Estée Lauder on Friday raised its full-year adjusted profit guidance and said it would eliminate up to 3,000 additional positions worldwide as it accelerates a broader restructuring, a move that sent the company's shares up about 7% in early trading. The maker of Clinique and M.A.C said its revised plan increases expected job cuts to a total of 9,000 to 10,000, compared with a prior estimate of as many as 7,000, and is intended to generate up to $1.2 billion in annual cost savings.
At the upper bound of the new target, the company said the total would represent roughly 17.5% of its global workforce of 57,000 as of June 30, 2025, according to Estée Lauder's latest annual filing. Estée Lauder attributed more than 70% of the additional reductions to cuts in department store roles as it reallocates resources toward faster-growing digital and specialty retail channels such as Ulta, Sephora, Amazon and TikTok Shop.
Industry observers noted the stepped-up layoffs may relate to the company's strategic discussions with Puig, the owner of Jean Paul Gaultier, as Estée Lauder explores ways to bolster its fragrance business. eMarketer analyst Sky Canaves said the increase in planned job cuts could indicate that, given merger plans, Estée Lauder would be able to remove more positions on its side while retaining Puig employees.
The restructuring is part of CEO Stephane de La Faverie's "Beauty Reimagined" strategy, which the company says has supported growth in premium product launches and helped streamline its supply chain. Estée Lauder said these initiatives contributed to stronger quarterly sales in luxury markets, including China and Europe.
Separately, the company highlighted geopolitical headwinds that have affected luxury spending in parts of the Middle East. Estée Lauder said the Iran war reduced quarterly sales by 1 percentage point and expects a 2-percentage-point impact in the fourth quarter. The company noted that French luxury group LVMH reported the conflict trimmed at least 1% off its group sales in the last quarter, and Puig said the conflict was hurting demand while keeping its full-year outlook unchanged.
Reflecting operational changes and recent results, Estée Lauder now expects full-year adjusted earnings of $2.35 to $2.45 per share, up from its prior projection of $2.05 to $2.25. The company also said organic net sales should grow at the high end of its earlier 1% to 3% range. Management emphasized that the updated forecast assumes no further deterioration in the geopolitical environment - including tariffs, consumer sentiment and business disruption in the Middle East - beyond May 2026.
For the quarter, Estée Lauder reported sales of $3.71 billion, topping analysts' estimate of $3.69 billion, according to LSEG data. Adjusted profit came in at $0.88 per share, above expectations of $0.65 per share.
Summary
Estée Lauder has increased its full-year profit outlook while expanding its planned workforce reductions by up to 3,000 roles, bringing the total planned cuts to 9,000-10,000 and targeting up to $1.2 billion in annual savings. The company is shifting staffing away from department stores toward digital and specialty retail channels and is exploring a merger with Puig to strengthen its fragrances business. Geopolitical disruption related to the Iran war has weighed on sales, particularly in parts of the Middle East, and the company has built assumptions about no further deterioration into its guidance.
Key points
- Estée Lauder raised full-year adjusted EPS guidance to $2.35 - $2.45 and expects organic net sales growth at the high end of its prior 1% - 3% range.
- The company plans up to 3,000 additional job cuts, raising the total targeted reductions to 9,000 - 10,000 and aiming to save up to $1.2 billion annually; over 70% of the new cuts will come from department store roles.
- Management is pursuing a potential merger with Puig to bolster its fragrances business while reallocating focus to faster-growing digital and specialty retail channels.
Risks and uncertainties
- Geopolitical risk - Ongoing conflict in the Middle East has already reduced quarterly sales by 1 percentage point and is expected to reduce fourth-quarter sales by 2 percentage points, with further deterioration potentially affecting results and guidance.
- Retail channel shifts - The move to reduce department store roles and prioritize digital and specialty retail could expose the company to execution risks in channel transition and consumer adoption.
- Merger-related uncertainty - Talks with Puig introduce integration and workforce composition unknowns that could affect cost savings, staffing outcomes and business performance.
Data points and guidance contained in this report are as stated by Estée Lauder in its public filings and recent earnings release.