Estée Lauder shares plunge 18% as it plans to slash up to 7,000 jobs
Cosmetics giant Estée Lauder Estee Lauder announced a major restructuring plan on Tuesday that includes slashing up to 7,000 jobs as the company grapples with persistent demand weakness — sending its shares spiraling nearly 20%.
The Manhattan-based company, founded and controlled by New York’s Lauder family, said it will cut about 10% of its workforce as part of the expanded turnaround plan under new CEO Stéphane de La Faverie, who took over on Jan. 1.
The company now expects third-quarter profit to come well below expectations, citing challenges in its Asia travel retail business, particularly at airports and travel destinations in Korea and China.
Shares in Estée Lauder plunged on Tuesday after the cosmetics company announced up to 7,000 job cuts. Heorshe – stock.adobe.com
“For the third quarter, we expect overall soft retail trends to persist in Asia travel retail, significantly pressuring our organic net sales,” La Faverie said.
Shares were down 17% in mid-day trading.
The company, which owns brands like Clinique and MAC, said it will wait to release its full-year forecast because of “evolving global geopolitical uncertainty.”
Estée Lauder has been hit hard for months – facing weak demand for its high-end fragrance and makeup products, and stiff competition from rivals like L’Oréal, which has been quicker to push out new trendy products.
Its shares have fallen more than 50% over the past 12 months.
Estee Lauder has faced challenges in boosting sales growth in China, which accounted for roughly a quarter of the company’s sales in 2024, due to high unemployment, a struggling economy, and an increasing preference for local brands.
“Simply said, we lost our agility. We did not capitalize on the higher growth opportunities,” de la Faverie said on a post-earnings call, adding that Estee has been lagging behind owing to its inability to adapt to on-trend innovations in time.
Net sales are expected to drop between 10% to 12% in the three months ending March 31 – worse than the 6.8% fall predicted by analysts, according to Bloomberg.
The 78-year-old cosmetics giant said it is expecting adjusted earnings per share to plunge as much as 79% in the current quarter compared to the year before.
“While we are not satisfied with our third quarter outlook, it primarily reflects weak retail sales trends in our Asia travel retail business, which deteriorated in our second quarter driven by Korea,” de La Faverie said.
“For the third quarter, we expect overall soft retail trends to persist in Asia travel retail, significantly pressuring our organic net sales despite the improvement we made with in-trade inventory levels in the first half of fiscal 2025, which we intend to maintain around current levels.”
CEO Stéphane de La Faverie (right) is expanding the company’s turnaround plan to focus on getting new products to consumers quicker. Patrick McMullan via Getty Images
In the second quarter, ended Dec. 31, Estée Lauder reported a $590 million net earnings loss, far below $313 million in earnings the year before. The company also reported revenue of $4 billion, below $4.3 billion the year before.
De La Faverie said his turnaround plan focuses on getting new, trendy cosmetics products to the consumer quicker, and marketing them better.
The 7,000 job cuts include 3,000 impacted positions that were announced last February.
The company said it expects contract terminations and other costs involved in the restructuring will cost between $1.2 billion and $1.6 billion.
The company said it expects to incur costs between $1.2 billion and $1.6 billion involved in its corporate restructuring. REUTERS
“The expanded plan is designed to further transform the company’s operating model to fund a return to sales growth and restore a solid double-digit adjusted operating margin over the next few years, and continue to manage external volatility, such as potential tariff increases globally,” Estée Lauder said in a statement.
On Tuesday, the company also named Jane Hertzmark chief brand officer and announced that its brands will be organized into categories, including skin care and makeup.
The company is also splitting its organization into four geographic groups.
