Estee Lauder Lays off more than 3,000 Employees Globally: No Major Adjustments in the Chinese Market

Before the U.S. stock market opened on February 5, Estee Lauder announced a restructuring plan on its official website, including laying off 3% to 5% to more than 3,000 employees.

Estee Lauder responded that the group has no major adjustment plans in the Chinese market. On the contrary, the group's profit recovery plan will help empower the Chinese team and better adapt to the development of the Chinese market.

According to the second quarter results released by Estee Lauder, the company's net sales in the second quarter ended December 31, 2023 were US$4.28 billion, a decrease of 7% from US$4.62 billion in the same period last year, but better than market expectations of US$4.19 billion. Net profit attributable to parent companies fell 20.5% year-on-year to US$313 million.

Among the four major businesses of skin care, makeup, perfume, and hair care, the skin care segment's net sales declined the most, with a decrease of 10%. In this regard, the Estee Lauder Group explained that this reflects the decline of the company's travel retail business in Asia. The main reason is that due to the impact of the control purchasing policy, the company and its retailers are taking actions to reset retailer inventory levels, the decline in the number of local consumers also reflects continued weakness in premium beauty products, including a drop in sales during the "Double Eleven" global shopping festival.

"We are at an inflection point. In the second half of fiscal 2024, we are on track to return to strong organic growth and expand profitability in the first half of the year," said Fabrizio Freda.

In the second quarter of 2023, the Estee Lauder Group's retail sales growth in mainland China was higher than the growth of net sales. It is worth mentioning that, benefiting from the sales performance of Estée Lauder (Estee Lauder) and La Mer (La Mer), the group's net sales on Douyin more than doubled. Among them, Estée Lauder achieved triple-digit sales growth. La Mer achieved double-digit growth in retail channels in mainland China.

"We are confident in China's long-term development and will continue to invest in the Chinese market." Fan Jiayu, President and CEO of Estee Lauder Group China, said that in fiscal year 2023, Estee Lauder made major investments in the Chinese market with the goal of long-term development, including the operation of Estee Lauder China Innovation R&D Center and the opening of a new logistics distribution center in Guangzhou.

In addition, The Estée Lauder Group's early stage investment and incubation (NIV) arm made a minority investment in Chinese fragrance brand Melt Season. The unit also invested in Internet celebrity Zhou Yangqing’s beauty brand CODEMINT, its first investment in a local Chinese brand.