Estée Lauder announces 7,000 job cuts following sales decline: Reasons explained

Cosmetics company Estée Lauder is expected to cut 7000 jobs globally, which is more than its initial target of 3000, as a part of its cost-saving strategy. The strategy aims to generate up to $1 billion in savings.

The company has a workforce of 62,000 people worldwide, and the process of job cuts will reportedly be completed by June 2026, and some employees will be retrained or redeployed.

According to a report by WION, the restructuring decision comes at a time when there is a slowdown in China’s luxury market as sales dropped by 20% in 2024 which is reportedly the steepest decline since 2011.

According to Global Data, Estée Lauder's restructuring plan focuses on reshaping certain departments, streamlining operations, outsourcing services, and refining its sales strategies and market presence.

Under new CEO Stéphane de La Faverie, the company made adjustments amid declining sales in Asia. It has reduced consumer demand in key markets like China and Korea.

In the second quarter of fiscal 2025, net sales dropped by 6% to $4 billion, while gross profit declined by 2% to $3.04 billion. Based on improving retail trends, for the third quarter, the company expects a significant decrease in global travel retail sales but anticipates a slower overall decline compared to the previous quarter.

In a press release published on February 4, 2025, Stéphane de La Faverie said:

“For the third quarter, we expect overall soft retail trends to persist in Asia travel retail, significantly pressuring our organic net sales despite the improvement we made with in-trade inventory levels in the first half of fiscal 2025, which we intend to maintain around current levels.”

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What does Estée Lauder’s restructuring initiative focus on?

Estée Lauder expects to finalize approvals for its restructuring initiatives by the end of fiscal 2026. As of January 2025, the company has approved initiatives covering about 90% of its targeted $500 million in estimated benefits.

However, challenges in Asia’s travel retail sector, weak consumer demand in China and Korea, and global geopolitical uncertainties are expected to create ongoing instability. Due to this uncertainty, the company is only providing an outlook for the third quarter of fiscal 2025.

In 2022, Estée Lauder announced the closure of all company-owned stores in Russia and halted product shipments to local retailers. The company had already paused business investments and new initiatives in the country.

According to The Wall Street Journal, despite Russia being one of its strongest markets recently, helping balance declines in China due to COVID-19 restrictions, it accounted for just over 1% of Estée Lauder’s total revenue, including online and travel retail sales. The company operated in Russia for more than three decades.

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In 2020, due to financial challenges caused by the COVID-19 pandemic, Estée Lauder announced plans to cut up to 2,000 jobs. The company introduced a two-year strategy called the Post-COVID Business Acceleration Program to realign its investments.