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Estée Lauder is set to eliminate up to 7,000 jobs, more than double its previously announced reduction, as part of a sweeping cost-cutting initiative following another disappointing quarter.
The beauty conglomerate, home to brands like Clinique, MAC, and La Mer, says it aims to slash $1billion in expenses by mid-2025 to counter ongoing revenue declines and global economic uncertainty.
The New York-based company reported a 6% drop in sales for its second quarter, citing weak demand in Asia and declining airport retail sales as key factors. The company’s latest forecast signals that profits for the upcoming quarter will fall well below expectations, prompting leadership to escalate job cuts in an effort to stabilize financial performance.
Job losses to exceed initial estimates
Initially planning to lay off 3,000 employees, the firm now expects to cut between 5,800 and 7,000 positions globally, accounting for over 10% of its 62,000-person workforce.
The restructuring is part of its ‘Beauty Reimagined’ strategy, an initiative designed to streamline operations, refocus investments, and navigate external pressures, including potential tariff increases under the Trump administration’s proposed trade policies.
“While we recognize there is much work to do, we are confident that Beauty Reimagined is the way to realize our ambition,” said CEO Stéphane de La Faverie. “We are significantly transforming our operating model to be leaner, faster, and more agile while taking decisive actions to expand consumer coverage, step-change innovation, and increase consumer-facing investments to better capture growth and drive profitability.”
The company estimates that the restructuring plan will cost between $1.2billion and $1.6billion but expects annual gross benefits of $800million to $1billion once fully implemented.
Global markets and economic uncertainty
Despite a booming global beauty industry, Estée Lauder has struggled with lagging sales. While competitors have capitalized on renewed demand for cosmetics and skincare, the company has posted consecutive quarters of declining revenue. In its latest earnings report, skincare sales saw the steepest drop at 12%, with the Asia-Pacific market - particularly mainland China - declining by 11%.
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Beyond workforce reductions, the company plans to introduce products at varied price points to attract a broader customer base and invest more in advertising, supply chain efficiency, and strategic market expansion.
The turnaround effort follows a previously unsuccessful restructuring under former CEO Fabrizio Freda, who stepped down in January.
His plan, announced in early 2024, sought to generate over 60% of sales from outside the U.S. while reducing headcount by 5%. However, continued struggles in key markets and economic headwinds forced the company to reevaluate its approach.
The firm now hopes its latest overhaul will steer the company back to sustainable growth and restore investor confidence. The restructuring is expected to be completed by 2027.
It highlights the complexities of large-scale restructuring in a volatile global market. Beyond cost savings, the challenge lies in maintaining morale, retaining critical talent, and ensuring the company’s long-term ability to attract skilled employees.
As the beauty giant shifts toward a leaner operating model, HR teams will play a pivotal role in workforce planning, redeployment, and supporting displaced employees through transition programs. Additionally, with economic pressures and market uncertainty influencing corporate strategy, HR leaders across industries are reassessing workforce flexibility, skills development, and change management strategies to navigate similar uncertainties.
