MAC lipstick maker Estée Lauder slashed its annual profit forecast and announced a restructuring programme aimed at cutting about 3% to 5% of its workforce to rein in costs.
Shares of the New York-based company were up 6% in premarket trade.
The firm said it would start the programme in the third quarter of fiscal 2024 and expects to take on restructuring and other charges of between $500 million and $700 million, before taxes.
As of June 2023, Estée Lauder had about 62,000 employees worldwide. The company had around 71% full-time, 16% temporary and 13% part-time employees.
Last quarter, in an attempt to lower its expenditure and rebuild margins, Estée Lauder had outlined a plan for fiscal years 2025 and 2026.
Profit Recovery Plan
The company now expects to drive incremental operating profit through the initiatives in the profit recovery plan of $1.1 billion to $1.4 billion.
It expects full-year 2024 adjusted profit per share between $2.08 and $2.23, compared with the prior forecast of $2.17 and $2.42.
The company's net sales fell 7%, to $4.28 billion in the second quarter, compared to analysts' estimate of $4.19 billion, according to LSEG data.
'Positioned To Return To Growth'
Fabrizio Freda, president and chief executive officer stated, “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. We are, encouragingly, at an inflection point.
“In the second half of fiscal 2024, we are positioned to return to strong organic sales growth and expand our profitability from the first half.”
The company believes that the restructuring 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,” Freda added.
News by Reuters, additional reporting by ESM.
