The Estée Lauder Companies has announced a major restructuring and strategic business transformation as it seeks to restore sales growth and strengthen profitability. The company reported a 6% decline in net sales to $4.0 billion for the second quarter ended December 31, 2024, prompting the expansion of its Profit Recovery and Growth Plan (PRGP). As part of this transformation, Estée Lauder will implement a significant workforce reduction, cutting between 5,800 and 7,000 positions. The restructuring, which includes outsourcing select services and re-evaluating supplier relationships, is expected to generate annual gross benefits of $0.8 billion to $1.0 billion.
The company also plans to increase marketing investments, accelerate product innovation, and streamline operations to drive sustainable growth and regain market leadership in the prestige beauty sector. Key aspects of the Beauty Reimagined strategy unveiled by Stéphane de La Faverie, President and Chief Executive Officer, include expanding presence in high-growth channels and markets, rapidly bringing trend-driven beauty products to market, optimising marketing investments, enhancing supply chain efficiencies, and flattening the corporate structure to improve decision-making and execution. Despite economic and geopolitical challenges, Estée Lauder remains committed to achieving a double-digit operating margin in the coming years through disciplined cost management and reinvestment in consumer engagement.
“We are excited to launch Beauty Reimagined, a bold strategic vision to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years as we aim to become the best consumer-centric prestige beauty company,” de La Faverie said. “While we recognise there is much work to do, we are confident that Beauty Reimagined is the way to realise our ambition. We are significantly transforming our operating model to be leaner, faster, and more agile, while taking decisive actions to expand consumer coverage, step-change innovation, and increase consumer-facing investments to better capture growth and drive profitability. Together with our talented employees, fundamental values, and incredible brands, Beauty Reimagined positions us to lead the prestige beauty industry once again.”
Financial performance and market highlights show mixed results. While fragrance sales increased by 2%, driven by Le Labo and Jo Malone London, other segments, including skincare and makeup, faced ongoing pressures. Luxury expansion efforts continue with the launch of Balmain Beauty in fiscal 2025, along with retail and e-commerce growth, including The Ordinary’s launch on TikTok Shop UK and Amazon US Premium Beauty Store.
In leadership news, Michael Bowes has been appointed as Executive Vice President, Chief People Officer, effective April 1, 2025. Reporting to President and CEO Stéphane de La Faverie, Bowes will lead the company’s global human resources strategy, focusing on talent management, career development, and cultural transformation. Bowes, who has been with Estée Lauder since 2015, previously led Global Talent Acquisition and Talent Management. He succeeds Michael O’Hare, who is set to retire in 2025. The transition will be managed in the coming months to ensure continuity in leadership and corporate culture initiatives.
With its leadership shift and aggressive restructuring, Estée Lauder is positioning itself for long-term success in an evolving global beauty landscape.
Read the SUMMER ’25 issue of Retail Beauty below:
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