The Estée Lauder Companies Inc. announced that it would close the global wholesale distribution of its Prescriptives brand by Jan. 31, 2010. The brand plans to continue to sell online for U.S. shipping at www.prescriptives.com to help service consumers for replenishment of key products, while inventory lasts. Prescriptives products are currently sold in the U.S., Canada, the U.K., Ireland and Australia. A core component of The Estée Lauder Companies' corporate strategy, according to the closer press release, is to evaluate, and where possible, turn around underperforming brands with the goal of improving return on investment. After a thorough analysis of the Prescriptives brand, management concluded that the brand's long term business model is no longer viable given the current market environment. Lauder, according to its statement, is committed to placing as many impacted employees as possible in open positions within the company.
"We believe that the difficult decision relating to Prescriptives will allow us to redirect our resources to key strategic imperatives where we see the highest growth potential," said Fabrizio Freda, president and CEO, The Estée Lauder Companies. "Ultimately, this action allows us to focus on those areas that we expect to benefit the company, our shareholders and business partners. We intend to work closely with our retail partners and continue to communicate with our consumers to ensure a seamless transition."
The company's previously disclosed estimated ranges for fiscal 2010 net sales and earnings per share, before charges associated with restructuring activities, remain unchanged as a result of this business decision. The company also expects to take charges associated with restructuring activities of between $35 million to $40 million in connection with this action. These charges are within the range of overall charges the company previously estimated it would take in fiscal 2010 in connection with its long-term strategic plan. The recording of charges will depend on when decisions are made and the relevant accounting criteria are met. Such charges are not included in the company's fiscal 2010 earnings per share projections for the first quarter or the full year.