The Estée Lauder Cos. Announces More Job Cuts
The Estée Lauder Cos. is more than doubling the number of employees it plans to lay off as parts of its profit recovery plan.
As the company’s sales fell 6 percent in the second quarter, the owner of namesake Estée Lauder, Jo Malone, Tom Ford, Clinique and more, announced plans to ramp up its restructuring program, from 3,000 to between 5,800 to 7,000.
Actions under the plan are expected to be executed in fiscal 2025 and 2026 and completed in fiscal 2027.
Net sales decreased 6 percent to $4 billion in the second quarter covering the final three months of 2024, a touch above analysts’ estimates, while adjusted diluted net earnings per common share decreased to 62 cents.
Skin care net sales decreased 12 percent, primarily due to impacts from the overall challenging retail environments in Asia/Pacific and the company’s Asia travel retail business, including ongoing pressure from subdued sentiment from Chinese consumers, which drove declines from Estée Lauder and La Mer.
Makeup net sales decreased 1 percent on the back of declines from Tom Ford, while hair care net sales decreased 8 percent..
On a brighter note, fragrance net sales increased 2 percent, led by Le Labo and its strong double-digit growth across each geographic region, partially offset by the decline from Estée Lauder, due in part to reduced shipments of holiday sets.
On a geographical basis, sales were flat in North America, decreased 6 percent in Europe Middle East and Africa, and fell 11 percent in Asia/Pacific
Releasing his first set of earnings since taking the reins as president and ceo on Jan. 1, Stéphane de La Faverie, aid “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. While our retail sales trends in Hainan were still negative in the second quarter, they improved sequentially, fueled by our retail activations. 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.”
At the same time, he unveiled the company’s new strategy: Beauty Reimagined. He described it as “a bold strategic vision to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years as we aim to become the best consumer-centric prestige beauty company.”
