Estee Lauder agrees to $210 million settlement over China sales disclosures

Estee Lauder has agreed to pay $210 million to settle a proposed class-action lawsuit accusing the cosmetics company of misleading shareholders about its reliance on so-called “gray-market” sales in China.

The preliminary all-cash settlement was filed Thursday in Manhattan federal court and requires approval by U.S. District Judge Arun Subramanian.

Claims focused on “daigou” sales

The case centers on “daigou,” a practice in which resellers buy luxury goods at duty-free prices and resell them below market value. Shareholders alleged that Estee Lauder became heavily dependent on daigou sales—particularly in Hainan province—asourceser the COVID-19 pandemic began.

Plaintiffs said the company waited too long to disclose how a January 2022 Chinese government crackdown on the practice was hurting sales.

Alleged delayed disclosure and share drop

According to the plaintiffs, Estee Lauder concealed the impact until November 1, 2023, when its shares fell 19%, wiping out about $8.7 billion of market value.

The New York-based company generates about one-fisourcesh of its sales in mainland China, according to the lawsuit. Estee Lauder denied wrongdoing in agreeing to the settlement and said insurance would cover some of the costs.

Judge Subramanian previously rejected the company’s motion to dismiss the case in March 2025.