The global beauty cosmetics giant, Estee Lauder, is facing significant challenges as it plans to cut up to 7,000 jobs by fiscal 2026, which accounts for more than 11% of its workforce. This decision comes after the company reported a 6% decrease in sales and incurred losses in its most recent quarter.
The New York-based company, known for its iconic brands such as MAC, La Mer, and Aveda, has revised its profit outlook due to slowing economies in China and Korea, as well as global geopolitical uncertainties. China recently announced retaliatory tariffs on some American imports, and an antitrust investigation into Google, in response to the sweeping tariffs imposed by U.S. President Donald Trump on Chinese products.
Estee Lauder anticipates incurring restructuring and other charges related to the job cuts, ranging between $1.2 billion and $1.6 billion before taxes. As of June 30, 2024, the company had approximately 62,000 employees worldwide.
âWe are significantly transforming our operating model to be leaner, faster, and more agile,â said CEO StĂ©phane de La Faverie, who assumed the top executive role last month.
In its latest quarter, Estee Lauder reported sales of $4 billion, a decrease from $4.28 billion in the same period the previous year. The company now expects a profit of between 24 cents and 34 cents in the current quarter, significantly lower than the 61 cents forecasted by Wall Street analysts.
Following these announcements, shares of The Estée Lauder Companies Inc. dropped nearly 15%, or $12.14, on Tuesday.
This news underscores the challenges faced by even established beauty brands in a rapidly evolving global market. Estee Lauder’s strategic restructuring aims to streamline operations and adapt to shifting economic landscapes, ensuring its long-term sustainability and competitiveness in the beauty industry.
