Amid ongoing challenges in global sales, Stéphane de La Faverie is actively working to reinvigorate agility at The Estée Lauder Companies. The iconic cosmetics powerhouse recently announced plans to cut its workforce by approximately 5,800 to 7,000 positions by the end of 2026. This move comes in response to a troubling 6% drop in net sales for the second quarter of fiscal year 2025, which contributed to a significant net loss of USD 590 million, largely due to restructuring and asset depreciation expenses.
Beauty Reimagined Initiative
In his first earnings call as President and CEO, de La Faverie unveiled an ambitious initiative called “Beauty Reimagined.” This robust strategic framework is designed to rejuvenate sales, enhance profitability, and re-establish The Estée Lauder Companies as the leading consumer-focused prestige beauty brand globally. He underscored the importance of reshaping the company’s operational model, aiming to create a more streamlined, agile organization that simplifies processes and reduces complexity.
Staff Cuts and Operational Restructuring
The company has indicated that the planned job cuts will involve the removal of certain roles, even after efforts to retrain and redeploy affected employees. These restructuring initiatives seek to reorganize various functions and optimize operations while focusing on outsourcing specific services and refining market strategies and sales models.
Focus on Efficiency and Market Challenges
A key aspect of this strategic transformation is the commitment to improving procurement efficiency, which is projected to deliver significant savings. The organization plans to consolidate its spending and reassess its partnerships with essential suppliers. Moreover, boosting supply chain efficiency remains a top priority. Goals include adopting a zero-waste philosophy, minimizing excess inventory, and fostering deeper collaborations in research and development across the entire value chain.
To support these changes, de La Faverie has established a new organizational structure that groups regional operations into four geographic clusters: EMEA (Europe, Middle East, Africa), the Americas, mainland China, and Asia-Pacific (excluding China). Additionally, the brand portfolio will be reorganized into specialized category clusters to further streamline operations.
The Estée Lauder Companies has faced a downturn in consumer demand, particularly in Asian markets like China, which has negatively impacted sales for several quarters now. Company leadership anticipates continued volatility in the business landscape and reports low visibility regarding short-term sales performance. They project a year-on-year decline of 12% to 15% for the third quarter of fiscal year 2025.
Source: Premiumbeautynews