Estée Lauder to axe 2,000 jobs as coronavirus hammers profits

The company, which owns a host of make-up, skincare and perfume brands including Mac, Joe Malone and Clinique, plans to shutter between 10% and 15% of its standalone store estate, while also slimming down its presence in department stores such as John Lewis, House of Fraser and Debenhams. 

The job cuts, which will impact its head office as well as stores, will affect around 3% of Estée Lauder’s workforce around the world. 

The New York-based business said the job cuts and store closures would save it as much as $400m (£302m) a year.    

The move comes after Estée Lauder revealed net profits more than halved to $680m (£513.4m) in the 12 months to the end of June. Sales during its fourth quarter tumbled 32%.

Sales of its make-up brands dropped 18% across the year, as the coronavirus crisis wiped out the 5% growth registered during its first half.  

Although online sales surged during the pandemic, that did not make up for revenues lost elsewhere including in its airport stores, which have been battered by the severe drop in air travel.

Estée Lauder stripped out around $800m (£604m) in costs during its fiscal year by slashing advertising and travel spend and freezing all recruitment, in a bid to shore up its balance sheet. 

But it cautioned that profits in the first quarter of its new financial year would also come in below analysts’ expectations.    

Although the group’s stores and beauty counters are being allowed to reopen, the customer experience is now very different as social distancing measures are adhered to. 

Shoppers are no longer able to test products in stores, while some beauty treatments also remain off-limits in certain countries.