Estée Lauder has reported a drop in sales as it widens job cuts

The beauty retailer consisting of Estée Lauder, Jo Malone, Clinique and more, saw sales drop 6% to $4bn (£3.2bn). Gross profit declined 2% to $3.05bn (£2.45bn).

Overall sales of skincare fell 12% to $1.9bn (£1.57bn), makeup sales edged down 1% to $1.15bn (£924m) and hair care sales decreased 8% to $159m (£127m). Fragrance sales were up 2% to $744m (£598m).

The group cited impacts from a challenging retail environment for the double-digit drop in skincare sales.

Along with the results, Estée Lauder Companies announced it is “expanding the restructuring” of the business and expects charges between $1.2bn (£964m) and $1.6bn (£1.3bn) before taxes, made up of “employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives”.

It estimates it will make 7,000 job cuts, up from its initial plan of 5,800.

In terms of outlook for the next quarter, the group anticipates “continued volatility and low visibility” due to challenges in the Asia travel retail business and low consumer sentiment in China and Korea.

It also announced a new “beauty reimagined” strategy to restore sales growth and double-digit adjusted operating margin in the next few years. 

Estée Lauder Companies president and chief executive Stéphane de La Faverie said: “While we are not satisfied with our third quarter outlook, it primarily reflects weak retail sales trends in our Asia travel retail business, which deteriorated in our second quarter driven by Korea. 

“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.

“In order to reignite our retail sales growth, we are strategically increasing consumer-facing investments around the world in the third quarter.”