In a significant organisational overhaul, Estée Lauder Companies has revealed an estimated net reduction of between 5,800 and 7,000 jobs as part of the restructuring programme set out in its Profit Recovery and Growth Plan.
At the end of June 2024, the beauty retailer employed 62,000 people across its international operations.
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The New York-headquartered company anticipates incurring restructuring and other charges of between $1.2bn and $1.6bn.
These efforts will yield annual savings of $800m to $1bn, bolstering profit margins and facilitating further reinvestment.
This downsizing strategy includes both the elimination of roles and the reassignment and retraining of employees within targeted areas of the business.
The company expects to finalise all specific measures related to the restructure by the end of the fiscal year 2026.
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By GlobalDataThe restructuring blueprint underscores key objectives including the reorganisation and appropriate sizing of select departments, simplification and hastening of processes, outsourcing of services and an evolution of market presence and sales methodologies.
Under the leadership of newly appointed CEO Stéphane de La Faverie, Estée Lauder is embarking on this course correction in a period of challenges from declining sales figures in Asia and tempered consumer enthusiasm in pivotal markets such as China and Korea.
For the second quarter of fiscal year 2025, Estée Lauder reported a 6% decrease in net sales, amounting to $4bn.
Gross profit also witnessed a downturn, falling by 2% to $3.04bn from the same period of the previous year’s $3.12bn.
For the third quarter, Estée Lauder anticipates a substantial contraction in net sales within its global travel retail segment.
This forecast reflects ongoing difficulties within the Asian travel retail sphere and additional strains stemming from revised selling policies adopted by several Korean retailers.
The company expects a moderation in the decline of net sales for the third quarter of fiscal 2025 compared to the second quarter.
The projection is based on an observed improvement in retail trends from the first quarter to the second quarter of fiscal 2025.
Estée Lauder CEO Stéphane de La Faverie stated: “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, fuelled 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.”
