The Estee Lauder Cos. has revealed a restructuring plan, including job losses, as it continues to tread water.
The company estimates a net reduction in the range of about 3 to 5 percent of its positions as of June 30. This reduction takes into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas, it said.
The restructuring program’s main focus includes the reorganization and rightsizing of certain areas of the company as well as simplification and acceleration of processes.
It expects to drive incremental operating profit through the initiatives in the Profit Recovery Plan of $1.1 billion to $1.4 billion, including net benefits from the restructuring program.
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Net sales were $4.28 billion for its second quarter ended Dec. 31, a decline of 7 percent from $4.62 billion in the prior-year period. Organic net sales fell 8 percent, reflecting the expected challenges in Asia travel retail as well as ongoing softness in overall prestige beauty in mainland China.
Skin care net sales declined 10 percent, reflecting a decrease in its Asia travel retail business primarily due to the ongoing actions by the company and its retailers to reset retailer inventory levels. Net sales from Estée Lauder, Clinique and Origins declined.
Net earnings came in at $313 million, compared with net earnings of $394 million in the prior-year period. Adjusted diluted net earnings per common share declined to 88 cents.
Fabrizio Freda, president and chief executive officer, said, “We made progress in the first half across several strategic priorities, including reducing inventory in the trade of Asia travel retail, improving working capital, realizing higher levels of net pricing, and managing expenses with discipline. We are, encouragingly, at an inflection point. In the second half of fiscal 2024, we are positioned to return to strong organic sales growth and expand our profitability from the first half. Moreover, today we have announced that we are further expanding our Profit Recovery Plan, which benefits fiscal years 2025 and 2026, to include a restructuring program. We believe this now-larger plan will better position the company to restore stronger, and more sustainable, profitability while also supporting sales growth acceleration and increasing agility and speed-to-market.”
