Estée Lauder Reports Disappointing Results and Announces CEO Departure

The company posted net sales of $15.61 billion for the year, down 2% from the previous year when Estée Lauder had counted on sales of $15.91 billion. The situation in the Chinese market, which is affecting virtually the entire international luxury sector, is no stranger to the group's disappointing performance. In a press release, Estée Lauder explained that "the decline was due to the continued weakness of the prestige beauty sector in mainland China and the decline of the travel retail sector in Asia."

The American company posted a profit of $0.39 billion, compared with a net profit of $1.01 billion last year. The group remains cautious about its forecasts for the coming year. The same press release announced that performance would be adversely affected by "a continued decline in the prestige beauty segment in China, primarily reflecting persistent weakness in Chinese consumer confidence." Estée Lauder believes that the premium segment can continue to grow by 2% to 3% over the next year, relying mainly on the development of emerging markets and on sales in the United States, which are more or less stable.

The company is nevertheless predicting a sure recovery in the cosmetics sector, with sales growth of between 4% and 6% in 2026, based on a recovery in the Chinese market. Forecasts are less optimistic for the medium term: by 2025, growth is unlikely to exceed +2%.

At the same time as releasing its financial results, the American company announced that CEO Fabrizio Freda would soon be stepping down. The name of his replacement has yet to be announced. Fabrizio Freda will retire at the end of the current financial year. He has led the group for almost 15 years. Last July, Estée Lauder had already made a change to its management team: Akhil Shrivastavy replaced Tracey Travis as Chief Financial Officer.

The American company plans to cut over 3,000 jobs as part of a major restructuring plan.