A360
Key Takeaways✦ Atlas AI
01
Estée Lauder is cutting up to 10,000 jobs, an increase of 3,000, as part of an expanded restructuring to generate $1.2 billion in annual savings and fund its turnaround.
02
The company is strategically shifting sales from traditional department stores to faster-growing digital channels like Amazon and TikTok Shop under CEO Stéphane de La Faverie.
03
Despite improved profit guidance and strong 6% sales growth in China, the company faces challenges with flat sales in the Americas and remains silent on a potential Puig merger.
Atlas AI
Expanded Restructuring Plan
Estée Lauder has announced a significant expansion of its ongoing turnaround efforts, increasing its planned job cuts by 3,000. The cosmetics giant now intends to eliminate as many as 10,000 positions from its global workforce of approximately 57,000.
The updated plan, announced Friday, aims to generate an additional $200 million in savings. This brings the total potential annual pre-tax savings from the company's profitability program to as much as $1.2 billion, providing substantial capital for reinvestment.
The news prompted a strong positive reaction from investors, with shares in the company surging as much as 16% in premarket trading. This rally follows a difficult period for the stock, which had fallen 27% year-to-date before the announcement.
Strategic Shift to Digital Channels
The workforce reduction is a key component of a broader strategic overhaul led by CEO Stéphane de La Faverie, who assumed the role in January 2025. His primary mission is to reverse a three-year trend of declining annual sales and re-energize the conglomerate.
A central pillar of this strategy involves shifting sales away from traditional US department stores. The company is reallocating resources to faster-growing digital channels, including e-commerce platforms like Amazon.com and social commerce avenues such as TikTok Shop.
This digital pivot reflects a wider industry trend and addresses the company's struggle to compete with a wave of agile startups in its home market. Sales in the Americas were flat in the most recent quarter, highlighting the competitive pressures Estée Lauder faces on its own turf.
Improved Outlook and Global Performance
Underscoring the early progress of its turnaround, Estée Lauder raised its profit outlook for the fiscal year. The company now expects adjusted earnings per share to be in the range of $2.35 to $2.45, a notable increase from its previous guidance of $2.05 to $2.25 and above analyst consensus.
Furthermore, the owner of brands like La Mer and The Ordinary projected organic net sales growth to reach 3% for the year, hitting the high end of its prior forecast. For the upcoming fiscal year ending in June 2027, the company anticipates organic sales growth between 3% and 5%.
A bright spot emerged in China, where organic net sales grew 6% in the latest quarter. This addresses a key area of underperformance and aligns with strong results reported by rivals like L'Oréal and LVMH in the region's premium cosmetics market.
Despite the detailed operational update, the company provided no new information regarding a potential merger with Spanish beauty firm Puig Brands SA, leaving a key strategic question unanswered.
