Dive Brief:
- The Estée Lauder Companies Inc. increased its estimated net reduction in positions to a final range from 9,000 to 10,000, per a Friday press release. That marks a jump from the previously estimated range from 5,800 to 7,000 net reductions in role reductions.
- More than 70% of that increase is due to a reduction in point-of-sale positions at “select unproductive doors” in the department store and freestanding store channels.
- The cosmetics company’s Q3 net sales grew 5% year over year to $3.7 billion, with growth across all categories such as makeup, skin care and fragrance. The company raised its full-year outlook, now expecting organic net sales growth of about 3%.
Dive Insight:
The cosmetics giant is expecting more role reductions as part of its broader turnaround effort called the Profit Recovery and Growth Plan. It recognized a total of $1.1 billion in restructuring-related charges through the end of March.
“Fiscal 2026 is promising to be the pivotal year we intended, one in which we restore organic sales growth and expand our adjusted operating margin for the first time in four years,” Stéphane de La Faverie, president and CEO, said in a statement.
With the increase in role impacts, Estée Lauder now expects “restructuring and other charges totaling between $1.5 billion and $1.7 billion,” per the release.
The international company — which operates Clinique, MAC, La Mer, Bobbi Brown Cosmetics, Aveda, Smashbox, Le Labo and more — noted business disruptions from conflict in the Middle East are expected to have a greater impact in the fiscal year’s fourth quarter versus the third quarter. It projects an unfavorable impact of about 2% to its sales growth in Q4.
Additionally, Estée Lauder continues to expect a $100 million hit to its fiscal 2026 profitability as a result of tariffs.
“Upside was consistent with our thesis that better results were likely, reflecting improving momentum across EL’s ecosystem strategy (Amazon, TikTok Shop, and shoppable content) and early signs of a China inflection,” TD Cowen analysts said in an emailed note Friday. “While China momentum and PRGP execution continue to improve, the Americas remain mixed, and we would prefer to see more durable U.S./Americas organic growth and brand‑led momentum before turning more constructive, all else equal, particularly given ongoing macro and geopolitical uncertainty heading into FY27.”
