On his first earnings call as CEO of The Estée Lauder Companies, Stéphane de La Faverie unveiled a plan called “Beauty Reimagined” to restore sustainable sales growth. Estée Lauder reported a 6% drop in net sales for the second quarter of fiscal year 2025, inspiring the company to take action in a competitive beauty market.
“We lost our agility,” said de La Faverie on Tuesday’s earnings call. “We did not capitalize on the higher growth opportunities quickly enough in channels, markets, media and prestige price tiers, nor fuel new consumer acquisition aggressively enough.”
Skin care was hit the hardest in Q2; the category saw net sales decrease 12%, largely due to declining sales in Asia. Hair care net sales fell 8%, due to poor performance from Aveda. Makeup net sales fell 1%, while fragrance net sales increased 2%. The company attributed growth in fragrance to luxury brands like Le Labo, while makeup declines were offset by growth from Clinique on Amazon. Despite the overall decline in skin care, the company reported that The Ordinary and the Estée Lauder brand were among the top-selling brands in the U.S. on TikTok Shop during Black Friday and Cyber Monday.
Estée Lauder’s “Beauty Reimagined” plan puts the focus on consumer-facing initiatives. The company said it will put more energy into consumer-preferred, high-growth channels and increase spending in advertising and marketing. It will also increase on-trend innovations with quick-to-market innovations in a bid to keep up with a competitive market. De La Faverie emphasized the use of AI, as well, to better target consumers and improve supply chains.
Estée Lauder also unveiled plans to establish a “flatter and leaner organization” to achieve those changes. The company announced it will cut up to 7,000 jobs across the globe. De La Faverie emphasized the establishment of a new, consumer-centric executive suite built on both internal and external talent. CFO Akhil Shrivastava, who ascended to the position in November, expects those actions to create savings of $800 million to $1 billion before taxes.
“As we transform how we operate and invest in a business, we must boldly pivot with a consumer-centric mindset focused on cost discipline, optimizing our resources for growth and fueling consumer facing investments to further ignite our brands,” said Shrivastava on Tuesday’s call.
Looking ahead to Q3 2025, Estée Lauder expects global travel retail sales will continue to decline due to a challenging market in Asia, but anticipates its new initiatives will improve retail performance overall. In the short-term, de La Faverie and Shrivastava emphasized the importance of maintaining existing brands over pursuing new acquisitions.
“We are going to triple the number of launches that we are going to bring to market within less than a year,” said de La Faverie.
