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Estee Lauder announced on Tuesday that it plans to slash up to 7,000 positions from its workforce.
The cosmetics company said it will eliminate a net of 5,800 to 7,000 roles as it unveiled an updated « profit recovery and growth plan » and released its second-quarter financial results on Tuesday.
The number of affected positions, up from the up to 3,000 positions it detailed last year, « takes into account the elimination of positions after retraining and redeployment of certain employees in select areas, » Estee Lauder said.
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The company said it has « realized more net benefits » from its turnaround plan « than expected » through its fiscal second quarter, but those have been « more than offset by sales volume deleverage, investments to restore sustainable growth, and inflation, » prompting the company to bolster its « profit recovery and growth plan » and the restructuring program within that.
A couple walks by an Estee Lauder store in Kuala Lumpur, Malaysia, on Oct. 3, 2024. (Faris Hadziq/SOPA Images/LightRocket via Getty Images / Getty Images)
The company expects to incur restructuring and other charges totaling between $1.2 billion and $1.6 billion, before taxes, by the time it completes the restructuring.
It projected the restructuring will bring annual pre-tax gross savings in the $800 million to $1 billion range, funds that Estee Lauder said will « help restore operating margin and also fuel reinvestment in consumer facing areas to drive sustainable sales growth. »
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| EL | THE ESTÉE LAUDER COMPANIES INC. | 70.05 | -12.74 | -15.39% |
The expansion of the overall turnaround plan seeks to bring the cosmetics company back to sales growth, pave the way for « solid double-digit adjusted operating margin over the next few years » and help it « continue to manage external volatility, such as potential tariff increases globally, » Estee Lauder said.
THE HISTORY OF ESTEE LAUDER, ONE OF THE WORLD’S LEADING COSMETICS BRANDS, BEGINNING WITH AN $800 SALE
Actions the company said it will take include « further consolidating spending and strategically re-evaluating key supplier relationships » in its procurement, minimizing excess inventory and product destruction through improved supply chain efficiencies, and outsourcing « select services to proven global partners. »
Estee Lauder is looking to finish its « profit recovery and growth plan » in fiscal 2027, with many of the measures slated to be carried out in fiscal 2025 and 2026, according to the company.
In this photo illustration, The Estee Lauder company logo is seen displayed on a smartphone screen. (Piotr Swat/SOPA Images/LightRocket via Getty Images / Getty Images)
« While we recognize there is much work to do, we are confident that Beauty Reimagined is the way to realize our ambition, » CEO Stephane de La Faverie said in a statement.
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The news of the workforce reduction and its second-quarter results sent shares of Estee Lauder down over 17% on Tuesday.
The company is known for brands such as Mac, Clinique, Too Faced and Bobbi Brown.
