By Steve Gelsi
Cosmetics company has approved layoffs of 3,200 staff based on a previously disclosed restructuring plan and may reduce head count by another 3,800, with expected restructuring charges of up to $1.6 billion
Estée Lauder posted a wider loss due partly to severance costs as its Asia-Pacific sales fell 3% in the fourth quarter.
This story has been updated to reflect that Estée Lauder announced 5,800 to 7,000 job cuts in February, not on Wednesday.
Estée Lauder Cos.’ stock dropped about 5% Wednesday after the maker of beauty products warned of a full-year profit miss and said it has approved 3,200 job cuts based on a previously announced restructuring plan.
Estée Lauder said that it approved the 3,200 layoffs as of Aug. 13, with severance and other charges of $747 million, but that it may ultimately lay off another 2,600 to 3,800 people under a plan initially laid out in February. The total number of job cuts could represent up to about 12% of the company’s workforce.
“I’ve said it multiple times – this is the biggest organizational transformation that we have done in our history,” Chief Executive Stéphane de La Faverie said on the company’s quarterly investor call, according to a FactSet transcript. “The culture is evolving and it’s changing, but we are really pushing on ambition and accountability.”
All told, the company expects restructuring and other changes to range from $1.2 billion to $1.6 billion for employee costs, asset-related costs, contract terminations and other costs.
Estée Lauder’s stock (EL) was down 4.8% in late morning trading, partially recovering from wider losses in premarket action.
The restructuring will generate $800 million to $1 billion of annual cost savings to boost its operating margin and “fuel reinvestment in consumer-facing areas to drive sustainable sales growth,” the company said.
Looking ahead, Estée Lauder said it expects about $100 million in tariff-related headwinds to affect its fiscal 2026 profitability as it weighs potential price increases.
For fiscal 2026, Estée Lauder said it expects adjusted profit of $1.90 to $2.10 a share, below the current FactSet consensus estimate of $2.20 a share.
For its fiscal fourth quarter to June 30, Estée Lauder said it faced sales “deterioration” mostly due to a double-digit-percentage decline in its global travel retail business, which includes sales of luxury items at duty-free shops in airports and cruise-ship terminals. The company also cited softness in mainland China from “ongoing subdued consumer sentiment and tighter inventory management by some retailers.”
Sales of the company’s skin-care products – its largest line of business – fell 16% in the fourth quarter to $1.71 billion, while makeup sales dropped 11% to $982 million.
The company’s fourth-quarter loss widened to $546 million, or $1.51 a share, from a loss of $284 million, or 79 cents a share, in the year-ago quarter. The latest quarter included $527 million of combined restructuring intangible-asset impairment charges, or about $1.12 a share.
On an adjusted basis, which excludes nonrecurring items, earnings per share fell to 9 cents from 64 cents in the year-ago period and matched the FactSet consensus.
Revenue dropped 12% to $3.41 billion but came in ahead of the analyst estimate of $3.39 billion.
Asia-Pacific sales fell 3% to $1.17 billion, while Middle East and Africa sales fell 22% to $1.29 billion and Americas sales dropped 6% to $949 million.
The company said it decided to cut its exposure to reseller activity, which also impacted revenue.
“Retailer shifts in strategies toward more profitable duty free business models in both Korea and mainland China … led to lower replenishment orders,” the company said.
On the plus side, Estée Lauder said it’s expecting a return of mid-single-digit sales growth in China as well as improved shipments as it reduces its exposure to reseller activity.
CEO de La Faverie said Estée Lauder has faced “continued volatility” but sees signs of momentum, with plans to grow organic sales in fiscal 2026 after three years of declines.
“This is only the beginning of the momentum that we are just going to see going forward,” he said.
-Steve Gelsi
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08-20-25 1132ET
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