The Estée Lauder Companies Unveils Aggressive Reset for Growth

The Estée Lauder Companies (ELC) is embarking on a bold transformation to reset its business, address financial setbacks, and reclaim its position as a leader in the prestige beauty industry. On the heels of reporting its financial results for the second quarter of fiscal 2025, ELC unveiled its new strategic vision, "Beauty Reimagined." This plan aims to restore sustainable sales growth, strengthen profitability, and position the company as the world’s most consumer-centric prestige beauty brand. Notably, the initiative will include as many as 7,000 job cuts.

Financial Snapshot: Addressing Challenges

For the second quarter ending December 31, 2024, ELC reported net sales of $4.0 billion, a 6% decline compared to the prior year. Organic net sales also dropped by 6%, impacted by ongoing challenges in key markets, including Asia/Pacific and travel retail. Operating income fell sharply, with the company recording a loss of $580 million, reflecting impairments and restructuring costs. Adjusted operating income also decreased by 20%, while diluted earnings per share swung to a net loss of $1.64.

While ELC faced headwinds, the company achieved some bright spots, such as gross margin expansion to 76.1%, driven by benefits from the Profit Recovery and Growth Plan (PRGP). However, CEO Stéphane de La Faverie acknowledges the challenges ahead: “While we recognize there is much work to do, we are confident that Beauty Reimagined is the way to realize our ambition."

Beauty Reimagined: A Strategic Reset

To address its financial hurdles and reignite growth, ELC introduced "Beauty Reimagined," a comprehensive strategy designed to transform its operating model, enhance consumer focus, and boost profitability. This initiative is centered around five key priorities:

1. Accelerating Consumer Coverage: ELC plans to expand its presence in high-growth channels, markets, and price tiers. By prioritizing consumer preferences, the company aims to seize new opportunities in prestige beauty.
2. Transformative Innovation: The focus will be on delivering fast-to-market, on-trend innovations across key subcategories, benefits, and occasions. This includes leveraging R&D to dramatically reduce the time-to-market for new products.
3. Boosting Consumer-Facing Investments: ELC intends to ramp up visible advertising and optimize marketing programs to accelerate new customer acquisition while eliminating low-return activities.
4. Driving Efficiencies: The company is expanding its PRGP by consolidating procurement, optimizing the supply chain, and outsourcing select services to generate cost savings. These efficiencies will fund growth initiatives and support the return to a double-digit adjusted operating margin.
5. Reimagining How They Work: ELC is simplifying operations, flattening its organizational structure, and empowering faster decision-making to drive execution excellence and agility.

Organizational Restructuring and Leadership Changes

While the road ahead may be challenging, ELC’s ambitious plans and leadership changes reflect a commitment to transformation and long-term success.asauriet at Adobe StockAs part of Beauty Reimagined, ELC announced a major overhaul of its organizational structure and leadership team to streamline operations and foster a more consumer-centric approach. The company is consolidating its regional organization into four geographic clusters: EMEA (Europe, Middle East, Africa), the Americas, mainland China, and Asia-Pacific (excluding China). This change aims to drive synergies, improve agility, and better respond to local consumer trends.

In addition, ELC has reorganized its brand portfolio into category clusters, including Skin Care, Makeup, Lifestyle Fragrance, Luxury Fragrance, Hair Care, and more. Leadership roles have been updated accordingly to foster collaboration, accelerate speed-to-market, and strengthen brand equity.

To further enhance innovation, ELC created the role of Chief Value Chain Officer to unify packaging, engineering, and supply chain functions. Additionally, the company is focusing on digital transformation, with upcoming appointments for Chief Digital Marketing Officer and Chief Technology, Data, and Analytics Officer.

“These changes reflect the need to create a flatter, leaner organization and simplified operations across the business to better serve our consumers,” said Stéphane de La Faverie. “This new structure will improve communication, accountability, collaboration, and empowerment across all levels.”

The Company is consolidating its existing regional organization into four geographic clusters to drive greater synergies and efficiencies, as well as strengthen its agility to better capitalize on consumer trends and locally relevant innovation faster.

Appointments List:

Geographic Cluster Appointments:

1. Nadine Graf: President, EMEA, UK & I, and Emerging Markets.
2. Tara Simon: President, The Americas (including Latin America).
3. Amber English: President, Digital & Online, The Americas (including Latin America).
4. Joy Fan: President and CEO, China.
5. Matthew Growdon: President, APAC and Travel Retail Worldwide.

Brand Leadership Appointments:

6. Jane Hertzmark Hudis: Executive Vice President, Chief Brand Officer.
7. Justin Boxford: Leader of Estée Lauder and AERIN Beauty.
8. Sandra Main: Leader of the Skin Care brand cluster (La Mer, Clinique, Origins, Dr.Jart+, Darphin, Lab Series).
9. Jo Dancey: Leader of the Lifestyle Fragrance brand cluster (Jo Malone London, KILIAN PARIS, Editions de Parfums Frédéric Malle).
10. Guillaume Jesel: Leader of the Couture brand cluster (TOM FORD, BALMAIN Beauty).
11. Shane Wolf: Leader of the Hair Care brand cluster (AVEDA, Bumble and bumble).
12. Deborah Royer: Leader of Le Labo.
13. Jesper Rasmussen: Leader of DECIEM.
14. To be named: Leader of the Makeup brand cluster (M·A·C, Bobbi Brown, Too Faced, Smashbox, GLAMGLOW).

Functional Leadership Appointments:

15. Roberto Canevari: Executive Vice President, Chief Value Chain Officer.
16. Carl Haney: Executive Vice President, Global Innovation and Research and Development.
17. Michael Bowes: Executive Vice President, Chief People Officer.
18. To be named: Chief Digital Marketing Officer.
19. To be named: Chief Technology, Data and Analytics Officer.

Continuing Executive Team Members:

20. Rashida La Lande: Executive Vice President, General Counsel.
21. Akhil Shrivastava: Executive Vice President, Chief Financial Officer.
22. Meridith Webster: Executive Vice President, Global Communications and Public Affairs.

Highlights: Strengthening Core Areas

Despite the challenges, ELC continues to see growth in certain areas and brands:

• Prestige Beauty Gains: ELC achieved share gains in key markets, including the U.S., China, and Japan, with standout performances from Clinique, Le Labo, and Bumble and bumble.
• Innovations and Expansions: The company launched several new products, such as Clinique CX in China and Estée Lauder’s Re-Nutriv longevity expansion. It also expanded distribution channels, including The Ordinary’s launch on TikTok in the U.K. and Amazon’s U.S. Premium Beauty store.
• Global Reach: Over 20 new freestanding fragrance stores were opened globally, led by Jo Malone London and Le Labo. The company also expanded geographically, including The Ordinary’s launch in Thailand and upcoming debut in mainland China.

Looking Ahead

With Beauty Reimagined, ELC is taking decisive action to reset its business and chart a path back to growth. By focusing on consumer-centric strategies, innovation, and operational efficiency, the company aims to overcome its recent challenges and strengthen its position as a global leader in prestige beauty.

While the road ahead may be challenging, ELC’s ambitious plans and leadership changes reflect a commitment to transformation and long-term success. As Stéphane de La Faverie said, “Together with our talented employees, fundamental values, and incredible brands, Beauty Reimagined positions us to lead the prestige beauty industry once again.”