The Estée Lauder Companies Inc. reported a 10% decline in net sales during its third quarter of fiscal year 2025 earnings call on Thursday. The beauty conglomerate stated it will lay off up to 7,000 employees amid a larger profit recovery and growth plan. In February, after reporting a 6% drop in net sales during its second-quarter earnings call, the company unveiled a “Beauty Reimagined” plan to counter declining sales.
“Though Beauty Reimagined has only deepened the executive team, our board of directors and the organization remain committed to restoring sustainable sales growth and achieving a solid double-digit adjusted operating margin over the next few years,” said Estée Lauder CEO Stéphane de La Faverie.
In addition to a reduction in force, de La Faverie highlighted initiatives to reach consumers with new products. MAC brought back classic ’90s lip shades with its Nudes collection in January, and de La Faverie stated Jo Malone will launch a body spray version of its Cypress & Grapevine scent to capture the body mist boom. The company will also open 10 new stores globally, primarily led by Le Labo stores in China and the U.S.
Buzzy launches like the MAC Nudes collection did not do enough to offset declining sales, however. By sector, skin-care and hair-care sales saw the sharpest drop, reporting an 11% and 10% drop in net sales, respectively, for the third quarter compared to the same period in 2024. Makeup sales declined 7%, while fragrance sales fell 1%. The conglomerate attributed the fragrance decline primarily to the Clinique Happy franchise, despite double-digit growth from Le Labo.
With tariffs on the horizon, the Estée Lauder Companies said it anticipates a potential impact on fiscal year 2026 and plans to mitigate the costs of tariffs by beefing up its local sourcing. For the 2025 full-year results, CFO Akhil Shrivastava said Estée Lauder anticipates an 8-9% decline in net sales. But Shrivastava acknowledged that those numbers may be overly optimistic.
“We want to acknowledge the risks associated with the geopolitical landscape, specifically tariffs and the uncertainty of their impact on consumer sentiment,” Shrivastava said on Thursday’s call. “If conditions worsen, particularly regarding Chinese consumer sentiment and the potential pressure on sales during the 618 mid-year shopping festival, the negative impact on financial performance could exceed what we have factored into our current assumptions. In that case, achieving the outlook we are providing today may not be possible.”