Blaming weak sales in China and duty-free markets, The Estée Lauder Cos. approved 3,200 job cuts. The company signaled it could reduce headcount by another 3,800 with expected restructuring charges of up to $1.6 billion. The restructuring is expected to be completed by the end of 2026.
“The Company now estimates a net reduction in positions of 5,800 to 7,000, including approvals to date. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas,” ELC said in a statement. “Approvals for specific initiatives under this restructuring program, in total, are still expected to be completed by the end of fiscal 2026.”
A Tough Fiscal 2025
The announcement came as part of the new leadership team’s strategic progress and outlook. In fiscal 2025, sales fell 8% to $14.3 billion. Operating margin fell from 6.2% to 5.5%.
“Having closed fiscal 2025 as expected, we remain wholly focused on continuing to execute our strategic vision of Beauty Reimagined with excellence,” said President and CEO Stéphane de La Faverie. “Despite continued volatility in the external environment, we embarked on fiscal 2026 with signs of momentum and confidence in our outlook to deliver organic sales growth this year after three years of declines and to begin rebuilding operating profitability in pursuit of a solid double-digit adjusted operating margin over the next few years.”
Declines in Most Categories
In fiscal 2025, sales fell in nearly all product categories. Specifically:
• Skincare -12%
• Makeup -6%
• Haircare -10%
• Other -13%
Fragrance sales were flat.
By region, sales fell 4% in the Americas, 12% in EMEA and 7% in Asia Pacific. As noted, ELC blamed the decline on double-digit net sales decline from the Company’s global travel retail business, which is included in EMEA, driven by lower net sales in Asia travel retail, due to ongoing subdued sentiment and lower conversion from Chinese consumers.
No comments:
Post a Comment