Cosmetics giant Estee Lauder is in the process of a multiyear turnaround plan that’s expected to cost between $1.2 billion and $1.6 billion.
The move comes after the company’s stock has tumbled more than 80% from its all-time high of $371.86 in 2022.
“Simply said, we lost our agility,” CEO Stéphane de la Faverie said in a post-earnings call for Estée Lauder’s fiscal year 2025 second quarter.
“We did not capitalize on the higher growth opportunities quickly enough in channels, markets, media and prestige price tiers, nor fuel new consumer acquisition aggressively enough,” he said, adding that the company also hasn’t innovated enough, which often put it “behind trend.”
The beauty firm, which also owns brands Clinique, MAC and Jo Malone, posted second-quarter results that showed revenues dropped 6% to $4 billion from $4.3 billion in the same period last year. Sales in skincare, its largest category by far, were down 12%.
De la Faverie became the company’s first new CEO in more than 15 years in January and was tapped to lead a turnaround. He introduced a bold action plan in February called “Beauty Reimagined,” which aims to “restore the company’s sustainable sales growth,” per the company’s website.
“We all knew a shakeup was coming and needed. So it’s good to see that it’s here,” said Baird Managing Director Jon Tenan.
Part of the plan includes some major cost-cutting initiatives; de la Faverie expanded a “restructuring plan” that will cut up to 7,000 jobs, or 11% of Estée Lauder’s 62,000-person workforce, and even affects the C-suite.
The company had cut its dividend by nearly half in October to free up some cash for restructuring, something a company rarely does, analysts say.
“It’s because the declines are not going to stop as quickly as thought,” said Linda Bolton Weiser, a senior analyst at D.A. Davidson. “In retrospect, they probably did the right thing.”
Watch this video to learn more about Estée Lauder’s struggles and its comeback plan.