A symbol of elegance and luxury, Estée Lauder is navigating an unprecedented storm. With a steep drop in profits and mounting global economic pressures, the American cosmetics giant is losing some of its shine. From January to March, its net profit plummeted by 53%, reaching just $159 million, a harsh blow for a company accustomed to thriving.
Worrying Numbers
Although adjusted earnings per share reached 65 cents, far exceeding analysts’ expectations of 31 cents, this is not enough to disguise the 10% drop in revenue, which now stands at $3.55 billion. While this revenue figure is above forecasts, it reveals a troubling trend for a brand that has long ridden the wave of global growth.
In a statement, Estée Lauder did not shy away from highlighting the causes of this downturn: waning consumer confidence, a significant slowdown in China, and rising production costs driven by persistent inflation and punitive tariffs.
China: A Slowing Engine
Once considered a golden market for luxury brands, China is showing signs of weakness. Consumers, who were previously a driving force behind Estée Lauder’s growth, are now exercising greater caution. “Chinese consumer conversion is weaker,” the group admitted, pointing to a global trend that is weighing on the entire industry.
The Response: A Bold Plan
In response to this crisis, Estée Lauder has unveiled a massive restructuring plan. By the end of 2026, the company intends to cut 5,800 to 7,000 jobs, nearly 10% of its global workforce. This program, expected to cost between $1.2 billion and $1.6 billion, aims to reduce costs and overhaul the company’s structure.
To date, over 2,600 positions have already been eliminated, representing $623 million in cumulative charges. Despite the scale of these cuts, CEO Stéphane de La Faverie remains optimistic: “We are confident in our ability to return to strong growth by 2026, provided that recent tariffs are significantly resolved.”
Luxury Under Pressure
However, the restructuring comes at a cost. On the New York Stock Exchange, Estée Lauder’s shares dropped 3.55%during the day, reflecting investors’ skepticism about the company’s ability to turn things around.
For a brand that has embodied excellence and timeless beauty for decades, this setback feels like a wake-up call. How can Estée Lauder once again captivate increasingly demanding consumers while weathering the shocks of a rapidly evolving global market?
The Time for Reinvention
Estée Lauder now stands at a historic crossroads. In an industry undergoing profound transformation, where sustainability and innovation dictate success, the company must reinvent its business model without losing its essence. Its massive restructuring plan is a bold move, but will it be enough to restore its luster in the face of fierce competition?
The challenge is immense, but the company’s history proves it has the resilience to rise again. Like its iconic products, Estée Lauder must apply to itself what it promises its customers: a rebirth, stronger and more radiant than ever.