Jane Lauder, the billionaire heiress of the cosmetic conglomerate Estée Lauder (EL, Financial), was concern about the company's direction and leadership under the current leadership. She believed that with the current leadership the challenges such as declining sales in China and the significant drop in stock price in Estée Lauder aren't addressed effectively.
To return the company back on track and ensure long term growth, Stephane de La Faverie was appointed to become the new President and CEO in Estée Lauder effective on January 1, 2025.
This transition comes after the stepping down of William Lauder as Executive Chairman and serve as Chair of the Board and a stockholder. This is the first time in the company's history where no Lauder family members that involved in day-to-day operations.
The Challenges
China is an important market for Estée Lauder, making up to 26% of Estée Lauder's total revenue. Estée Lauder and its brands has a strong presence in China, being well-received as the prestige beauty brand by Chinese consumers. However there has been a decline in consumer sentiment in China. Estee Lauder's first fiscal quarter of 2025 reported that they experienced 4% decrease in net sales primarily due to declining sales in China.
Chinese consumers were reducing their spending and visit less often to retail stores leading to inventory issues in Estee Lauder's Asia travel retails. When William was on his leadership position, he directed to reallocate the advertising budgets to target peak shopping moments and adjusted product offerings and marketing strategies to align with China's preferences.
Estée Lauder's stock price has seen a significant decline of 49.15% from year to date and is 80% lower from its all-time high. They expect potential recovery in 2025.
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