We are seeing quite a few high-profile train wrecks in the consumer space. I wrote about one of them, Estée Lauder, in September 2024. The verdict was to look for a turnaround to begin in 2026. Estée Lauder, unlike the other trainwrecks, is showing signs of improvement and looks like it is on the path to a sustained turnaround.

The Estée Lauder Companies Inc. (NYSE: EL) is a classic "turnaround-in-flight" story. After suffering a severe structural de-rating driven by excessive exposure to Asian Travel Retail (ATR) and a protracted consumer slowdown in Hainan and mainland China, EL has reached an operational pivot. With CEO Stéphane de La Faverie leading the "Beauty Reimagined" operating model and the broader Profit Recovery and Growth Plan (PRGP), the investment thesis hinges on whether cost realignments and digital distribution expansion can restore double-digit operating margins faster than macro headwinds in Asia erode organic revenue.