Estée Lauder to cut roles as global sales decline

Estée Lauder Companies, which owns global beauty brands including Clinique, The Ordinary and Jo Malone London, reported net sales of $4.28bn (£3.40bn) in the second quarter ending December 31, 2023 – a decline of 7% from the $4.62bn (£3.67bn) the business reported at the same time last year.

Organic net sales fell 8% during the same period.

The company attributed this fall to “expected challenges in Asia travel retail as well as ongoing softness in overall prestige beauty in mainland China” and said “the decrease also reflects a 1% headwind due to business disruptions in Israel and other parts of the Middle East.”

Estée Lauder confirmed plans to undergo a restructuring programme as it looks to expand its profit recovery; it expects a reduction of between 3% and 5% in staff.

Fabrizio Freda, Estée Lauder president and chief executive officer, said: “For the second quarter of fiscal 2024, we delivered our organic sales outlook and exceeded expectations for profitability. The Ordinary and La Mer in skin care, Clinique in make-up, and Le Labo and Jo Malone London in fragrance categories performed strongly.

“Many developed and emerging markets around the world continued to grow organically and at retail. While mainland China and Asia travel retail declined, our retail sales trended ahead of organic sales, and these businesses are poised to return to organic sales growth in the second half.”

Inflection point

Freda continued: “We made progress in the first half across several strategic priorities, including reducing inventory in the trade of Asia travel retail, improving working capital, realizing higher levels of net pricing, and managing expenses with discipline. We are, encouragingly, at an inflection point.

“In the second half of fiscal 2024, we are positioned to return to strong organic sales growth and expand our profitability from the first half. Moreover, today we have announced that we are further expanding our profit recovery plan, which benefits fiscal years 2025 and 2026, to include a restructuring programme.

“We believe this now-larger plan will better position the company to restore stronger, and more sustainable, profitability, while also supporting sales growth acceleration and increasing agility and speed-to-market.”