Estee Lauder has announced a significant workforce reduction as part of its revamped “profit recovery and growth plan.” The cosmetics giant, widely known for its brands like Mac, Clinique, Too Faced, and Bobbi Brown, intends to eliminate a net 5,800 to 7,000 positions globally. This decision stems from the company’s ongoing efforts to address financial pressures caused by sales volume declines, inflation, and required investments for sustainable growth. The move is indicative of the volatile landscape in the global beauty industry, which has faced challenges such as supply chain disruptions and fluctuating consumer demand.
How does Estee Lauder plan to manage these changes?
The company aims to achieve savings through measures such as consolidating spending, reassessing supplier relationships, improving supply chain efficiencies, and outsourcing specific services to global partners. Estee Lauder projects restructuring charges of $1.2 billion to $1.6 billion before taxes by the conclusion of the program. Executives anticipate pre-tax annual gross savings between $800 million and $1 billion, which will be allocated to reinvestment in consumer-facing areas while also restoring operating margins.
What are Estee Lauder’s long-term goals?
With the turnaround strategy set to conclude in fiscal 2027, the company is focused on achieving sustainable sales growth and a solid double-digit adjusted operating margin in the years ahead. Some initiatives are expected to be implemented during fiscal 2025 and 2026. Estee Lauder also aims to navigate ongoing external challenges like potential tariff hikes. CEO Stephane de La Faverie expressed optimism about the plan, stating,
“While we recognize there is much work to do, we are confident that Beauty Reimagined is the way to realize our ambition.”
In earlier reports regarding workforce reductions, Estee Lauder had detailed plans to cut up to 3,000 positions. This latest announcement marks a significant expansion of its restructuring efforts. It reflects the company’s response to both internal financial concerns and broader market dynamics, such as inflation and shifting consumer buying behaviors. Notably, Estee Lauder had previously experienced successful financial performance, but recent pressures have prompted the need for a larger-scale overhaul.
Shares of Estee Lauder saw a sharp decline of over 17% following the news of layoffs and its second-quarter financial report, signaling investor concerns over the company’s short-term hurdles. Actions outlined in the updated strategy seek to stabilize the business while positioning it for future growth.
As Estee Lauder continues its restructuring journey, the company must carefully balance cost-saving measures with maintaining its brand reputation and market competitiveness. Increasing operational efficiency while avoiding potential disruptions to product quality and customer satisfaction will remain critical challenges. For stakeholders and employees alike, the focus will be on the execution and outcomes of this ambitious plan.
