An Estee Lauder cosmetics counter in Los Angeles, Calif., on Aug. 19, 2019.Lucy Nicholson/Reuters
Estee Lauder Companies EL-N forecast annual profit and sales below estimates as the global beauty market struggles with slowing demand mainly in the China market, and said chief executive officer Fabrizio Freda was retiring after nearly 16 years at the helm.
Mr. Freda, 66, who is retiring in June, was named the CEO in 2009 and was responsible for expanding the company’s skin care portfolio with the addition of brands such as Dr. Jart and The Ordinary owner Deciem.
He also steered the company through pandemic-induced supply-chain snags when Estee was forced to raise prices to offset rising costs and laid out a turnaround plan last year that included job cuts.
Mr. Freda’s plans to retire come just a month after chief financial officer Tracey Travis said she would step down after a 12-year stint.
On Monday, Estee said the board was considering internal and external candidates as part of its CEO succession planning.
“It’s not a surprise that Fabrizio is stepping down. It was a long-anticipated change of the guard, given the results over the past few years and the need certainly for newness,” said Dana Telsey of Telsey Advisory Group.
Shares of Estee see-sawed in early trading and were marginally down. They have lost nearly 75 per cent since hitting a record high of US$374.20 in January, 2022, as prolonged inflation and China-led weakness hammered demand.
On a post earnings call with analysts, Ms. Travis said profit is expected to be up in fiscal 2025, mainly aided by the turnaround plan and growth in the Americas, Asia-Pacific region outside of China and Europe, except travel retail.
Estee expects annual sales to either fall as much as 1 per cent or rise 2 per cent. That compares with analysts’ estimates of a 6.4-per-cent rise, according to LSEG data.
The La Mer maker expects annual adjusted profit a share between US$2.75 and US$2.95, compared with analysts’ expectations of US$3.96.
Demand for even “affordable luxuries” such as lipsticks and perfumes, widely considered recession-proof, are seeing a hit, with Estee expecting continued declines in the prestige beauty segment in China and European peer L’Oreal highlighting a lack of a rebound in the region.