2023, respectively, and $491 million and $421 million during the nine months ended March 31, 2024 and 2023, respectively. Depreciation and amortization related to the Company’s manufacturing process is included in Cost of sales, and all other depreciation and amortization is included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings. |
Income Taxes | Income Taxes The effective rate for income taxes for the three and nine months ended March 31, 2024 and 2023 are as follows: Three Months Ended Nine Months Ended 2024 2023 2024 2023 Effective rate for income taxes 31.1 % 44.6 % 33.9 % 27.9 % Basis-point change from the prior-year period (1,350) 600 For the three months ended March 31, 2024, the decrease in the effective tax rate was primarily attributable to a lower effective tax rate on the Company's foreign operations due to the timing of the estimated change in the Company's full year geographical mix of earnings in the current and prior-year periods, partially offset by the unfavorable impact associated with previously issued stock-based compensation. For the nine months ended March 31, 2024, the increase in the effective tax rate was primarily attributable to a higher effective tax rate on the Company's foreign operations, due to the Company's geographical mix of earnings for fiscal 2024, and the unfavorable impact associated with previously issued stock-based compensation. On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act, including a tax provision implementing a 15% corporate alternative minimum tax based on global adjusted financial statement income. The corporate alternative minimum tax became effective beginning with the Company's first quarter of fiscal 2024 and did not have an impact on the Company's consolidated financial statements for the three and nine months ended March 31, 2024. As of March 31, 2024 and June 30, 2023, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $64 million and $63 million, respectively. The total amount of unrecognized tax benefits at March 31, 2024 that, if recognized, would affect the effective tax rate was $54 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three and nine months ended March 31, 2024 in the accompanying consolidated statements of earnings was $1 million and $3 million, respectively. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at each of March 31, 2024 and June 30, 2023, was $18 million and $15 million, respectively. On the basis of the information available as of March 31, 2024, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months. During the fiscal 2024 second quarter, the Company formally concluded the compliance process with respect to its fiscal 2022 income tax return under the U.S. Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”), which had no impact on the Company’s consolidated financial statements for the three and nine months ended March 31, 2024. |
Supplier Finance Programs | Supplier Finance Programs Under its supplier finance programs, the Company agrees to pay the banks the stated amount of confirmed invoices from its designated suppliers on the due dates of the invoices. The Company may terminate the agreements upon written notice (with notice periods ranging from 30 to 60 days) or immediately upon a breach. The supplier invoices that have been confirmed as valid under the programs require payment in full within 90 days of the invoice date. |
Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards FASB ASU No. 2022-04 – Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations In September 2022, the FASB issued authoritative guidance which is intended to enhance the transparency surrounding the use of supplier finance programs. The guidance requires companies that use supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. Effective for the Company – The guidance became effective for the Company’s first quarter fiscal 2024 and has been applied on a retrospective basis, except for the requirement to disclose rollforward information annually which is effective prospectively for the Company beginning in fiscal 2025. Impact on consolidated financial statements – The Company has supplier financing arrangements and applied the disclosure requirements as required by the amendments. Such information is included in Supplier Finance Programs above within Note 1 – Summary of Significant Accounting Policies . Reference Rate Reform (ASC Topic 848 “ ASC 848 ” ) In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”) and applies to lease and other contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that reference LIBOR or another rate that is expected to be discontinued as a result of reference rate reform. In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC 848. In December 2022, the FASB issued authoritative guidance to defer the sunset date of ASC 848 from December 31, 2022 to December 31, 2024. Effective for the Company – This guidance can only be applied for a limited time through December 31, 2024. Impact on consolidated financial statements – The Company completed its comprehensive evaluation of applying this guidance and adopted certain practical expedients for its interest rate swap agreements in the fiscal 2024 first quarter which did not have a significant impact on its consolidated financial statements. The practical expedients that were adopted permit its hedging relationships to continue without de-designation upon changes due to reference rate reform. Foreign currency forward contracts do not reference LIBOR and no practical expedients were elected but are now discounted using the Secured Overnight Financing Rate ("SOFR"). For existing lease, debt arrangements and other contracts, the Company did not adopt any ASC 848 practical expedients as it relates to these arrangements. Recently Issued Accounting Standards FASB ASU No. 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the FASB issued authoritative guidance to improve reportable segment disclosure requirements. Companies are required to disclose significant segment expenses by reportable segment if they are regularly provided to the chief operating decision maker (CODM). Companies are also required to disclose other segment items by reportable segment. The guidance clarifies that companies may disclose more than one measure of segment profit or loss used by the CODM, provided that at least one of the reported measures includes the segment profit or loss measure that is most consistent with U.S. GAAP measurement principles. All existing annual disclosures about segment profit or loss, as well as the new requirements, must now be provided on an interim basis. Additionally, on an annual basis, the CODM’s title and position is required, as well as an explanation of how the CODM uses the reported measure(s) and other disclosures. The guidance does not change how companies identify their operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2025 Form 10-K and then in interim periods beginning in the Company’s first quarter of fiscal 2026. Early adoption is permitted. The guidance should be applied retrospectively unless impracticable. Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures. FASB ASU No. 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued authoritative guidance to amend and enhance existing annual in come tax disclosures primarily focusing on two reporting areas: (1) greater disaggregation of information in the effective tax rate reconciliations and (2) disclosure of income taxes paid by the companies, disaggregated by applicable jurisdiction. Companies are required to use specific categories to prepare and disclose a tabular rate reconciliation (using both percentages and reporting currency amounts) of: • the reported income tax expense (or benefit) from continuing operations and the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal income tax rate of the jurisdiction of domicile. • reconciling items within certain categories that are equal to or greater than a specified quantitative threshold, including the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items. The guidance also requires companies to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign jurisdictions including individual jurisdictions with amounts paid equal to or greater than a specified quantitative threshold. The guidance also requires companies to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign as well as income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign jurisdictions. Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2026 Form 10-K. Early adoption is permitted. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures. SEC Final Rule Release No. 33-11275 – The Enhancement and Standardization of Climate-Related Disclosures for Investors In March 2024, the SEC adopted rules intended to enhance and standardize climate-related disclosures in registration statements and annual reports. The rules require significant effects of severe weather events and other natural conditions, amounts related to carbon offsets and renewable energy credits or certificates, as well as material impacts on financial estimates and assumptions that are due to severe weather events and other natural conditions or disclosed climate-related targets or transition plans to be disclosed in the annual financial statements in certain circumstances. Effective for the Company – On April 4, 2024, the SEC issued an order staying the final rule on climate-related disclosures pending certain legal challenges. Under the rule as currently issued, the disclosure requirements related to the annual financial statements are expected to be effective for the Company's fiscal year ending June 30, 2026 Form 10-K. The Company is not required to provide comparative information in the year of adoption. Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its annual financial statement disclosures. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of inventory and promotional merchandise | Inventory and promotional merchandise consists of the following: (In millions) March 31, 2024 June 30, 2023 Raw materials $ 776 $ 876 Work in process 312 362 Finished goods 960 1,404 Promotional merchandise 259 337 $ 2,307 $ 2,979 |
Schedule of property, plant and equipment | Property, plant and equipment consists of the following: (In millions) March 31, 2024 June 30, 2023 Assets (Useful Life) Land and improvements (1) $ 70 $ 70 Buildings and improvements (10 to 40 years) 884 843 Machinery and equipment (3 to 10 years) 1,187 1,071 Computer hardware and software (4 to 10 years) 1,727 1,651 Furniture and fixtures (5 to 10 years) 136 136 Leasehold improvements 2,408 2,310 Construction in progress 677 827 7,089 6,908 Less accumulated depreciation and amortization (3,956) (3,729) $ 3,133 $ 3,179 (1) Land improvements are depreciated over a 10 year useful life. |
Schedule of effective rate for income taxes | The effective rate for income taxes for the three and nine months ended March 31, 2024 and 2023 are as follows: Three Months Ended Nine Months Ended 2024 2023 2024 2023 Effective rate for income taxes 31.1 % 44.6 % 33.9 % 27.9 % Basis-point change from the prior-year period (1,350) 600 |
Schedule of other accrued liabilities | Other accrued liabilities consist of the following: (In millions) March 31, 2024 June 30, 2023 Advertising, merchandising and sampling $ 283 $ 235 Employee compensation 507 546 Accrued sales incentives 400 321 Deferred revenue 306 323 Payroll and other non-income taxes 307 297 Accrued income taxes 315 222 Sales return accrual 289 289 Other 944 983 $ 3,351 $ 3,216 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill by product category and related change in the carrying amount | The following table presents goodwill by product category and the related change in the carrying amount: (In millions) Skin Care Makeup Fragrance Hair Care Total Balance as of June 30, 2023 Goodwill $ 1,664 $ 1,116 $ 254 $ 353 $ 3,387 Accumulated impairments (139) (732) (30) — (901) 1,525 384 224 353 2,486 Translation adjustments, goodwill (32) — (1) — (33) (32) — (1) — (33) Balance as of March 31, 2024 Goodwill 1,632 1,116 253 353 3,354 Accumulated impairments (139) (732) (30) — (901) $ 1,493 $ 384 $ 223 $ 353 $ 2,453 |
Schedule of other intangible assets, by type | Other intangible assets consist of the following: March 31, 2024 June 30, 2023 (In millions) Gross Accumulated Total Net Gross Accumulated Total Net Amortizable intangible assets: Customer lists and other $ 2,000 $ 868 $ 1,132 $ 2,030 $ 766 $ 1,264 Non-amortizable intangible assets: Trademarks 4,306 4,338 Total intangible assets $ 5,438 $ 5,602 |
Estimated aggregate amortization expense for the remainder of the current fiscal year and the next four years | The estimated aggregate amortization expense for the remainder of fiscal 2024 and for each of the next four fiscal years is as follows: Fiscal (In millions) 2024 2025 2026 2027 2028 Estimated aggregate amortization expense $ 35 $ 143 $ 143 $ 126 $ 101 |
Summary of impairment charges and carrying value of intangible assets | A summary of the impairment charges for the three and nine months ended March 31, 2023 and the remaining trademark and goodwill carrying values as of March 31, 2023, for each reporting unit, are as follows: Impairment Charges Carrying Value (In millions) Three Months Ended March 31, 2023 Nine Months Ended March 31, 2023 As of March 31, 2023 Reporting Unit Geographic Region Trademarks Goodwill Trademarks Goodwill Trademarks Goodwill Smashbox The Americas $ — $ — $ 21 $ — $ — $ — Dr.Jart+ Asia/Pacific — — 100 — 330 310 Too Faced The Americas — — 86 — 186 13 Total $ — $ — $ 207 $ — $ 516 $ 323 |
CHARGES ASSOCIATED WITH RESTR_2
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
Schedule Of Restructuring And Other Charges Expected To Be Incurred | The Restructuring Program cumulative charges approved by the Company through March 31, 2024 were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Approved Cumulative charges through March 31, 2024 $ — $ — $ 13 $ 21 $ 34 Included in the above table, cumulative Restructuring Program restructuring initiatives approved by the Company through March 31, 2024 by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Approved Cumulative charges through March 31, 2024 $ 6 $ 4 $ — $ 3 $ 13 The following presents the restructuring initiative charges approved from April 1, 2024 to April 24, 2024: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Approval Period April 1, 2024 - April 24, 2024 $ — $ — $ 11 $ 51 $ 62 Included in the above table, cumulative Restructuring Program restructuring initiative charges approved by the Company from April 1, 2024 to April 24, 2024 by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Approved April 1, 2024 - April 24, 2024 $ 9 $ 1 $ — $ 1 $ 11 |
Schedule of Total Cumulative Charges Recorded Associated With Restructuring and Other activities | Total cumulative charges recorded associated with restructuring and other activities for the Restructuring Program were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Cumulative charges through March 31, 2024 $ — $ — $ 6 $ 11 $ 17 (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Cumulative charges through March 31, 2024 $ 6 $ — $ — $ — $ 6 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | These recently issued notes are summarized as follows: ($ in millions) Issue Date Price Yield Unamortized Debt Semi-annual 2034 Senior Notes (1) February 2024 99.689 % 5.04 % $ (2) $ (5) February 14/August 14 (1) In March 2022, in anticipation of the issuance of the 2034 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $300 million at a weighted average all-in rate of 2.02%. The treasury lock agreements were terminated in September 2022, and the Company recognized a gain in OCI of $31 million that is being amortized to interest expense over the life of the 2034 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2034 Senior Notes will be 4.53% over the life of the debt. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair values of the derivative financial instruments included in the consolidated balance sheets | The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows: Asset Derivatives Liability Derivatives Fair Value (1) Fair Value (1) (In millions) Balance Sheet March 31, 2024 June 30, 2023 Balance Sheet March 31, 2024 June 30, 2023 Derivatives Designated as Hedging Instruments: Foreign currency cash flow hedges Prepaid expenses and other current assets $ 36 $ 56 Other accrued liabilities $ 8 $ 16 Cross-currency swap contracts Prepaid expenses and other current assets 52 22 Other accrued liabilities — — Net investment hedges Prepaid expenses and other current assets 7 — Other accrued liabilities — 13 Interest rate-related derivatives Prepaid expenses and other current assets — — Other accrued liabilities 148 150 Total Derivatives Designated as Hedging Instruments 95 78 156 179 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Prepaid expenses and other current assets 7 20 Other accrued liabilities 7 20 Total derivatives $ 102 $ 98 $ 163 $ 199 (1) See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined. |
Schedule of gains and losses related to derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness | The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows: Amount of Gain (Loss) Location of Gain (Loss) Reclassified Amount of Gain (Loss) Reclassified from AOCI into Earnings (1) Three Months Ended Three Months Ended (In millions) 2024 2023 2024 2023 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ 36 $ (11) Net sales $ 15 $ 22 Interest rate-related derivatives — (11) Interest expense — (1) 36 (22) 15 21 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) 11 (23) — — Total derivatives $ 47 $ (45) $ 15 $ 21 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material. (2) During the three months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $3 million and $6 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain (Loss) Location of Gain (Loss) Reclassified Amount of Gain (Loss) Reclassified from AOCI into Earnings (1) Nine Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ 28 $ 7 Net sales $ 36 $ 59 Interest rate-related derivatives — 1 Interest expense (1) (1) 28 8 35 58 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (6) (38) — — Total derivatives $ 22 $ (30) $ 35 $ 58 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material. (2) During the nine months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $13 million and $19 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain (Loss) Recognized in Earnings on Derivatives Location of Gain (Loss) Recognized in Earnings on Derivatives Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Derivatives in Fair Value Hedging Relationships: Cross-currency swap contracts (1) Selling, general and administrative $ 30 $ 1 $ 19 $ 1 Interest rate swap contracts (2) Interest expense $ (17) $ 18 $ 3 $ (17) (1) Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in earnings from cross-currency swap contracts related to the amount excluded from effectiveness testing during the three months ended March 31, 2024 and 2023 was $5 million and $4 million, respectively, and for the nine months ended March 31, 2024 and 2023 was $14 million and $4 million, respectively. (2) Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. |
Schedule of cumulative amount of fair value hedging adjustments for designated and qualifying hedged items | Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows: (In millions) Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included Carrying Amount of the Cumulative Amount of Fair March 31, 2024 March 31, 2024 Long-term debt $ 845 $ (148) Intercompany debt $ — $ 62 |
Schedule of effects of fair value and cash flow hedging relationships for designated and qualified hedging instruments | Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows: Three Months Ended March 31 2024 2023 (In millions) Net Sales Selling, General and Administrative Interest Net Sales Selling, General and Administrative Interest Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded $ 3,940 $ 2,284 $ 94 $ 3,751 $ 2,281 $ 58 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item N/A N/A 17 N/A N/A (18) Derivatives designated as hedging instruments N/A N/A (17) N/A N/A 18 Gain (loss) on fair value hedge relationships – cross-currency swap contracts: Hedged item N/A (30) N/A N/A (1) N/A Derivatives designated as hedging instruments N/A 30 N/A N/A 1 N/A Loss on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings N/A N/A — N/A N/A (1) Gain on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings 15 N/A N/A 22 N/A N/A N/A (Not applicable) Nine Months Ended March 31 2024 2023 (In millions) Net Sales Selling, General and Administrative Interest Net Sales Selling, General and Administrative Interest Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded $ 11,737 $ 7,177 $ 287 $ 12,301 $ 7,155 $ 156 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item N/A N/A (3) N/A N/A 17 Derivatives designated as hedging instruments N/A N/A 3 N/A N/A (17) Gain (loss) on fair value hedge relationships – cross-currency swap contracts: Hedged item N/A (19) N/A N/A (1) N/A Derivatives designated as hedging instruments N/A 19 N/A N/A 1 N/A Loss on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings N/A N/A (1) N/A N/A (1) Gain on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings 36 N/A N/A 59 N/A N/A N/A (Not applicable) |
Schedule of gains and losses related to derivative financial instruments not designated as hedging instruments | The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows: Amount of Gain Location of Gain Recognized in Earnings on Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Selling, general and administrative $ 18 $ 4 $ 31 $ 21 |
Schedule of Offsetting Assets | The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties: As of March 31, 2024 As of June 30, 2023 (In millions) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Derivative Financial Contracts Derivative assets $ 102 $ (36) $ 66 $ 98 $ (53) $ 45 Derivative liabilities (163) 36 (127) (199) 53 (146) Total $ (61) $ — $ (61) $ (101) $ — $ (101) |
Schedule of Offsetting Liabilities | The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties: As of March 31, 2024 As of June 30, 2023 (In millions) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Derivative Financial Contracts Derivative assets $ 102 $ (36) $ 66 $ 98 $ (53) $ 45 Derivative liabilities (163) 36 (127) (199) 53 (146) Total $ (61) $ — $ (61) $ (101) $ — $ (101) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 1,855 $ — $ — $ 1,855 Foreign currency forward contracts — 50 — 50 Cross-currency swap contracts — 52 — 52 Total $ 1,855 $ 102 $ — $ 1,957 Liabilities: Foreign currency forward contracts $ — $ 15 $ — $ 15 Interest rate-related derivatives — 148 — 148 DECIEM stock options — — 106 106 Total $ — $ 163 $ 106 $ 269 The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2023: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 3,241 $ — $ — $ 3,241 Foreign currency forward contracts — 76 — 76 Cross-currency swap contracts — 22 — 22 Total $ 3,241 $ 98 $ — $ 3,339 Liabilities: Foreign currency forward contracts $ — $ 49 $ — $ 49 Interest rate-related derivatives — 150 — 150 DECIEM stock options — — 99 99 Total $ — $ 199 $ 99 $ 298 |
Schedule of estimated fair values of financial instruments | The estimated fair values of the Company’s financial instruments are as follows: March 31, 2024 June 30, 2023 (In millions) Carrying Fair Carrying Fair Nonderivatives Cash and cash equivalents $ 3,701 $ 3,701 $ 4,029 $ 4,029 Current and long-term debt 7,770 7,276 8,114 7,665 DECIEM stock options 106 106 99 99 Deferred consideration payable 341 340 341 338 Derivatives Cross-currency swap contracts - asset, net 52 52 22 22 Foreign currency forward contracts – asset, net 35 35 27 27 Interest rate-related derivatives – liability, net (148) (148) (150) (150) |
Impairment charges measured at fair value on a nonrecurring basis, classified as Level 3 | The following table presents the Company’s impairment charges for the nine months ended March 31, 2023 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, due to a change in circumstances that triggered an interim impairment test during the three months ended December 31, 2022: (In millions) Impairment charges Date of Fair Value Measurement Fair Value (1) Other intangible assets, net (trademarks) Dr.Jart+ $ 100 November 30, 2022 $ 330 Too Faced 86 November 30, 2022 186 Smashbox 21 December 31, 2022 — Total $ 207 $ 516 (1) See Note 2 - Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. |
Changes in DECEIM stock option liability | Changes in the DECIEM stock option liability for the nine months ended March 31, 2024 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows: (In millions) Fair Value DECIEM stock option liability as of June 30, 2023 $ 99 Changes in fair value, net of foreign currency remeasurements 8 Translation adjustments and other, net (1) DECIEM stock option liability as of March 31, 2024 $ 106 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of changes in allowance for credit losses | Changes in the allowance for credit losses are as follows: (In millions) March 31, 2024 Balance at June 30, 2023 $ 16 Provision for expected credit losses (3) Write-offs, net & other 2 Balance at March 31, 2024 $ 15 |
Schedule of significant changes in deferred revenue | Changes in deferred revenue during the period are as follows: Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Deferred revenue, beginning of period $ 610 $ 353 $ 572 $ 362 Revenue recognized that was included in the deferred revenue balance at the beginning of the period (26) (50) (275) (330) Revenue deferred (released) during the period (38) (15) 255 261 Other (4) 26 (10) 21 Deferred revenue, end of period $ 542 $ 314 $ 542 $ 314 |
PENSION AND POST-RETIREMENT B_2
PENSION AND POST-RETIREMENT BENEFIT PLANS (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Retirement Benefits [Abstract] | |
Schedule of components of net periodic benefit cost for pension and other post-retirement benefit plans | The components of net periodic benefit cost for the three months ended March 31, 2024 and 2023 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2024 2023 2024 2023 2024 2023 Service cost $ 9 $ 10 $ 7 $ 7 $ — $ — Interest cost 12 10 5 3 2 2 Expected return on plan assets (14) (14) (7) (5) — — Amortization of: Actuarial loss (gain) 1 — (2) — — — Prior service cost — — (1) — (1) — Special termination benefits — — — 1 — — Net periodic benefit cost $ 8 $ 6 $ 2 $ 6 $ 1 $ 2 The components of net periodic benefit cost for the nine months ended March 31, 2024 and 2023 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2024 2023 2024 2023 2024 2023 Service cost $ 27 $ 28 $ 20 $ 20 $ 1 $ — Interest cost 35 30 14 10 6 6 Expected return on plan assets (41) (42) (19) (13) — — Amortization of: Actuarial loss (gain) 3 2 (6) (2) — — Prior service cost — — (1) — (1) — Special termination benefits — — — 1 — — Net periodic benefit cost $ 24 $ 18 $ 8 $ 16 $ 6 $ 6 |
Schedule of amounts recognized in the consolidated balance sheets related to the Company's pension and post-retirement benefit plans | The amounts recognized in the consolidated balance sheets related to the Company’s pension and post-retirement benefit plans consist of the following: (In millions) March 31, 2024 June 30, 2023 Other assets $ 113 $ 115 Other accrued liabilities (35) (34) Other noncurrent liabilities (334) (395) Funded status (256) (314) Accumulated other comprehensive loss 212 235 Net amount recognized $ (44) $ (79) |
STOCK PROGRAMS (Tables)
STOCK PROGRAMS (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of key assumptions used for fair value | The fair value of the stock options were calculated by incorporating significant assumptions including the starting equity value, actual and projected net sales and EBITDA and the following key assumptions into the Monte Carlo Method: March 31, 2024 June 30, 2023 Risk-free rate 5.00% 4.90% Term to mid of last twelve-month period 0.08 years 0.46 years Operating leverage adjustment 0.45 0.45 Net sales discount rate 7.90% 7.80% EBITDA discount rate 11.40% 11.30% EBITDA volatility 31.80% 32.00% Net sales volatility 14.30% 14.40% |
NET EARNINGS ATTRIBUTABLE TO _2
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation between the numerator and denominator of the basic and diluted EPS computations | A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows: Three Months Ended Nine Months Ended (In millions, except per share data) 2024 2023 2024 2023 Numerator: Net earnings attributable to The Estée Lauder Companies Inc. $ 330 $ 156 $ 674 $ 1,039 Denominator: Weighted average common shares outstanding – Basic 359.1 357.9 358.8 357.8 Effect of dilutive stock options 0.8 2.5 0.9 2.4 Effect of PSUs 0.2 0.1 0.1 0.1 Effect of RSUs 0.7 0.7 0.6 0.6 Weighted average common shares outstanding – Diluted 360.8 361.2 360.4 360.9 Net earnings attributable to The Estée Lauder Companies Inc. per common share: Basic $ .92 $ .44 $ 1.88 $ 2.90 Diluted $ .91 $ .43 $ 1.87 $ 2.88 |
Schedule of antidilutive securities excluded from computation of earnings per share | The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows: Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Stock options 5.8 2.2 5.7 2.1 RSUs and PSUs 0.1 — 0.5 — |
EQUITY AND REDEEMABLE NONCONT_2
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of equity | Total Stockholders’ Equity – The Estée Lauder Companies Inc. Three Months Ended Nine Months Ended (In millions, except per share data) 2024 2023 2024 2023 Common stock, beginning of the period $ 6 $ 6 $ 6 $ 6 Stock-based compensation — — — — Common stock, end of the period 6 6 6 6 Paid-in capital, beginning of the period 6,367 6,000 6,153 5,796 Common stock dividends 2 1 5 3 Stock-based compensation 96 102 307 304 Paid-in capital, end of the period 6,465 6,103 6,465 6,103 Retained earnings, beginning of the period 13,858 14,342 13,991 13,912 Common stock dividends (238) (237) (715) (690) Net earnings attributable to The Estée Lauder Companies Inc. 330 156 674 1,039 Retained earnings, end of the period 13,950 14,261 13,950 14,261 Accumulated other comprehensive loss, beginning of the period (856) (829) (934) (762) Other comprehensive loss attributable to The Estée Lauder Companies Inc. (158) (46) (80) (113) Accumulated other comprehensive loss, end of the period (1,014) (875) (1,014) (875) Treasury stock, beginning of the period (13,663) (13,617) (13,631) (13,362) Acquisition of treasury stock — — — (184) Stock-based compensation — (1) (32) (72) Treasury stock, end of the period (13,663) (13,618) (13,663) (13,618) Total equity $ 5,744 $ 5,877 $ 5,744 $ 5,877 Redeemable noncontrolling interest, beginning of the period $ 850 $ 819 $ 832 $ 842 Net earnings (loss) attributable to redeemable noncontrolling interest 5 (1) 21 3 Translation adjustments (15) 1 (13) (26) Redeemable noncontrolling interest, end of the period $ 840 $ 819 $ 840 $ 819 Cash dividends declared per common share $ .66 $ .66 $ 1.98 $ 1.92 |
Summary of cash dividends declared per share on the Company's Class A and Class B Common Stock | The following is a summary of quarterly cash dividends declared per share on the Company’s Class A and Class B Common Stock during the nine months ended March 31, 2024: Date Declared Record Date Payable Date Amount per Share August 17, 2023 August 31, 2023 September 15, 2023 $ .66 October 31, 2023 November 30, 2023 December 15, 2023 $ .66 February 2, 2024 February 29, 2024 March 15, 2024 $ .66 |
Schedule of components of AOCI, net of tax | The following table represents changes in accumulated other comprehensive loss, net of tax, by component for the nine months ended March 31, 2024: (In millions) Net Cash Cross-Currency Swap Contracts (2) Amounts Translation Total Balance at June 30, 2023 $ 59 $ (15) $ (177) $ (801) $ (934) OCI before reclassifications (3) 21 19 23 (103) (1) (40) Amounts reclassified to Net earnings (26) (11) (3) — (40) Net current-period OCI (5) 8 20 (103) (80) Balance at March 31, 2024 $ 54 $ (7) $ (157) $ (904) $ (1,014) (1) See Note 5 – Derivative Financial Instruments for gains (losses) relating to net investment hedges. (2) The gain recognized in AOCI, net of tax from cross-currency swap contracts represents the amount excluded from effectiveness testing. (3) The tax provision included in Net Cash Flow Hedge Gain (Loss), Cross-Currency Swap Contracts, Amounts Included in Net Periodic Benefit Cost and Translation Adjustments are $7 million, $5 million, $5 million, and $26 million, respectively. |
Schedule of effects of reclassification adjustments from AOCI into net earnings | The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three and nine months ended March 31, 2024 and 2023: Amount Reclassified from AOCI Affected Line Item in Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 Gain (Loss) on Cash Flow Hedges Foreign currency forward contracts $ 15 $ 22 $ 36 $ 59 Net sales Interest rate-related derivatives — (1) (1) (1) Interest expense 15 21 35 58 Provision for income taxes (5) (5) (9) (14) Provision for income taxes 10 16 26 44 Net earnings Cross-Currency Swap Contracts Gain on cross-currency swap contracts 5 4 14 4 Selling, general and administrative Provision for income taxes (1) (1) (3) (1) Provision for income taxes 4 3 11 3 Net earnings Retirement Plan and Other Retiree Benefit Adjustments Amortization of prior service cost 2 — 2 — Other components of net periodic benefit cost (1) Amortization of actuarial gain 1 — 3 — Other components of net periodic benefit cost (1) 3 — 5 — Provision for income taxes (1) — (2) — Provision for income taxes 2 — 3 — Net earnings Total reclassification adjustments, net $ 16 $ 19 $ 40 $ 47 Net earnings (1) See Note 8 – Pension and Post-Retirement Benefit Plans for additional information. |
STATEMENT OF CASH FLOWS (Tables
STATEMENT OF CASH FLOWS (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow information | Supplemental cash flow information for the nine months ended March 31, 2024 and 2023 is as follows: (In millions) 2024 2023 Cash: Cash paid during the period for interest $ 244 $ 142 Cash paid during the period for income taxes $ 441 $ 387 Non-cash investing and financing activities: Property, plant and equipment accrued but unpaid $ 35 $ 239 Right-of-use assets obtained in exchange for new/modified operating lease liabilities $ 351 $ 197 |
SEGMENT DATA AND RELATED INFO_2
SEGMENT DATA AND RELATED INFORMATION (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of segment data and related information | Three Months Ended Nine Months Ended (In millions) 2024 2023 2024 2023 PRODUCT CATEGORY DATA Net sales: Skin Care $ 2,060 $ 1,915 $ 5,873 $ 6,454 Makeup 1,136 1,104 3,365 3,424 Fragrance 575 577 1,948 1,907 Hair Care 143 148 464 488 Other 26 11 88 38 3,940 3,755 11,738 12,311 Returns associated with restructuring and other activities — (4) (1) (10) Net sales $ 3,940 $ 3,751 $ 11,737 $ 12,301 Operating income (loss) before charges associated with restructuring and other activities: Skin Care $ 468 $ 269 $ 920 $ 1,238 Makeup 66 (5) 56 (9) Fragrance 29 66 267 343 Hair Care (25) (24) (50) (32) Other 11 9 38 7 549 315 1,231 1,547 Reconciliation: Charges associated with restructuring and other activities (18) (18) (28) (33) Interest expense (94) (58) (287) (156) Interest income and investment income, net 45 37 126 78 Other components of net periodic benefit cost 4 4 9 9 Earnings before income taxes $ 486 $ 280 $ 1,051 $ 1,445 GEOGRAPHIC DATA (1) Net sales: The Americas $ 1,117 $ 1,089 $ 3,567 $ 3,447 Europe, the Middle East & Africa 1,647 1,474 4,488 4,972 Asia/Pacific 1,176 1,192 3,683 3,892 3,940 3,755 11,738 12,311 Returns associated with restructuring and other activities — (4) (1) (10) Net sales $ 3,940 $ 3,751 $ 11,737 $ 12,301 Operating income (loss): The Americas $ (6) $ (93) $ (243) $ (53) Europe, the Middle East & Africa 302 176 825 919 Asia/Pacific 253 232 649 681 549 315 1,231 1,547 Charges associated with restructuring and other activities (18) (18) (28) (33) Operating income $ 531 $ 297 $ 1,203 $ 1,514 (1) The net sales from the Company's travel retail business are included in the Europe, the Middle East & Africa region, and operating income attributable to these net sales are included in that region and in The Americas. The exception is for net sales and operating income of Dr.Jart+ in the travel retail channel in Korea that are reflected in Korea in the Asia/Pacific region. |
Schedule of Error Corrections and Prior Period Adjustments | The tables below present the effect of the corrections for the three and nine months ended March 31, 2023, and fiscal years ended June 30, 2023 and 2022. Three Months Ended March 31, 2023 Nine Months Ended March 31, 2023 (In millions) As Previously Reported Adjustments As Adjusted As Previously Reported Adjustments As Adjusted PRODUCT CATEGORY DATA Net sales: Skin Care $ 1,922 $ (7) $ 1,915 $ 6,408 $ 46 $ 6,454 Makeup 1,088 16 1,104 3,408 16 3,424 Fragrance 585 (8) 577 1,967 (60) 1,907 Hair Care 149 (1) 148 489 (1) 488 Other 11 — 11 39 (1) 38 3,755 — 3,755 12,311 — 12,311 Returns associated with restructuring and other activities (4) — (4) (10) — (10) Net sales $ 3,751 $ — $ 3,751 $ 12,301 $ — $ 12,301 Operating income (loss): Skin Care $ 256 $ 13 $ 269 $ 1,207 $ 31 $ 1,238 Makeup (15) 10 (5) (36) 27 (9) Fragrance 89 (23) 66 399 (56) 343 Hair Care (24) — (24) (31) (1) (32) Other 9 — 9 8 (1) 7 315 — 315 1,547 — 1,547 Charges associated with restructuring and other activities (18) — (18) (33) — (33) Operating income $ 297 $ — $ 297 $ 1,514 $ — $ 1,514 Year Ended June 30, 2023 Year Ended June 30, 2022 (In millions) As Previously Reported Adjustments As Adjusted As Previously Reported Adjustments As Adjusted PRODUCT CATEGORY DATA Net sales: Skin Care $ 8,202 $ 47 $ 8,249 $ 9,886 $ 16 $ 9,902 Makeup 4,516 16 4,532 4,667 3 4,670 Fragrance 2,512 (61) 2,451 2,508 (17) 2,491 Hair Care 653 (1) 652 631 — 631 Other 54 (1) 53 49 (2) 47 15,937 — 15,937 17,741 — 17,741 Returns associated with restructuring and other activities (27) — (27) (4) — (4) Net sales $ 15,910 $ — $ 15,910 $ 17,737 $ — $ 17,737 Operating income (loss): Skin Care $ 1,204 $ 73 $ 1,277 $ 2,753 $ 23 $ 2,776 Makeup (22) 1 (21) 133 (7) 126 Fragrance 440 (70) 370 456 (15) 441 Hair Care (34) (2) (36) (28) — (28) Other 6 (2) 4 0 (1) (1) 1,594 — 1,594 3,314 — 3,314 Charges associated with restructuring and other activities (85) — (85) (144) — (144) Operating income $ 1,509 $ — $ 1,509 $ 3,170 $ — $ 3,170 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Currency Translation and Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Currency Translation and Transactions | ||||
Unrealized translation losses, net of tax | $ 192 | $ 5 | $ 103 | $ 66 |
Net exchange gains on foreign currency transactions | $ 23 | $ 25 | $ 52 | $ 59 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of Credit Risk (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Concentration Risk [Line Items] | ||||||
Net sales | $ 3,940 | $ 3,751 | $ 11,737 | $ 12,301 | $ 15,910 | $ 17,737 |
Accounts receivable, net | 1,854 | 1,854 | 1,452 | |||
Largest Customer | ||||||
Concentration Risk [Line Items] | ||||||
Net sales | 395 | $ 165 | 750 | $ 887 | ||
Accounts receivable, net | $ 189 | $ 189 | $ 49 | |||
Largest Customer | Net Sales | Customer Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (as a percent) | 10% | 4% | 6% | 7% | ||
Largest Customer | Accounts Receivable | Customer Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (as a percent) | 10% | 3% |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory and Promotional Merchandise (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Accounting Policies [Abstract] | ||
Raw materials | $ 776 | $ 876 |
Work in process | 312 | 362 |
Finished goods | 960 | 1,404 |
Promotional merchandise | 259 | 337 |
Inventory and promotional merchandise | $ 2,307 | $ 2,979 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 7,089 | $ 7,089 | $ 6,908 | ||
Less accumulated depreciation and amortization | (3,956) | (3,956) | (3,729) | ||
Property, plant and equipment, net | 3,133 | 3,133 | 3,179 | ||
Depreciation and amortization of property, plant and equipment | 166 | $ 147 | 491 | $ 421 | |
Land and improvements | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 70 | $ 70 | $ 70 | ||
Property, plant and equipment, useful life (in years) | 10 years | 10 years | 10 years | ||
Buildings and improvements | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 884 | $ 884 | $ 843 | ||
Buildings and improvements | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | 10 years | 10 years | ||
Buildings and improvements | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 40 years | 40 years | 40 years | ||
Machinery and equipment | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 1,187 | $ 1,187 | $ 1,071 | ||
Machinery and equipment | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 3 years | 3 years | 3 years | ||
Machinery and equipment | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | 10 years | 10 years | ||
Computer hardware and software | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 1,727 | $ 1,727 | $ 1,651 | ||
Computer hardware and software | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 4 years | 4 years | 4 years | ||
Computer hardware and software | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | 10 years | 10 years | ||
Furniture and fixtures | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 136 | $ 136 | $ 136 | ||
Furniture and fixtures | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 5 years | 5 years | 5 years | ||
Furniture and fixtures | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | 10 years | 10 years | ||
Leasehold improvements | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 2,408 | $ 2,408 | $ 2,310 | ||
Construction in progress | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 677 | $ 677 | $ 827 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
Accounting Policies [Abstract] | |||||
Effective rate for income taxes (as a percent) | 31.10% | 44.60% | 33.90% | 27.90% | |
Basis-point change from the prior-year period (as a percent) | (13.50%) | 6% | |||
Gross unrecognized tax benefits | $ 64 | $ 64 | $ 63 | ||
Total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate | 54 | 54 | |||
Gross interest and penalty accrued | 1 | 3 | |||
Total gross accrued interest and penalties related to unrecognized tax benefits | $ 18 | $ 18 | $ 15 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Supplier Finance Programs (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Other Liabilities [Line Items] | ||
Supplier finance program, payment timing, period | 90 days | |
Supplier finance program, obligation, current | $ 54 | $ 52 |
Minimum | ||
Other Liabilities [Line Items] | ||
Supplier finance, agreement termination period | 30 days | |
Maximum | ||
Other Liabilities [Line Items] | ||
Supplier finance, agreement termination period | 60 days |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Accounting Policies [Abstract] | ||
Advertising, merchandising and sampling | $ 283 | $ 235 |
Employee compensation | 507 | 546 |
Accrued sales incentives | 400 | 321 |
Deferred revenue | 306 | 323 |
Payroll and other non-income taxes | 307 | 297 |
Accrued income taxes | 315 | 222 |
Sales return accrual | 289 | 289 |
Other | 944 | 983 |
Other accrued liabilities | $ 3,351 | $ 3,216 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Accrued Liabilities Narrative (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Other Liabilities [Line Items] | ||
Other noncurrent liabilities | $ 1,728 | $ 1,943 |
Other Noncurrent Liabilities | ||
Other Liabilities [Line Items] | ||
Deferred tax liabilities | $ 581 | $ 620 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Millions | 9 Months Ended | |
Mar. 31, 2024 | Jun. 30, 2023 | |
Changes in goodwill | ||
Goodwill, gross, beginning balance | $ 3,387 | |
Accumulated impairments | (901) | $ (901) |
Goodwill, beginning balance | 2,486 | |
Translation adjustments, goodwill | (33) | |
Goodwill, period increase (decrease) | (33) | |
Goodwill, gross, ending balance | 3,354 | |
Goodwill, ending balance | 2,453 | |
Skin Care | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 1,664 | |
Accumulated impairments | (139) | (139) |
Goodwill, beginning balance | 1,525 | |
Translation adjustments, goodwill | (32) | |
Goodwill, period increase (decrease) | (32) | |
Goodwill, gross, ending balance | 1,632 | |
Goodwill, ending balance | 1,493 | |
Makeup | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 1,116 | |
Accumulated impairments | (732) | (732) |
Goodwill, beginning balance | 384 | |
Translation adjustments, goodwill | 0 | |
Goodwill, period increase (decrease) | 0 | |
Goodwill, gross, ending balance | 1,116 | |
Goodwill, ending balance | 384 | |
Fragrance | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 254 | |
Accumulated impairments | (30) | (30) |
Goodwill, beginning balance | 224 | |
Translation adjustments, goodwill | (1) | |
Goodwill, period increase (decrease) | (1) | |
Goodwill, gross, ending balance | 253 | |
Goodwill, ending balance | 223 | |
Hair Care | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 353 | |
Accumulated impairments | 0 | $ 0 |
Goodwill, beginning balance | 353 | |
Translation adjustments, goodwill | 0 | |
Goodwill, period increase (decrease) | 0 | |
Goodwill, gross, ending balance | 353 | |
Goodwill, ending balance | $ 353 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
Intangible Assets | |||||
Total intangible assets | $ 5,438 | $ 5,438 | $ 5,602 | ||
Aggregate amortization expense for amortizable intangible assets | 36 | $ 36 | 109 | $ 109 | |
Estimated aggregate amortization expense | |||||
Estimated aggregate amortization expense for remainder of fiscal year 2024 | 35 | 35 | |||
Estimated aggregate amortization expense for fiscal year 2025 | 143 | 143 | |||
Estimated aggregate amortization expense for fiscal year 2026 | 143 | 143 | |||
Estimated aggregate amortization expense for fiscal year 2027 | 126 | 126 | |||
Estimated aggregate amortization expense for fiscal year 2028 | 101 | 101 | |||
Trademarks | |||||
Intangible Assets | |||||
Trademarks | 4,306 | 4,306 | 4,338 | ||
Customer lists and other | |||||
Amortizable intangible assets: | |||||
Gross Carrying Value | 2,000 | 2,000 | 2,030 | ||
Accumulated Amortization | 868 | 868 | 766 | ||
Total Net Book Value | $ 1,132 | $ 1,132 | $ 1,264 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - Trademarks $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) | Jun. 30, 2023 USD ($) | |
Intangible assets | |||||
Carrying value | $ 4,306 | $ 4,338 | |||
Smashbox | Makeup | The Americas | |||||
Intangible assets | |||||
Trademarks, Impairment charges | $ 0 | $ 21 | $ 21 | ||
Carrying value | 0 | 0 | 0 | ||
Dr. Jart+ | Skin Care | Asia/Pacific | |||||
Intangible assets | |||||
Trademarks, Impairment charges | 0 | $ 100 | $ 100 | ||
Dr. Jart+ | Weighted-Average Cost Of Capital | Skin Care | Asia/Pacific | |||||
Intangible assets | |||||
Weighted-average cost of capital used to estimate fair value, measurement input | 0.11 | 0.11 | |||
Too Faced | Makeup | The Americas | |||||
Intangible assets | |||||
Trademarks, Impairment charges | $ 0 | $ 86 | $ 86 | ||
Too Faced | Weighted-Average Cost Of Capital | Makeup | The Americas | |||||
Intangible assets | |||||
Weighted-average cost of capital used to estimate fair value, measurement input | 0.13 | 0.13 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS - Impairment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2024 | Jun. 30, 2023 | |
Intangible assets | |||||
Carrying Value, Goodwill | $ 2,453 | $ 2,486 | |||
Makeup | |||||
Intangible assets | |||||
Carrying Value, Goodwill | 384 | 384 | |||
Skin Care | |||||
Intangible assets | |||||
Carrying Value, Goodwill | $ 1,493 | $ 1,525 | |||
Smashbox | The Americas | Makeup | |||||
Intangible assets | |||||
Impairment, Goodwill | $ 0 | $ 0 | |||
Carrying Value, Goodwill | 0 | 0 | |||
Smashbox | The Americas | Makeup | Trademarks | |||||
Intangible assets | |||||
Impairment, Trademarks | 0 | $ 21 | 21 | ||
Carrying Value, Trademarks | 0 | 0 | |||
Dr. Jart+ | Asia/Pacific | Skin Care | |||||
Intangible assets | |||||
Impairment, Goodwill | 0 | 0 | |||
Carrying Value, Goodwill | 310 | 310 | |||
Dr. Jart+ | Asia/Pacific | Skin Care | Trademarks | |||||
Intangible assets | |||||
Impairment, Trademarks | 0 | 100 | 100 | ||
Carrying Value, Trademarks | 330 | 330 | |||
Too Faced | The Americas | Makeup | |||||
Intangible assets | |||||
Impairment, Goodwill | 0 | 0 | |||
Carrying Value, Goodwill | 13 | 13 | |||
Too Faced | The Americas | Makeup | Trademarks | |||||
Intangible assets | |||||
Impairment, Trademarks | 0 | $ 86 | 86 | ||
Carrying Value, Trademarks | 186 | 186 | |||
Smashbox, Dr. Jart+, And Too Faced | |||||
Intangible assets | |||||
Impairment, Goodwill | 0 | 0 | |||
Carrying Value, Goodwill | 323 | 323 | |||
Smashbox, Dr. Jart+, And Too Faced | Trademarks | |||||
Intangible assets | |||||
Impairment, Trademarks | 0 | 207 | |||
Carrying Value, Trademarks | $ 516 | $ 516 |
CHARGES ASSOCIATED WITH RESTR_3
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Narrative (Details) - Restructuring Program $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Feb. 05, 2024 USD ($) | Jun. 30, 2024 USD ($) | Mar. 31, 2024 USD ($) position | Jun. 30, 2027 USD ($) | Jun. 30, 2026 USD ($) | Jun. 30, 2025 USD ($) | |
Restructuring and Other Costs | ||||||
Restructuring program, period | 2 years | |||||
Accrued restructuring charges | $ 7 | |||||
Forecast | ||||||
Restructuring and Other Costs | ||||||
Accrued restructuring charges expected to result in cash expenditures funded from cash provided by operations | $ 2 | $ 1 | $ 2 | $ 2 | ||
Minimum | ||||||
Restructuring and Other Costs | ||||||
Net reduction in global positions | position | 1,800 | |||||
Net reduction of current workforce (as a percent) | 3% | |||||
Restructuring and related costs, expected costs | $ 500 | |||||
Maximum | ||||||
Restructuring and Other Costs | ||||||
Net reduction in global positions | position | 3,000 | |||||
Net reduction of current workforce (as a percent) | 5% | |||||
Restructuring and related costs, expected costs | $ 700 |
CHARGES ASSOCIATED WITH RESTR_4
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Cumulative Charges Expected To Be Incurred Associated With Restructuring And Other Activities (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 24, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | $ 18 | $ 14 | $ 26 | $ 24 | |
Restructuring Program | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 34 | ||||
Restructuring Program | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | $ 62 | ||||
Restructuring Program | Employee- Related Costs | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 6 | ||||
Restructuring Program | Employee- Related Costs | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 9 | ||||
Restructuring Program | Asset- Related Costs | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 4 | ||||
Restructuring Program | Asset- Related Costs | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 1 | ||||
Restructuring Program | Contract Terminations | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 0 | ||||
Restructuring Program | Contract Terminations | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 0 | ||||
Restructuring Program | Other Exit Costs | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 3 | ||||
Restructuring Program | Other Exit Costs | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 1 | ||||
Restructuring Program | Sales Returns (included in Net Sales) | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 0 | ||||
Restructuring Program | Sales Returns (included in Net Sales) | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 0 | ||||
Restructuring Program | Cost of Sales | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 0 | ||||
Restructuring Program | Cost of Sales | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 0 | ||||
Restructuring Program | Restructuring Charges | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 13 | ||||
Restructuring Program | Restructuring Charges | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | 11 | ||||
Restructuring Program | Other Charges | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | $ 21 | ||||
Restructuring Program | Other Charges | Subsequent Event | |||||
Restructuring and Other Costs | |||||
Restructuring and other charges expected to be incurred | $ 51 |
CHARGES ASSOCIATED WITH RESTR_5
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Cumulative Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | $ 18 | $ 18 | $ 28 | $ 33 | $ 85 | $ 144 |
Sales Returns (included in Net Sales) | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 0 | $ 4 | 1 | $ 10 | $ 27 | $ 4 |
Restructuring Program | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 17 | 17 | ||||
Restructuring Program | Sales Returns (included in Net Sales) | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 0 | 0 | ||||
Restructuring Program | Cost of Sales | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 0 | 0 | ||||
Restructuring Program | Restructuring Charges | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 6 | 6 | ||||
Restructuring Program | Restructuring Charges | Employee- Related Costs | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 6 | 6 | ||||
Restructuring Program | Restructuring Charges | Asset- Related Costs | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 0 | 0 | ||||
Restructuring Program | Restructuring Charges | Contract Terminations | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 0 | 0 | ||||
Restructuring Program | Restructuring Charges | Other Exit Costs | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | 0 | 0 | ||||
Restructuring Program | Other Charges | ||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | ||||||
Restructuring Charges | $ 11 | $ 11 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - Senior Notes - 5.00% Senior Notes, due February 14, 2034 | Feb. 29, 2024 USD ($) |
Debt | |
Aggregate principal amount | $ 650,000,000 |
Interest rate, stated percentage | 5% |
DEBT - Schedule of Long-Term De
DEBT - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Debt | ||||||
Amount of gain (loss) recognized in OCI on Derivatives | $ 47 | $ (45) | $ 22 | $ (30) | ||
Senior Notes | 5.00% Senior Notes, due February 14, 2034 | ||||||
Debt | ||||||
Price (as a percent) | 99.689% | 99.689% | ||||
Yield (as a percent) | 5.04% | 5.04% | ||||
Unamortized Debt Discount | $ (2) | $ (2) | ||||
Debt Issuance Costs | $ (5) | $ (5) | ||||
Senior Notes | 5.00% Senior Notes, due February 14, 2034 | Treasury lock agreements | ||||||
Debt | ||||||
Yield (as a percent) | 4.53% | 4.53% | ||||
Notional amount | $ 300 | |||||
Weighted-average all-in rate (as a percent) | 2.02% | |||||
Amount of gain (loss) recognized in OCI on Derivatives | $ 31 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Cash Flow Hedges, Fair Value Hedges, Credit Risk Narrative (Details) | 9 Months Ended | |
Mar. 31, 2024 USD ($) agency | Jun. 30, 2023 USD ($) | |
Derivatives Not Designated as Hedging Instruments: | ||
Derivative instruments | ||
Notional amount | $ 3,449,000,000 | |
Derivative | ||
Derivative instruments | ||
Minimum number of nationally recognized rating agencies | agency | 2 | |
Maximum exposure to credit risk in the event of non performance by counterparties, gross fair value of contracts in asset positions | $ 102,000,000 | |
Cross-currency swap contracts | ||
Derivative instruments | ||
Accumulated net gain (loss) on derivative instruments in AOCI, before tax | (10,000,000) | $ (20,000,000) |
Fair value hedge, gain to be reclassified within 12 months | 14,000,000 | |
Cash flow hedges | ||
Derivative instruments | ||
Amount expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months | 25,000,000 | |
Accumulated net gain (loss) on derivative instruments in AOCI, before tax | 72,000,000 | $ 79,000,000 |
Cash flow hedges | Foreign currency forward contracts | ||
Derivative instruments | ||
Notional amount | 2,478,000,000 | |
Derivatives in fair value hedging relationships | Interest rate swap contracts | 2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | ||
Derivative instruments | ||
Notional amount | $ 700,000,000 | |
Derivatives in fair value hedging relationships | Interest rate swap contracts | 2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | SOFR | ||
Derivative instruments | ||
Number of months for SOFR calculation | 3 months | |
Derivatives in fair value hedging relationships | Interest rate swap contracts | 1.950% Senior Notes, due March15, 2031 ("2031 Senior Notes") | ||
Derivative instruments | ||
Notional amount | $ 300,000,000 | |
Derivatives in fair value hedging relationships | Interest rate swap contracts | 1.950% Senior Notes, due March15, 2031 ("2031 Senior Notes") | SOFR | ||
Derivative instruments | ||
Number of months for SOFR calculation | 3 months | |
Derivatives in fair value hedging relationships | Cross-currency swap contracts | ||
Derivative instruments | ||
Notional amount | $ 491,000,000 | |
Net investment hedges | Foreign currency forward contracts | ||
Derivative instruments | ||
Notional amount | $ 1,011,000,000 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Derivative Instruments Included in the Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Derivatives, Fair Value | ||
Asset Derivatives | $ 102 | $ 98 |
Derivative asset, total | 102 | 98 |
Liability Derivatives | 163 | 199 |
Derivative liability, total | 163 | 199 |
Derivatives Designated as Hedging Instruments: | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 95 | 78 |
Derivatives Designated as Hedging Instruments: | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 156 | 179 |
Derivatives Designated as Hedging Instruments: | Foreign currency cash flow hedges | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 36 | 56 |
Derivatives Designated as Hedging Instruments: | Foreign currency cash flow hedges | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 8 | 16 |
Derivatives Designated as Hedging Instruments: | Cross-currency swap contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 52 | 22 |
Derivatives Designated as Hedging Instruments: | Cross-currency swap contracts | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 0 | 0 |
Derivatives Designated as Hedging Instruments: | Net investment hedges | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 7 | 0 |
Derivatives Designated as Hedging Instruments: | Net investment hedges | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 0 | 13 |
Derivatives Designated as Hedging Instruments: | Interest rate-related derivatives | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 0 | 0 |
Derivatives Designated as Hedging Instruments: | Interest rate-related derivatives | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 148 | 150 |
Derivatives Not Designated as Hedging Instruments: | Foreign currency forward contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 7 | 20 |
Derivatives Not Designated as Hedging Instruments: | Foreign currency forward contracts | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | $ 7 | $ 20 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Gain (Loss) on Derivative Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Gain (loss) on derivative financial instruments | ||||
Amount of Gain (Loss) Recognized in OCI on Derivatives | $ 47 | $ (45) | $ 22 | $ (30) |
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 15 | 21 | 35 | 58 |
Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain (Loss) Recognized in OCI on Derivatives | 36 | (22) | 28 | 8 |
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 15 | 21 | 35 | 58 |
Foreign currency forward contracts | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain (Loss) Recognized in OCI on Derivatives | 36 | (11) | 28 | 7 |
Foreign currency forward contracts | Net investment hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain (Loss) Recognized in OCI on Derivatives | 11 | (23) | (6) | (38) |
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 0 | 0 | 0 | 0 |
Foreign currency forward contracts | Net sales | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 15 | 22 | 36 | 59 |
Interest rate-related derivatives | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain (Loss) Recognized in OCI on Derivatives | 0 | (11) | 0 | 1 |
Interest rate-related derivatives | Interest expense | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 0 | (1) | (1) | (1) |
Net investment hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Gain recognized in earnings related to the amount excluded from effectiveness testing | $ 3 | $ 6 | $ 13 | $ 19 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Derivatives in Fair Value Hedging Relationships (Details) - Derivatives in fair value hedging relationships - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Cross-currency swap contracts | Selling, general and administrative | ||||
Derivative instruments | ||||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | $ (30) | $ (1) | $ (19) | $ (1) |
Cross-currency swap contracts | Derivatives Designated as Hedging Instruments: | Selling, general and administrative | ||||
Derivative instruments | ||||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | 30 | 1 | 19 | 1 |
Gain recognized in earnings related to the amount excluded from effectiveness testing | 5 | 4 | 14 | 4 |
Interest rate-related derivatives | Interest expense | ||||
Derivative instruments | ||||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | 17 | (18) | (3) | 17 |
Interest rate-related derivatives | Derivatives Designated as Hedging Instruments: | Interest expense | ||||
Derivative instruments | ||||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | $ (17) | $ 18 | $ 3 | $ (17) |
DERIVATIVE FINANCIAL INSTRUME_7
DERIVATIVE FINANCIAL INSTRUMENTS - Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included (Details) - Derivatives in fair value hedging relationships $ in Millions | 9 Months Ended |
Mar. 31, 2024 USD ($) | |
Long-term debt | |
Derivative instruments | |
Carrying Amount of the Hedged Liabilities | $ 845 |
Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability | (148) |
Intercompany debt | |
Derivative instruments | |
Carrying Amount of the Hedged Liabilities | 0 |
Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability | $ 62 |
DERIVATIVE FINANCIAL INSTRUME_8
DERIVATIVE FINANCIAL INSTRUMENTS - Additional Information Regarding the Effects of Fair Value and Cash Flow Hedging Relationships (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) reclassified from AOCI into earnings | $ 15 | $ 21 | $ 35 | $ 58 |
Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) reclassified from AOCI into earnings | 15 | 21 | 35 | 58 |
Net sales | ||||
Gain (loss) on derivative financial instruments | ||||
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded | 3,940 | 3,751 | 11,737 | 12,301 |
Selling, general and administrative | ||||
Gain (loss) on derivative financial instruments | ||||
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded | 2,284 | 2,281 | 7,177 | 7,155 |
Interest expense | ||||
Gain (loss) on derivative financial instruments | ||||
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded | 94 | 58 | 287 | 156 |
Interest rate-related derivatives | Interest expense | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) recognized in earnings | 17 | (18) | (3) | 17 |
Interest rate-related derivatives | Interest expense | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) reclassified from AOCI into earnings | 0 | (1) | (1) | (1) |
Interest rate-related derivatives | Interest expense | Derivatives Designated as Hedging Instruments: | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) recognized in earnings | (17) | 18 | 3 | (17) |
Cross-currency swap contracts | Selling, general and administrative | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) recognized in earnings | (30) | (1) | (19) | (1) |
Cross-currency swap contracts | Selling, general and administrative | Derivatives Designated as Hedging Instruments: | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) recognized in earnings | 30 | 1 | 19 | 1 |
Foreign currency forward contracts | Net sales | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) reclassified from AOCI into earnings | $ 15 | $ 22 | $ 36 | $ 59 |
DERIVATIVE FINANCIAL INSTRUME_9
DERIVATIVE FINANCIAL INSTRUMENTS - Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Foreign currency forward contracts | Derivatives Not Designated as Hedging Instruments: | Selling, general and administrative | ||||
Derivative instruments | ||||
Amount of Gain Recognized in Earnings on Derivatives | $ 18 | $ 4 | $ 31 | $ 21 |
DERIVATIVE FINANCIAL INSTRUM_10
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Derivative Asset and Liabilities, Offset (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Derivative assets | ||
Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | $ 102 | $ 98 |
Contracts Subject to Netting | (36) | (53) |
Net Amounts of Assets / (Liabilities) | 66 | 45 |
Derivative liabilities | ||
Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | (163) | (199) |
Contracts Subject to Netting | 36 | 53 |
Net Amounts of Assets / (Liabilities) | (127) | (146) |
Derivative Total | ||
Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | (61) | (101) |
Contracts Subject to Netting | 0 | 0 |
Net Amounts of Assets / (Liabilities) | $ (61) | $ (101) |
FAIR VALUE MEASUREMENTS - Hiera
FAIR VALUE MEASUREMENTS - Hierarchy For Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Recurring basis - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Assets: | ||
Money market funds | $ 1,855 | $ 3,241 |
Foreign currency forward contracts | 50 | 76 |
Cross-currency swap contracts | 52 | 22 |
Total | 1,957 | 3,339 |
Liabilities: | ||
Foreign currency forward contracts | 15 | 49 |
Interest rate-related derivatives | 148 | 150 |
DECIEM stock options | 106 | 99 |
Total | 269 | 298 |
Level 1 | ||
Assets: | ||
Money market funds | 1,855 | 3,241 |
Foreign currency forward contracts | 0 | 0 |
Cross-currency swap contracts | 0 | 0 |
Total | 1,855 | 3,241 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | 0 |
DECIEM stock options | 0 | 0 |
Total | 0 | 0 |
Level 2 | ||
Assets: | ||
Money market funds | 0 | 0 |
Foreign currency forward contracts | 50 | 76 |
Cross-currency swap contracts | 52 | 22 |
Total | 102 | 98 |
Liabilities: | ||
Foreign currency forward contracts | 15 | 49 |
Interest rate-related derivatives | 148 | 150 |
DECIEM stock options | 0 | 0 |
Total | 163 | 199 |
Level 3 | ||
Assets: | ||
Money market funds | 0 | 0 |
Foreign currency forward contracts | 0 | 0 |
Cross-currency swap contracts | 0 | 0 |
Total | 0 | 0 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | 0 |
DECIEM stock options | 106 | 99 |
Total | $ 106 | $ 99 |
FAIR VALUE MEASUREMENTS - Estim
FAIR VALUE MEASUREMENTS - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Carrying Amount | ||
Nonderivatives | ||
Cash and cash equivalents | $ 3,701 | $ 4,029 |
Current and long-term debt | 7,770 | 8,114 |
DECIEM stock options | 106 | 99 |
Deferred consideration payable | 341 | 341 |
Carrying Amount | Cross-currency swap contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 52 | 22 |
Carrying Amount | Foreign currency forward contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 35 | 27 |
Carrying Amount | Interest rate-related derivatives | ||
Derivatives | ||
Derivative assets (liabilities) | (148) | (150) |
Fair Value | ||
Nonderivatives | ||
Cash and cash equivalents | 3,701 | 4,029 |
Current and long-term debt | 7,276 | 7,665 |
DECIEM stock options | 106 | 99 |
Deferred consideration payable | 340 | 338 |
Fair Value | Cross-currency swap contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 52 | 22 |
Fair Value | Foreign currency forward contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 35 | 27 |
Fair Value | Interest rate-related derivatives | ||
Derivatives | ||
Derivative assets (liabilities) | $ (148) | $ (150) |
FAIR VALUE MEASUREMENTS - Impai
FAIR VALUE MEASUREMENTS - Impairment Charges (Details) - Level 3 - Fair Value, Nonrecurring - Trademarks - Fair Value $ in Millions | 9 Months Ended |
Mar. 31, 2023 USD ($) | |
Estimated fair values of financial instruments | |
Trademarks, Impairment charges | $ 207 |
Trademarks, Fair Value | 516 |
Dr. Jart+ | |
Estimated fair values of financial instruments | |
Trademarks, Impairment charges | 100 |
Trademarks, Fair Value | 330 |
Too Faced | |
Estimated fair values of financial instruments | |
Trademarks, Impairment charges | 86 |
Trademarks, Fair Value | 186 |
Smashbox | |
Estimated fair values of financial instruments | |
Trademarks, Impairment charges | 21 |
Trademarks, Fair Value | $ 0 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in DECEIM Stock Option Liability (Details) - Level 3 - Recurring basis - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value Measurement Inputs and Valuation Techniques [Roll Forward] | ||||
Changes in fair value, net of foreign currency remeasurements | $ 5 | $ 1 | $ 8 | $ (2) |
DECIEM Stock Option | ||||
Fair Value Measurement Inputs and Valuation Techniques [Roll Forward] | ||||
DECIEM stock option liability as of June 30, 2023 | 99 | |||
Changes in fair value, net of foreign currency remeasurements | 8 | |||
Translation adjustments and other, net | (1) | |||
DECIEM stock option liability as of March 31, 2024 | $ 106 | $ 106 |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Revenue from Contract with Customer [Abstract] | ||
Allowance for doubtful accounts and customer deductions | $ 27 | $ 30 |
Allowance for non-credit losses | $ 12 | $ 14 |
REVENUE RECOGNITION - Changes i
REVENUE RECOGNITION - Changes in Allowance for Credit Losses (Details) $ in Millions | 9 Months Ended |
Mar. 31, 2024 USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at June 30, 2023 | $ 16 |
Provision for expected credit losses | (3) |
Write-offs, net & other | 2 |
Balance at March 31, 2024 | $ 15 |
REVENUE RECOGNITION - Changes_2
REVENUE RECOGNITION - Changes in Deferred Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Change in Contract with Customer, Liability [Roll Forward] | ||||
Balance at the beginning of the period | $ 610 | $ 353 | $ 572 | $ 362 |
Revenue recognized that was included in the deferred revenue balance at the beginning of the period | (26) | (50) | (275) | (330) |
Revenue deferred (released) during the period | (38) | (15) | 255 | 261 |
Other | (4) | 26 | (10) | 21 |
Balance at the end of the period | $ 542 | $ 314 | $ 542 | $ 314 |
REVENUE RECOGNITION - Transacti
REVENUE RECOGNITION - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions | Mar. 31, 2024 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-04-28 | Marcolin Group | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 20 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-04-01 | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 12 months |
Estimated recognition of deferred revenue | $ 306 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-04-01 | Marcolin Group | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | |
Estimated recognition of deferred revenue | $ 226 |
PENSION AND POST-RETIREMENT B_3
PENSION AND POST-RETIREMENT BENEFIT PLANS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Pension Plans | U.S. | ||||
Components of net periodic benefit cost: | ||||
Service cost | $ 9 | $ 10 | $ 27 | $ 28 |
Interest cost | 12 | 10 | 35 | 30 |
Expected return on plan assets | (14) | (14) | (41) | (42) |
Amortization of: | ||||
Actuarial loss (gain) | 1 | 0 | 3 | 2 |
Prior service cost | 0 | 0 | 0 | 0 |
Special termination benefits | 0 | 0 | 0 | 0 |
Net periodic benefit cost | 8 | 6 | 24 | 18 |
Pension Plans | International | ||||
Components of net periodic benefit cost: | ||||
Service cost | 7 | 7 | 20 | 20 |
Interest cost | 5 | 3 | 14 | 10 |
Expected return on plan assets | (7) | (5) | (19) | (13) |
Amortization of: | ||||
Actuarial loss (gain) | (2) | 0 | (6) | (2) |
Prior service cost | (1) | 0 | (1) | 0 |
Special termination benefits | 0 | 1 | 0 | 1 |
Net periodic benefit cost | 2 | 6 | 8 | 16 |
Other than Pension Plans Post-retirement | ||||
Components of net periodic benefit cost: | ||||
Service cost | 0 | 0 | 1 | 0 |
Interest cost | 2 | 2 | 6 | 6 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of: | ||||
Actuarial loss (gain) | 0 | 0 | 0 | 0 |
Prior service cost | (1) | 0 | (1) | 0 |
Special termination benefits | 0 | 0 | 0 | 0 |
Net periodic benefit cost | $ 1 | $ 2 | $ 6 | $ 6 |
PENSION AND POST-RETIREMENT B_4
PENSION AND POST-RETIREMENT BENEFIT PLANS - Amounts Recognized in the Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Amounts recognized in the consolidated balance sheets consist of: | ||
Other assets | $ 113 | $ 115 |
Other accrued liabilities | (35) | (34) |
Other noncurrent liabilities | (334) | (395) |
Funded status | (256) | (314) |
Accumulated other comprehensive loss | 212 | 235 |
Net amount recognized | $ (44) | $ (79) |
STOCK PROGRAMS - Compensation E
STOCK PROGRAMS - Compensation Expense and Stock Options (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Non-cash stock-based compensation | $ 87 | $ 69 | $ 276 | $ 234 |
Common Class A | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Grant at fair value (in shares) | 1.8 | |||
Weighted-average exercise price (in dollars per share) | $ 155.92 | |||
Weighted-average grant date fair value (in dollars per share) | $ 52.83 | |||
Intrinsic value of stock options exercised (in dollars) | $ 25 |
STOCK PROGRAMS - Restricted Sto
STOCK PROGRAMS - Restricted Stock Units (Details) - Restricted Stock Units - Employee - Common Class A shares in Millions | 9 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Granted (in shares) | 1.6 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 155.84 |
RSU grants scheduled to vest in fiscal 2025 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.6 |
RSU grants scheduled to vest in fiscal 2026 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.6 |
RSU grants scheduled to vest in fiscal 2027 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.4 |
STOCK PROGRAMS - Performance Sh
STOCK PROGRAMS - Performance Share Units (Details) - Performance Share Units - Employee - $ / shares shares in Millions | 1 Months Ended | 9 Months Ended |
Aug. 31, 2023 | Mar. 31, 2024 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Vested (in shares) | 0.2 | |
Common Class A | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Granted (in shares) | 0.2 | |
Grant date fair value (in dollars per share) | $ 156.39 | |
Common Stock issued (in shares) | 0.1 |
STOCK PROGRAMS - DECIEM Stock O
STOCK PROGRAMS - DECIEM Stock Options (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
Recurring basis | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Stock option liability | $ 106 | $ 106 | $ 99 | ||
Level 3 | Recurring basis | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Changes in fair value, net of foreign currency remeasurements | 5 | $ 1 | 8 | $ (2) | |
Stock option liability | 106 | $ 106 | 99 | ||
DECIEM 2021 Stock Option Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Exercised in period (in shares) | 0 | ||||
DECIEM 2021 Stock Option Plan | Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Stock option liability | $ 106 | $ 106 | $ 99 |
STOCK PROGRAMS - Schedule of Ke
STOCK PROGRAMS - Schedule of Key Assumptions Used For Award (Details) - Stock Options - DECIEM - DECIEM 2021 Stock Option Plan | 9 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Jun. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Risk-free rate (as a percent) | 5% | 4.90% |
Term to mid of last twelve-month period | 29 days | 5 months 15 days |
Operating leverage adjustment | 0.45 | 0.45 |
Net sales discount rate (as a percent) | 7.90% | 7.80% |
EBITDA discount rate (as a percent) | 11.40% | 11.30% |
EBITDA volatility (as a percent) | 31.80% | 32% |
Net sales volatility (as a percent) | 14.30% | 14.40% |
NET EARNINGS ATTRIBUTABLE TO _3
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Reconciliation Between Numerator and Denominator of Basic and Diluted EPS Computations (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator: | ||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ 330 | $ 156 | $ 674 | $ 1,039 |
Denominator: | ||||
Weighted-average common shares outstanding - Basic (in shares) | 359.1 | 357.9 | 358.8 | 357.8 |
Weighted-average common shares outstanding - Diluted (in shares) | 360.8 | 361.2 | 360.4 | 360.9 |
Net earnings attributable to The Estée Lauder Companies Inc. per common share: | ||||
Basic (in dollars per share) | $ 0.92 | $ 0.44 | $ 1.88 | $ 2.90 |
Diluted (in dollars per share) | $ 0.91 | $ 0.43 | $ 1.87 | $ 2.88 |
Stock Options | ||||
Denominator: | ||||
Incremental common shares attributable to share-based payment arrangements (in shares) | 0.8 | 2.5 | 0.9 | 2.4 |
Performance Share Units | ||||
Denominator: | ||||
Incremental common shares attributable to share-based payment arrangements (in shares) | 0.2 | 0.1 | 0.1 | 0.1 |
Restricted Stock Units | ||||
Denominator: | ||||
Incremental common shares attributable to share-based payment arrangements (in shares) | 0.7 | 0.7 | 0.6 | 0.6 |
NET EARNINGS ATTRIBUTABLE TO _4
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Antidilutive Securities Excluded from Computation of Earnings, Per Share (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||||
Antidilutive shares excluded from the calculation of diluted earnings per share (in shares) | 5.8 | 2.2 | 5.7 | 2.1 |
Restricted Stock Units and Performance Shares | ||||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||||
Antidilutive shares excluded from the calculation of diluted earnings per share (in shares) | 0.1 | 0 | 0.5 | 0 |
Contingently Issuable Shares | ||||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||||
Antidilutive shares excluded from the calculation of diluted earnings per share (in shares) | 0.4 | 0.4 |
EQUITY AND REDEEMABLE NONCONT_3
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST - Equity Roll forward (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Increase (Decrease) in Stockholders' Equity | ||||
Other comprehensive loss attributable to The Estée Lauder Companies Inc. | $ (173) | $ (45) | $ (93) | $ (139) |
Increase (Decrease) in Redeemable Noncontrolling Interest | ||||
Beginning of the period | 832 | |||
Net earnings (loss) attributable to redeemable noncontrolling interest | 5 | (1) | 21 | 3 |
Translation adjustments | 15 | $ (1) | 13 | $ 26 |
End of the period | $ 840 | $ 840 | ||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 1.98 | $ 1.92 |
Total Stockholders' Equity | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | ||||
End of the period | $ 5,744 | $ 5,877 | $ 5,744 | $ 5,877 |
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 6 | 6 | 6 | 6 |
Stock-based compensation | 0 | 0 | 0 | 0 |
End of the period | 6 | 6 | 6 | 6 |
Paid-in Capital | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 6,367 | 6,000 | 6,153 | 5,796 |
Common stock dividends | 2 | 1 | 5 | 3 |
Stock-based compensation | 96 | 102 | 307 | 304 |
End of the period | 6,465 | 6,103 | 6,465 | 6,103 |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 13,858 | 14,342 | 13,991 | 13,912 |
Common stock dividends | (238) | (237) | (715) | (690) |
Net earnings attributable to The Estée Lauder Companies Inc. | 330 | 156 | 674 | 1,039 |
End of the period | 13,950 | 14,261 | 13,950 | 14,261 |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | (856) | (829) | (934) | (762) |
Other comprehensive loss attributable to The Estée Lauder Companies Inc. | (158) | (46) | (80) | (113) |
End of the period | (1,014) | (875) | (1,014) | (875) |
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | (13,663) | (13,617) | (13,631) | (13,362) |
Stock-based compensation | 0 | (1) | (32) | (72) |
Acquisition of treasury stock | 0 | 0 | 0 | (184) |
End of the period | (13,663) | (13,618) | (13,663) | (13,618) |
Redeemable Noncontrolling Interest | ||||
Increase (Decrease) in Redeemable Noncontrolling Interest | ||||
Beginning of the period | 850 | 819 | 832 | 842 |
Net earnings (loss) attributable to redeemable noncontrolling interest | 5 | (1) | 21 | 3 |
Translation adjustments | (15) | 1 | (13) | (26) |
End of the period | $ 840 | $ 819 | $ 840 | $ 819 |
EQUITY AND REDEEMABLE NONCONT_4
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST - Class of Stock and Dividend Information (Details) - $ / shares | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Mar. 15, 2024 | Feb. 02, 2024 | Dec. 15, 2023 | Oct. 31, 2023 | Sep. 15, 2023 | Aug. 17, 2023 | Apr. 24, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 1.98 | $ 1.92 | |||||||
Common Class A | |||||||||||
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.66 | ||||||||
Cash dividends paid per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.66 | ||||||||
Common Class A | Subsequent Event | |||||||||||
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | ||||||||||
Common Class B | |||||||||||
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.66 | ||||||||
Cash dividends paid per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.66 | ||||||||
Common Class B | Subsequent Event | |||||||||||
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 |
EQUITY AND REDEEMABLE NONCONT_5
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST - Changes in Accumulated Other Comprehensive Income (Loss) (Details) $ in Millions | 9 Months Ended |
Mar. 31, 2024 USD ($) | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | $ 5,585 |
OCI before reclassification | (40) |
Amounts reclassified to Net earnings | (40) |
Net current-period OCI | (80) |
Balance, end of the period | 5,744 |
Accumulated Other Comprehensive Loss | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | (934) |
Balance, end of the period | (1,014) |
Net Cash Flow Hedge Gain (Loss) | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | 59 |
OCI before reclassification | 21 |
Amounts reclassified to Net earnings | (26) |
Net current-period OCI | (5) |
Balance, end of the period | 54 |
Tax provision | 7 |
Cross-currency Swap Contracts | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | (15) |
OCI before reclassification | 19 |
Amounts reclassified to Net earnings | (11) |
Net current-period OCI | 8 |
Balance, end of the period | (7) |
Tax provision | 5 |
Amounts Included in Net Periodic Benefit Cost | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | (177) |
OCI before reclassification | 23 |
Amounts reclassified to Net earnings | (3) |
Net current-period OCI | 20 |
Balance, end of the period | (157) |
Tax provision | 5 |
Translation Adjustments | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | (801) |
OCI before reclassification | (103) |
Amounts reclassified to Net earnings | 0 |
Net current-period OCI | (103) |
Balance, end of the period | (904) |
Tax provision | $ 26 |
EQUITY AND REDEEMABLE NONCONT_6
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST - Reclassification Adjustments From Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Net sales | $ 3,940 | $ 3,751 | $ 11,737 | $ 12,301 | $ 15,910 | $ 17,737 |
Interest expense | 94 | 58 | 287 | 156 | ||
Earnings before income taxes | 486 | 280 | 1,051 | 1,445 | ||
Selling, general and administrative | 2,284 | 2,281 | 7,177 | 7,155 | ||
Other components of net periodic benefit cost | 4 | 4 | 9 | 9 | ||
Provision for income taxes | (151) | (125) | (356) | (403) | ||
Net earnings | 335 | 155 | 695 | 1,042 | ||
Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Net earnings | 16 | 19 | 40 | 47 | ||
Gain (Loss) on Cash Flow Hedges | Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Earnings before income taxes | 15 | 21 | 35 | 58 | ||
Provision for income taxes | (5) | (5) | (9) | (14) | ||
Net earnings | 10 | 16 | 26 | 44 | ||
Gain (Loss) on Cash Flow Hedges | Foreign currency forward contracts | Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Net sales | 15 | 22 | 36 | 59 | ||
Gain (Loss) on Cash Flow Hedges | Interest rate-related derivatives | Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Interest expense | 0 | (1) | (1) | (1) | ||
Cross-currency Swap Contracts | Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Selling, general and administrative | 5 | 4 | 14 | 4 | ||
Provision for income taxes | (1) | (1) | (3) | (1) | ||
Net earnings | 4 | 3 | 11 | 3 | ||
Amortization of prior service cost | Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Other components of net periodic benefit cost | 2 | 0 | 2 | 0 | ||
Amortization of actuarial gain | Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Other components of net periodic benefit cost | 1 | 0 | 3 | 0 | ||
Amounts Included in Net Periodic Benefit Cost | Amount Reclassified from AOCI | ||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||||
Earnings before income taxes | 3 | 0 | 5 | 0 | ||
Provision for income taxes | (1) | 0 | (2) | 0 | ||
Net earnings | $ 2 | $ 0 | $ 3 | $ 0 |
STATEMENT OF CASH FLOWS (Detail
STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Millions | 9 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash: | ||
Cash paid during the period for interest | $ 244 | $ 142 |
Cash paid during the period for income taxes | 441 | 387 |
Non-cash investing and financing activities: | ||
Property, plant and equipment accrued but unpaid | 35 | 239 |
Right-of-use assets obtained in exchange for new/modified operating lease liabilities | $ 351 | $ 197 |
SEGMENT DATA AND RELATED INFO_3
SEGMENT DATA AND RELATED INFORMATION - Narrative (Details) | 9 Months Ended |
Mar. 31, 2024 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
SEGMENT DATA AND RELATED INFO_4
SEGMENT DATA AND RELATED INFORMATION - Schedule of Segment Data and Related Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | $ 3,940 | $ 3,755 | $ 11,738 | $ 12,311 | $ 15,937 | $ 17,741 |
Charges associated with restructuring and other activities | (18) | (18) | (28) | (33) | (85) | (144) |
Net sales | 3,940 | 3,751 | 11,737 | 12,301 | 15,910 | 17,737 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | 549 | 315 | 1,231 | 1,547 | 1,594 | 3,314 |
Reconciliation: | ||||||
Interest expense | (94) | (58) | (287) | (156) | ||
Interest income and investment income, net | 45 | 37 | 126 | 78 | ||
Other components of net periodic benefit cost | 4 | 4 | 9 | 9 | ||
Earnings before income taxes | 486 | 280 | 1,051 | 1,445 | ||
Operating income | 531 | 297 | 1,203 | 1,514 | 1,509 | 3,170 |
Sales Returns (included in Net Sales) | ||||||
Net sales: | ||||||
Charges associated with restructuring and other activities | 0 | (4) | (1) | (10) | (27) | (4) |
The Americas | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 1,117 | 1,089 | 3,567 | 3,447 | ||
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | (6) | (93) | (243) | (53) | ||
Europe, the Middle East & Africa | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 1,647 | 1,474 | 4,488 | 4,972 | ||
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | 302 | 176 | 825 | 919 | ||
Asia/Pacific | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 1,176 | 1,192 | 3,683 | 3,892 | ||
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | 253 | 232 | 649 | 681 | ||
Skin Care | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 2,060 | 1,915 | 5,873 | 6,454 | 8,249 | 9,902 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | 468 | 269 | 920 | 1,238 | 1,277 | 2,776 |
Makeup | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 1,136 | 1,104 | 3,365 | 3,424 | 4,532 | 4,670 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | 66 | (5) | 56 | (9) | (21) | 126 |
Fragrance | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 575 | 577 | 1,948 | 1,907 | 2,451 | 2,491 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | 29 | 66 | 267 | 343 | 370 | 441 |
Hair Care | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 143 | 148 | 464 | 488 | 652 | 631 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | (25) | (24) | (50) | (32) | (36) | (28) |
Other | ||||||
Net sales: | ||||||
Net sales before returns associated with restructuring and other activities | 26 | 11 | 88 | 38 | 53 | 47 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||||
Operating income (loss) before charges associated with restructuring activities | $ 11 | $ 9 | $ 38 | $ 7 | $ 4 | $ (1) |
SEGMENT DATA AND RELATED INFO_5
SEGMENT DATA AND RELATED INFORMATION - Schedule of Error Correction (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | $ 3,940 | $ 3,755 | $ 11,738 | $ 12,311 | $ 15,937 | $ 17,741 |
Charges associated with restructuring and other activities | (18) | (18) | (28) | (33) | (85) | (144) |
Net sales | 3,940 | 3,751 | 11,737 | 12,301 | 15,910 | 17,737 |
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 549 | 315 | 1,231 | 1,547 | 1,594 | 3,314 |
Operating income | 531 | 297 | 1,203 | 1,514 | 1,509 | 3,170 |
Previously Reported | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 3,755 | 12,311 | 15,937 | 17,741 | ||
Charges associated with restructuring and other activities | (18) | (33) | (85) | (144) | ||
Net sales | 3,751 | 12,301 | 15,910 | 17,737 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 315 | 1,547 | 1,594 | 3,314 | ||
Operating income | 297 | 1,514 | 1,509 | 3,170 | ||
Revision of Prior Period, Error Correction, Adjustment | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 0 | 0 | 0 | 0 | ||
Charges associated with restructuring and other activities | 0 | 0 | 0 | 0 | ||
Net sales | 0 | 0 | 0 | 0 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 0 | 0 | 0 | 0 | ||
Operating income | 0 | 0 | 0 | 0 | ||
Sales Returns (included in Net Sales) | ||||||
Error Corrections [Line Items] | ||||||
Charges associated with restructuring and other activities | 0 | (4) | (1) | (10) | (27) | (4) |
Sales Returns (included in Net Sales) | Previously Reported | ||||||
Error Corrections [Line Items] | ||||||
Charges associated with restructuring and other activities | (4) | (10) | (27) | (4) | ||
Sales Returns (included in Net Sales) | Revision of Prior Period, Error Correction, Adjustment | ||||||
Error Corrections [Line Items] | ||||||
Charges associated with restructuring and other activities | 0 | 0 | 0 | 0 | ||
Skin Care | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 2,060 | 1,915 | 5,873 | 6,454 | 8,249 | 9,902 |
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 468 | 269 | 920 | 1,238 | 1,277 | 2,776 |
Skin Care | Previously Reported | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 1,922 | 6,408 | 8,202 | 9,886 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 256 | 1,207 | 1,204 | 2,753 | ||
Skin Care | Revision of Prior Period, Error Correction, Adjustment | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | (7) | 46 | 47 | 16 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 13 | 31 | 73 | 23 | ||
Makeup | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 1,136 | 1,104 | 3,365 | 3,424 | 4,532 | 4,670 |
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 66 | (5) | 56 | (9) | (21) | 126 |
Makeup | Previously Reported | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 1,088 | 3,408 | 4,516 | 4,667 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | (15) | (36) | (22) | 133 | ||
Makeup | Revision of Prior Period, Error Correction, Adjustment | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 16 | 16 | 16 | 3 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 10 | 27 | 1 | (7) | ||
Fragrance | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 575 | 577 | 1,948 | 1,907 | 2,451 | 2,491 |
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 29 | 66 | 267 | 343 | 370 | 441 |
Fragrance | Previously Reported | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 585 | 1,967 | 2,512 | 2,508 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 89 | 399 | 440 | 456 | ||
Fragrance | Revision of Prior Period, Error Correction, Adjustment | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | (8) | (60) | (61) | (17) | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | (23) | (56) | (70) | (15) | ||
Hair Care | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 143 | 148 | 464 | 488 | 652 | 631 |
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | (25) | (24) | (50) | (32) | (36) | (28) |
Hair Care | Previously Reported | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 149 | 489 | 653 | 631 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | (24) | (31) | (34) | (28) | ||
Hair Care | Revision of Prior Period, Error Correction, Adjustment | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | (1) | (1) | (1) | 0 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 0 | (1) | (2) | 0 | ||
Other | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 26 | 11 | 88 | 38 | 53 | 47 |
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | $ 11 | 9 | $ 38 | 7 | 4 | (1) |
Other | Previously Reported | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 11 | 39 | 54 | 49 | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | 9 | 8 | 6 | 0 | ||
Other | Revision of Prior Period, Error Correction, Adjustment | ||||||
Error Corrections [Line Items] | ||||||
Net sales before returns associated with restructuring and other activities | 0 | (1) | (1) | (2) | ||
Operating Income (Loss) before Total Returns and Charges Associated with Restructuring Activities | $ 0 | $ (1) | $ (2) | $ (1) |