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Estee Lauder forecasts profit below expectations, to cut up to 2,000 jobs

Estee Lauder Cos Inc reported a 32per cent fall in fourth-quarter sales on Thursday, as travel restrictions and store closures imposed to contain the spread of the coronavirus dampened demand for its high-end beauty brands.

Estee Lauder forecasts profit below expectations, to cut up to 2,000 jobs

An Estee Lauder cosmetics counter is seen in Los Angeles, California, U.S., August 19, 2019. REUTERS/Lucy Nicholson/Files

REUTERS: Estee Lauder Cos Inc forecast current-quarter profit below analysts' estimates on Thursday after posting a bigger-than-expected quarterly loss, as travel restrictions and store closures put in place to contain the spread of coronavirus dampened demand for its premium makeup brands.

The company and other cosmetic brands have been struggling in recent months with consumers adapting to the new work-from-home lifestyle and ordering more skincare products than makeup.

This led to Estee Lauder posting a 32per cent decline in sales in the fourth quarter, pushing its shares down about 6per cent in premarket trading.

The COVID-19 crisis has also made the M.A.C. brand owner reassess its business as consumers increasingly shop for beauty products online.

Estee Lauder said on Thursday it would cut about 1,500 to 2,000 jobs or about 3per cent of its workforce globally and also expects to close about 10per cent-15per cent of its freestanding stores.

Sales of makeup brands such as M.A.C. and Too Faced have taken a hit on falling demand for the New York-based company's foundations and lip products. Overall annual sales for its makeup brands fell 18per cent as the COVID-19 pandemic offset the 5per cent growth seen in the first half of the year.

Estee Lauder forecast first-quarter adjusted profit per share to be between 80 cents and 85 cents, below estimates of US$1.22, according to IBES data from Refinitiv.

The company also expects sales to decline between 12per cent and 13per cent, compared to expectations of an 11.42per cent drop.

Net sales fell 32per cent to US$2.43 billion in the fourth quarter ended June 30, missing estimates of US$2.45 billion. Excluding items, the company reported a loss of 53 cents per share, much bigger than Wall Street estimates of a 19-cent loss.

Still, the company reinstated its quarterly dividend payment after suspending it in April.

(Reporting by Aditi Sebastian and Praveen Paramasivam in Bengaluru; Editing by Maju Samuel)

Source: Reuters