Estee Lauder plans shake-up of its beauty empire as third quarter sales rise
Estée Lauder has announced a shake-up of its beauty empire that will result in up to 1,200 job losses, after posting a rise in third quarter sales.
The company, which owns brands including Jo Malone, M.A.C and Clinique, said the strategy, called Leading Beauty Forward, was aimed at simplifying the business and cutting costs in an attempt to boost sales.
The plan will result in restructuring and other charges of between $600m (£409m) and $700m and lead to around 900 to 1,200 job losses globally, equal to about 2.5 per cent of the company’s workforce.
The company also expects to yield annual pre-tax benefits between $200m and $300m from the restructuring plan, which will kick off in the fourth quarter.
Estée Lauder employs over 8,500 people in the UK and Ireland although it is unclear how many of these roles would be affected.
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Chief executive, Fabrizio Fredo, said the company was "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," he added.
News of a shake-up came as the company posted better-than-expected third quarter sales thanks to double digit growth from M.A.C makeup and fragrance brands including Jo Malone London.
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Net sales for the three months to 31 March rose by by three per cent to $2.66bn compared with $2.58bn in the same quarter last year. Excluding the impact of currency movements, sales increased by six per cent.
The company's net earnings were $265.6m compared with $272.1m last year, and diluted net earnings per common share were flat at $0.71.
Estée Lauder said skincare sales, namely its own eponymous brand and Clinique, decreased in the period, blaming a slowdown in demand in the Asia Pacific region, particularly in Hong Kong.
However, the was offset by higher makeup sales driven by M.A.C, Smashbox and Tom Ford, as well as gains from Bobbi Brown. The company's fragrance business also posted higher sales thanks to the launch of new perfumes including Tom Ford Noir.