Estee Lauder announced plans to cut up to 7,000 jobs, citing the need for restructuring to address challenges like sales volume deleverage, inflation, and investment needs. The company expects to save $800 million to $1 billion annually from the restructuring.
Estee Lauder announced on Tuesday its plans to reduce its workforce by up to 7,000 positions. The cosmetics giant unveiled an updated 'profit recovery and growth plan' and released its second-quarter financial results, revealing the need for significant restructuring. The company stated that the elimination of 5,800 to 7,000 roles takes into account retraining and redeployment of certain employees in specific areas.
Estee Lauder acknowledged that its turnaround plan has yielded greater-than-expected net benefits in the fiscal second quarter. However, these gains were overshadowed by sales volume deleverage, investments aimed at restoring sustainable growth, and inflationary pressures. Consequently, the company decided to enhance its 'profit recovery and growth plan' and implement a more comprehensive restructuring program. The company anticipates incurring restructuring and other charges, amounting to $1.2 billion to $1.6 billion before taxes, upon completion of the restructuring. Estee Lauder projects the restructuring will generate annual pre-tax gross savings in the range of $800 million to $1 billion. These funds, according to the company, will be instrumental in restoring operating margins and fueling reinvestment in consumer-facing areas to drive sustainable sales growth.The expanded turnaround plan aims to return the cosmetics company to sales growth, pave the way for 'solid double-digit adjusted operating margin' over the next few years, and equip it to effectively manage external volatility, such as potential global tariff increases. Estee Lauder outlined several key actions it will take, including consolidating spending and strategically re-evaluating key supplier relationships in procurement, minimizing excess inventory and product destruction through improved supply chain efficiencies, and outsourcing 'select services to proven global partners.' Estee Lauder envisions completing its 'profit recovery and growth plan' in fiscal 2027, with many of these measures anticipated to be implemented in fiscal 2025 and 2026, as stated by the company. '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 expressed in a statement. The announcement of the workforce reduction and the release of its second-quarter results led to a decline of over 17% in Estee Lauder's share price on Tuesday. Estee Lauder is renowned for its portfolio of brands, including Mac, Clinique, Too Faced, and Bobbi Brown.
Estee Lauder Restructuring Layoffs Cosmetics Finance Profitability Turnaround Plan
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