Topline
Estée Lauder will lay off between 5,800 and 7,000 employees – from 9% to 11% of its 62,000 workforce – after second-quarter sales dropped 6% and operating income swung from a $574 million gain in the same period last year to a $580 million in loss this year, new CEO, Stéphane de La Faverie said, in his first earnings report.
“The Estée Lauder Company is absolutely committed to change – absolutely committed to bring speed ... [+]
Key Facts
Through Dec. 31, Estée Lauder second quarter fiscal 2025 revenues dropped 6% to $4 billion from $4.3 billion same period last year and past six-month revenues are off 6%, from $7.8 billion to $7.4 billion.
Second quarter operating margin declined to -14.5% from 13.4% previous year.
Skin care revenues, its top money maker, are down 12% to $1.9 billion and Asia/Pacific sales tanked 11% to $1.3 billion in the second quarter.
Upcoming third-quarter organic net sales are projected to decrease between 8% and 10% compared to last year, with a steep fall expected in travel retail.
The disappointing earnings report led to a 16% drop in share price yesterday to close at $69.47 with a further share price decline at market open today.
Background
The second quarter 2025 earnings call was de la Faverie’s formal introduction as CEO to investors. He assumed the position on January 1, after being promoted from executive group president overseeing Estée Lauder, Jo Malone, The Ordinary and Le Labo brands. De la Faverie has been with the company since 2011, working under past CEO Fabrizio Freda until his retirement at the end of 2024. Before leaving, Freda put in place a Profit Recovery and Growth Plan. De la Faverie is carrying the PRGP forward and putting his own spin on it under a “Beauty Reimagined” restructuring plan. Besides its name-sake brand and others mentioned above, Estée Lauder beauty brands include Clinique, La Mer, Bumble & Bumble, MAC, Bobbi Brown, Aerin, Smashbox and Tom Ford.
Pillars Of ‘beauty Reimagined’ Plan
De la Faverie’s vision for the company hinges on greater consumer engagement in growth markets, across channels and price points. For example, popularly-priced The Ordinary skin care brand just launched on Amazon. The company will increase investments in advertising and marketing, while reining in SG&A expenditures. It aims for “transformative innovation” in new products, especially prestige offerings, and to deliver innovative new products faster to market. Efficiencies will be achieved through better demand forecasting, aided by AI, and supply chain enhancements, along with a flatter, more agile organizational structure. The goal is to return the company to “sustainable sales growth” and to deliver double-digit adjusted operating margin over the next several years. It’s a big ask, given company performance most recently.
Big Number
$2.1 billion – How much Estée Lauder lost in sales over the last two years, from $17.7 billion in 2022 to $15.6 billion in 2024.
Tangent
McKinsey reported beauty retail sales globally reached $446 billion in 2023, up 10% from 2022. By contrast, Estée Lauder revenues dropped by the same percentage that year to $15.9 billion.
Contra
LVMH reported that its Sephora beauty retail powerhouse delivered a “remarkable performance” in fiscal 2024 generating double-digit growth in revenue and profit, though the company doesn’t report specific brand results. And in the first nine months of 2024, beauty industry leader L’Oréal revenues rose 6% to reach $33.8 billion.
Crucial Quote
“We lost agility. It came from the complexity of the organization. The commitment is to simplify the ways of working,” said de la Faverie in the earnings call. “The Estée Lauder Company is absolutely committed to change – absolutely committed to bring speed and agility to everything we are doing so we can rebuild this company to the rightful place that it belongs, which is at the top.”
Further Reading
Estée Lauder to Cut Up to 7,000 Jobs (Wall Street Journal, 2/4/2025)
Estée Lauder warns of up to 7,000 job cuts globally (Retail Dive, 2/4/205)
Stéphane de La Faverie Announces Leadership Updates in Support of The Estée Lauder Companies’ Beauty Reimagined Vision (Company Press Release, 2/4/2025)
