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Estée Lauder has announced a restructuring programme, which will see the group cut up to 3,100 jobs across its global workforce, as net sales fell 7% to $4.28bn (£3.39bn) for the second quarter ended 31 December 2023.
According to the group, the restructuring programme will go hand-in-hand with a further expansion of its Profit Recovery Plan, after the group experienced “ongoing softness” in overall prestige beauty in mainland China.
The group’s challenges in Asia travel retail has been attributed to an 8% fall in organic net sales. The decrease also reflects a 1% headwind due to business disruptions in Israel and other parts of the Middle East.
As a result, the company reported net earnings of $313m (£247.7m), down from the recorded net earnings of $394m (£311.8m) in the prior year end.
However, the group maintained that these pressures have been “partially offset” by organic net sales growth in the EMEA regions, as well as in nearly every market in Latin America.
Fabrizio Freda, president and CEO of Estée Lauder, said: “For the second quarter of fiscal 2024, we delivered our organic sales outlook and exceeded expectations for profitability. The Ordinary and La Mer in skincare, Clinique in makeup, and Le Labo and Jo Malone London in fragrance performed strongly. Many developed and emerging markets around the world continued to grow organically and at retail.
“In the second half of fiscal 2024, we are positioned to return to strong organic sales growth and expand our profitability from the first half. Moreover, today we have announced that we are further expanding our Profit Recovery Plan, which benefits fiscal years 2025 and 2026, to include a restructuring program.”
He added: “We believe this now-larger plan will better position the company to restore stronger, and more sustainable profitability, while also supporting sales growth acceleration and increasing agility and speed-to-market.”
