Estée Lauder to axe up to 7,000 roles amid restructuring plan
For the six months to the end of the year, net cash flows provided by operating activities also fell from $937m (£748.5m) to $387m (£309.1m)
Estée Lauder has revealed its plans to cut up to 7,000 roles globally as part of its latest cost-cutting plan, as the cosmetics retailer braces for tariff increases sparked by US President Donald Trump.
It comes as net sales fell by 6% to $4bn (£3.2bn) during the second quarter ended 31 December 2024, as each category – makeup, fragrance and skincare – across all global territories saw a fall in sales.
For the six months to the end of the year, net cash flows provided by operating activities also fell from $937m (£748.5m) to $387m (£309.1m) due to lower pre-tax earnings.
The group has “significantly” expanded the restructuring component of its profit recovery and growth plan (PRGP), and once implemented, Estée Lauder expects to take restructuring and other charges of between $1.2bn (£960m) and $1.6bn (£1.28bn) before taxes.
The restructuring programme is expected to yield annual gross benefits of between $0.8bn (£640m) and $1bn (£800m) before taxes.
According to Estée Lauder, this will restore its operating margin and also fuel reinvestment in consumer facing areas to drive “sustainable” sales growth.
Stéphane de La Faverie, president and CEO of Estée Lauder, said: “Today, we are excited to launch Beauty Reimagined, a bold strategic vision to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years as we aim to become the best consumer-centric prestige beauty company.
“We are significantly transforming our operating model to be leaner, faster, and more agile, while taking decisive actions to expand consumer coverage, step-change innovation, and increase consumer-facing investments to better capture growth and drive profitability.”
He added: “While we are not satisfied with our third quarter outlook, it primarily reflects weak retail sales trends in our Asia travel retail business, which deteriorated in our second quarter driven by Korea. For the third quarter, we expect overall soft retail trends to persist in Asia travel retail.”
