Estée Lauder unveils new profit recovery plan after sales decline in golden quarter
The Estée Lauder Companies has launched a new strategic plan to restore sustainable growth and recover profit after sales dropped in the golden quarter.
The company saw net sales decrease 6% to $4 billion (£3.2 billion) in the second quarter ending 31 December 2024, compared to $4.2 billion (£3.3 billion) the previous year.
For Q2, Estée Lauder shared the following regional results:
- The Americas down 2% to $1.22 billion (£982 million).
- EMEA down 6% to $1.49 billion (£1.2 billion).
- Asia/Pacific down 11% to $1.28 billion (£1.03 billion).
Skincare sales decreased 12%, primarily due to impacts from the challenging retail environments in Asia/Pacific and the company’s Asia travel retail business, including ongoing pressure from subdued sentiment from Chinese consumers, which drove declines from Estée Lauder and La Mer.
Meanwhile, makeup sales dropped 1%, with softness in the eye and face subcategories from MAC Cosmetics and Smashbox, respectively, as well as declines at Tom Ford,
Haircare sales also decreased 8% during the three months, primarily driven by Aveda, reflecting continued softness in the company’s salon channel and the timing of shipments.
However, fragrance sales increased 2%, led by double-digit growth from Le Labo, partially offset by declines from Estée Lauder, due in part to reduced shipments of holiday sets.
Looking ahead, the US-based company has introduced a new strategic vision bolstered by an updated profit recovery plan.
The Beauty Reimagined strategy includes:
- Expand presence in consumer-preferred, high-growth channels, markets, media and price tiers to participate in key growth opportunities in prestige beauty.
- Deliver fast-to-market, on-trend innovation focused on in-demand subcategories, benefits, and occasions.
- Increase visible advertising spending, optimise marketing programmes and eliminate low-return activities to accelerate new consumer acquisition.
- Unburden smaller brands so that they can be more successful in the beauty organisation, while driving greater benefits of scale for its larger brands.
Stéphane de La Faverie, President and Chief Executive Officer at Estée Lauder Companies, said: "Today, we are excited to launch Beauty Reimagined, a bold strategic vision to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years as we aim to become the best consumer-centric prestige beauty company.
"While we recognise there is much work to do, we are confident that Beauty Reimagined is the way to realise our ambition. We are significantly transforming our operating model to be leaner, faster, and more agile, while taking decisive actions to expand consumer coverage, step-change innovation, and increase consumer-facing investments to better capture growth and drive profitability.
"Together with our talented employees, fundamental values, and incredible brands, Beauty Reimagined positions us to lead the prestige beauty industry once again."