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The Estée Lauder Companies Inc. is a leading global manufacturer, marketer, and seller of prestige beauty products, including skin care, makeup, fragrance, and hair care, distributed in approximately 150 countries and territories . The company operates under well-known brand names such as Estée Lauder, Clinique, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, and others . Leveraging consumer analytics and insights, the company drives innovation and maintains a broad, inclusive range of products to compete effectively in the prestige beauty market .
- Skin Care - Develops and markets a wide range of skin care products, with significant contributions from brands like Estée Lauder, Clinique, and Dr.Jart+ .
- Makeup - Offers a variety of makeup products, with key offerings from brands such as M·A·C and Estée Lauder .
- Fragrance - Produces and sells fragrances, with notable contributions from Le Labo and Jo Malone London .
- Hair Care - Provides hair care products, primarily through the Aveda brand .
- Other Products - Includes a diverse range of additional beauty products beyond the main categories .
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Given the ongoing declines in the prestige beauty industry in China and Asia travel retail, and your expectation for continued softness in fiscal 2025, can you elaborate on the specific actions you are taking to regain momentum in these markets and how confident you are in the timing of their recovery?
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With the announcement of your retirement at the end of the fiscal year and the search for your successor underway, how are you ensuring that the leadership transition will not disrupt the execution of your strategic reset and the Profit Recovery and Growth Plan?
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You mentioned the need to accelerate margin expansion despite facing sales declines and fixed expense deleverage; can you provide more details on how you plan to achieve this without compromising necessary investments in consumer-facing activities, especially in highly competitive markets like North America and China?
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Given the underperformance in the skin care category and the increased competition, what are the key initiatives you are implementing to reignite growth in skin care, and how will these initiatives differentiate you from competitors who are likely not pulling back investments?
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Regarding the execution of your strategy in some key areas of the business that has not met expectations, can you identify specific execution gaps and detail how the PRGP and organizational changes will address these issues to improve performance in fiscal 2025?
Competitors mentioned in the company's latest 10K filing.
- L’Oréal S.A.; Unilever; Procter & Gamble; LVMH Moët Hennessey Louis Vuitton; Chanel S.A.; Beiersdorf; Shiseido Company, Ltd.; Natura & Co.; Coty Inc. - These are large, well-known, multinational manufacturers and marketers of skin care, makeup, fragrance, and hair care products, most of which market and sell their products under multiple brand names .
- Independent brands, some backed by private-equity investors - These brands also compete in the beauty market .
- Retailers with their own beauty brands - Some retailers that are customers of Estée Lauder also market and sell competing brands .
| Customer | Relationship | Segment | Details |
|---|---|---|---|
Largest Customer (China travel retail) | Primarily sells Estée Lauder products through the China travel retail channel | Travel Retail (China) | $206 million (12% of accounts receivable) as of June 30, 2024; previously $49 million (3%) as of June 30, 2023. |
Recent developments and announcements about EL.
Corporate Leadership
Board Change
Key Update: On January 10, 2025, Ronald S. Lauder retired from the Board of Directors of The Estée Lauder Companies Inc. after serving since 2016. He was succeeded by Eric Zinterhofer, who has been elected as a Class II director. Mr. Zinterhofer is a Founding Partner of Searchlight Capital Partners and has extensive experience in private equity and corporate boards.
Leadership Change
Ronald S. Lauder is retiring from the Board of Directors of The Estée Lauder Companies Inc., effective January 10, 2025. His decision to retire is not due to any disagreements with the company. He will continue as Chairman of Clinique Laboratories LLC. Eric Zinterhofer has been elected as a Class II director to replace Mr. Lauder. Mr. Zinterhofer is a Founding Partner of Searchlight Capital Partners and has extensive experience in private equity.
Board Change
Richard D. Parsons has retired from the Board of Directors of The Estée Lauder Companies Inc. due to health reasons, effective immediately as of December 3, 2024. He was a Class II director and a member of the Nominating and ESG Committee and the Compensation Committee .
Leadership Change
Richard D. Parsons is leaving the Board of Directors of The Estée Lauder Companies Inc. due to health reasons, effective immediately. He has been a Board member since 1999 and was part of the Nominating and ESG Committee and the Compensation Committee .
Board Change
Stéphane de La Faverie has been appointed as President and Chief Executive Officer of The Estée Lauder Companies Inc., effective January 1, 2025. He will also join the Board of Directors on the same date. Fabrizio Freda will resign from the Board at the end of the day on December 31, 2024. Additionally, William P. Lauder will step down from his role as Executive Chairman following the Annual Meeting of Stockholders on November 8, 2024, but will continue to serve on the Board as Chair .
CEO Change
Fabrizio Freda, the current President and CEO of The Estée Lauder Companies Inc., will be stepping down from his role and resigning from the company's board at the end of December 31, 2024. Stéphane de La Faverie has been appointed to succeed him as President and CEO, effective January 1, 2025 .