Estée Lauder has announced that it will axe between 1,500 and 2,000 positions across its global business in a bid to restructure the company following the coronavirus crisis.
The redundancies, which form part of its ‘Post-Covid Business Acceleration Program’, will primarily affect point of sale employees and support staff in areas that were the “most disrupted” following the crisis.
The move is said to affect around 3% of its current workforce, including temporary and part-time employees.
The makeup group, which also owns the M.A.C and Too Faced makeup brands, also predicts the closure of 10% to 15% of its freestanding stores, as well as the closure of “less productive” department store counters across its business.
Its latest business acceleration programme marks a two-year initiative to “rebalance investments to address the dramatic shifts in the distribution landscape and consumer behavior post-Covid-19”.
It will begin during the Company’s fiscal 2021 first quarter, and the group expects to take a restructuring charge of between $400m (£302m) and $500m (£378m) following the programme.
Once fully implemented, however, it’s expected to yield annual benefits of between $300m (£227m) and $400m (£302m), of which a portion is “expected to be reinvested in future initiatives to drive sustainable, profitable sales growth”.
In the same period, net sales fell by 3%, driven by retail store closures as a result of the global pandemic. Closures were partially offset by a “tremendous” acceleration online, however.
Fabrizio Freda, president and CEO said: “Fiscal 2020 was a year without parallel, as we delivered record sales and exceptionally strong adjusted EPS growth in our first half and navigated with agility through an unprecedented pandemic in our second half.
“In this new fiscal year, we remain focused on the safety and well-being of our employees and consumers. Our sense of urgency to act on our recently announced racial equity commitments is strong.”
He added: “Our strategic priorities for fiscal 2021 rightly balance investment in these engines with cost discipline amid the ongoing pandemic. Through the Post-Covid Business Acceleration Program announced today, we are better aligning our brick-and-mortar footprint to improve productivity and invest for growth.
“We are well-positioned to drive growth as the market dynamics support it, yet remain equally mindful of the effects of Covid-19 on consumers, the retail sector and economics, in general, as well as geopolitical uncertainty.”