Estee Lauder to axe up to 1200 jobs
Beauty giant Estee Lauder has announced a multi-year initiative named Leading Beauty Forward to build on its strengths and better leverage its cost structure to free resources for investment to continue its growth momentum.
The plan involves the reduction of between 900 and 1200 jobs – about 2.5 per cent of its workforce – and restructuring on a number of fronts aimed at saving US$250 million to $300 million in overheads.
“Leading Beauty Forward is designed to enhance the company’s go-to-market capabilities, reinforce its leadership in global prestige beauty and continue creating sustainable value,” the company said in an announcement coinciding with its latest quarterly financial results.
Globally, net sales for the company’s third quarter to March 31 totalled US$2.66 billion, a 3 per cent increase compared over the $2.58 billion in the prior-year quarter. Net earnings were $265.6 million, down on the $272.1 million of last year.
Fabrizio Freda, president and CEO of Estee Lauder, said: “We are launching this initiative from a position of exceptional strength. With the aid of our 10-year compass, we are proactively anticipating long-term industry trends and positioning our brands in more promising and faster growing areas. Leading Beauty Forward should further position us better to continue winning on a complex global stage and generate savings to help sustain our long-term sales growth and margin progress.
“This initiative is expected to provide further resources to invest in brand growth, increase speed-to-market and flexibility in resource allocation, and better leverage growth for continued profitability improvement,” he concluded
Leading Beauty Forward will begin during the company’s current quarter. Specific initiatives are expected to be approved through to the end of the 2019 fiscal year and be complete by 2021. Key actions include:
- Better leveraging growth through cost savings, more scalable processes and organisational design;
- Redesigning select areas of the company’s go-to-market brand, region and affiliate organisations to strengthen capabilities in areas such as digital and retail;
- Redesigning and restructuring select corporate functions that support the company’s brands, channels and geographies through the development of scalable global and regional shared services with a more efficient cost base;
- Investing in brand growth, such as new products, social media, communications, in-store merchandising, point-of-sale activities and advertising.
The company expects to take restructuring and other charges of between $600 million and $700 million, before taxes, consisting of employee-related costs, asset write-offs and other costs associated with implementing these initiatives.
Estee Lauder said the job cuts will take into account the elimination of some positions, retraining and redeployment of certain employees and investment in new positions in key areas.