Estee Lauder, the maker of popular brands like Mac, Aveda, Clinique, Too Faced and Bobbi Brown, is all set to reduce its working personnel. The unemployment rate is hovering at 3.7%, just above a half-century low. In addition, layoffs continue to happen across almost every sector in 2024, as companies adjust to a shifting economy. Therefore, the cosmetic giant is focused on achieving profits after several weak quarters. The new structure is also said to amplify its investments in the “strong equity and desirability of its brands” for growth.
Cosmetics company Estee Lauder has announced its expansion plan for fiscal years 2025 and 2026. The company’s restructuring program estimates a net reduction of approximately 3 to 5 percent of its positions by June 30, 2023.
Estee Lauder employs about 62,000 people globally and the layoffs will affect approximately 3,000 positions. Post the layoffs, the company expects to have improved its gross margin and expense base. This shall also drive greater operating leverage for the future.
The company’s President and CEO, Fabrizio Freda said, “We believe this now-larger plan will position the company better, to restore stronger and sustainable profitability, while supporting sales growth acceleration and increasing agility.”
Overview of Estee Lauder for Q2
The organisation recorded net sales of 4.28 billion dollars for its second quarter and a decline of 7 percent. The organic net sales fell 8 percent, highlighting challenges in Asia travel retail. Subsequently, the decrease in the second quarter also reflects a 1 percent headwind due to business disruptions in Israel and other parts of the Middle East.
Forecast for FY24
Estee Lauder claims that the company’s ‘profit recovery plan’ is projected to garner $1.1 billion to $1.4 billion in incremental operating profit benefits post restructuring.
The third quarter will see 3 to 5 percent increase in net sales. So, the organic net sales will increase between 4 percent to 6 percent.
“The company remains optimistic about the long-term prospects and future growth opportunities in global prestige beauty,” they said further.