Estée Lauder to Slash Up to 7,000 Jobs Amid Sales Decline and Tariff Challenges

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Estée Lauder Companies, the global beauty giant, has announced plans to cut between 5,800 and 7,000 jobs, representing up to 11% of its workforce, as part of an expanded restructuring initiative.

This decision comes in response to declining sales, geopolitical tensions, and the impact of tariffs on its operations.

Financial Struggles and Market Challenges

The company reported a significant drop in net sales for the last quarter, with revenue falling to $4 billion from previous levels.

Estée Lauder also posted a notable net loss, a sharp contrast to profits recorded during the same period the previous year.

The decline was largely attributed to weak consumer demand in Asia, particularly in China and Korea, where economic struggles and a shift toward local brands have dampened sales performance.

The company’s skin care segment saw the steepest decline, with sales dropping 12%, while makeup and hair care sales fell by 1% and 8%, respectively.

Only the fragrance segment showed slight growth. Ongoing challenges in Asia’s travel retail sector, especially at airports and tourist destinations, further exacerbated the situation.

Restructuring Plan and Job Cuts

Under its new CEO Stéphane de La Faverie, Estée Lauder is implementing a comprehensive restructuring strategy called “Beauty Reimagined.” The plan aims to simplify operations, enhance agility, and restore sustainable growth.

The company expects to incur restructuring charges covering employee-related costs, contract terminations, and asset write-offs. The job cuts are expected to be completed by the end of fiscal 2026.

While some employees will be retrained or redeployed into new roles, Estée Lauder has not disclosed specific locations for the layoffs. The company employs approximately 62,000 people worldwide, including about 4,400 in the UK and Ireland.

Broader Implications

The announcement comes amid heightened global economic uncertainty. Estée Lauder cited rising inflation and potential tariff increases as significant challenges.

In particular, U.S.-China trade tensions have imposed additional costs on the company’s supply chain.

China accounted for a substantial portion of Estée Lauder’s sales but has become a challenging market due to high unemployment rates and shifting consumer preferences.

The restructuring is expected to generate significant annual pre-tax savings, part of which will be reinvested into consumer-facing initiatives like luxury pricing tiers and digital marketing efforts.

However, analysts remain cautious about the company’s ability to regain momentum in a competitive beauty market increasingly dominated by younger consumers and local brands.

Market Reaction

Following the announcement, Estée Lauder’s shares experienced a steep decline, marking one of the most significant drops among S&P 500 companies on Tuesday.

Investors reacted not only to the job cuts but also to the company’s weaker-than-expected profit forecast for the upcoming quarter.

As Estée Lauder navigates this turbulent period, its turnaround strategy under “Beauty Reimagined” will be closely watched as it seeks to adapt to evolving market dynamics while managing external pressures from tariffs and global economic volatility.

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