Estée Lauder is cutting 3 percent to 5 percent of its global workforce as part of a restructuring program that aims to increase profits and become more nimble in a challenging international environment, reports ABC News. The layoffs were announced Monday as the New York cosmetic giant reported falling profits and revenue in the second quarter, and trimmed its annual profit forecast. The downsizing, which will affect as many as 3,100 workers, will be made by July, Estee Lauder said. The reduction includes the elimination of some positions as well as retraining and redeployment of certain employees
Estee Lauder, whose brands include Clinique, Tom Ford, and La Mer, said it expects to take restructuring and other charges of between $500 million and $700 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing the initiative. The company expects the restructuring program to deliver annual savings of between $350 million and $500 million, before taxes. The restructuring program will begin during the company’s 2024 fiscal third quarter.
Total Retail’s Take: Estée Lauder joins a growing list of retailers and brands that have announced layoffs in recent weeks, including Amazon.com, Macy’s, Levi’s, and Wayfair, to name a few. Many companies are announcing restructuring programs or enacting turnaround strategies in a bid to regain profitability in an ever-changing economic and consumer-driven landscape. Estée Lauder, however, believes it’s at an inflection point.
“In the second half of fiscal 2024, we’re positioned to return to strong organic sales growth and expand our profitability from the first half,” said Fabrizio Freda, president and CEO of Estée Lauder, in a company release. “We believe this now-larger plan will better position the company to restore stronger, and more sustainable, profitability while also supporting sales growth acceleration and increasing agility and speed-to-market.” The cosmetics company also revised its full-year guidance for the rest of its fiscal year, slightly raising expectations for net sales.
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