Estee Lauder cuts thousands of jobs due to weak Asia performance

(Source: Estee Lauder / Facebook)

Estee Lauder is set to lay off up about 3 to 5 per cent of its global workforce – equivalent to about 3100 jobs – after the company reported poor performance in Asia Pacific due to China’s slow rebound. 

“Once fully implemented, the company expects to take restructuring and other charges of between US$500 million and $700 million, before taxes,” the company said in a statement. 

Estee Lauder expects to drive incremental operating profit through the initiatives in its profit recovery plan of $1.1 billion to $1.4 billion from $800 to $1 billion it had estimated previously. 

The company posted net sales of $4.28 billion for its second quarter ended December 31, a 7 per cent drop year on year. Estee Lauder said the sales were affected by the challenges in Asia travel retail and ongoing slow demand in Mainland China. 

“The decrease also reflects a 1 per cent headwind due to business disruptions in Israel and other parts of the Middle East,” the company said in a statement. 

Net sales in Asia Pacific were down 7 per cent driven by China’s weak performance and partially offset by growth across other markets led by Hong Kong’s double-digit growth. 

“While Mainland China and Asia travel retail declined, our retail sales trended ahead of organic sales, and these businesses are poised to return to organic sales growth in the second half,” said Fabrizio Freda, president and CEO of Estee Lauder. 

“We made progress in the first half across several strategic priorities, including reducing inventory in the trade of Asia travel retail, improving working capital, realising higher levels of net pricing, and managing expenses with discipline,” Freda said. 

The company reported net sales plummeting 9 per cent to $7.8 billion for the six months ended December 31.  

You have 7 articles remaining. Unlock 15 free articles a month, it’s free.