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Estée Lauder CEO Fabrizio Freda. Picture: SUPPLIED
Estée Lauder CEO Fabrizio Freda. Picture: SUPPLIED

Bengaluru — Estée Lauder forecast annual profit and sales below estimates as the global beauty market struggles with slowing demand mainly in the China market and said CEO Fabrizio Freda was retiring after nearly 16 years at the helm.

Freda, 66, who is retiring in June 2025, was named CEO in 2009 and was responsible for expanding the company’s skincare portfolio with the addition of brands such as Dr Jart and The Ordinary owner Deciem.

He also steered the company through pandemic-induced supply chain snags when Estée was forced to raise prices to offset rising costs and laid out a turnaround plan last year that included job cuts.

Freda’s plans to retire come just a month after CFO Tracey Travis said she would step down after a 12-year stint.

On Monday, Estée said the board was considering internal and external candidates as part of its CEO succession planning.

“It’s not a surprise that Fabrizio is stepping down. It was a long-anticipated change of the guard, given the results over the past few years and the need certainly for newness,” said Dana Telsey of Telsey Advisory Group.

Shares of Estée see-sawed in early trading and were marginally down. It has lost nearly 75% since hitting a record high of $374.20 in January 2022 as prolonged inflation and China-led weakness hammered demand.

Picture: 123RF
Picture: 123RF

On a post earnings call with analysts, Travis said profit is expected to be up in fiscal 2025, mainly aided by the turnaround plan and growth in the Americas, Asia-Pacific region outside China and Europe, except travel retail.

Estée expects annual sales to either fall as much as 1% or rise 2%. That compares with analysts’ estimates of a 6.4% rise, according to LSEG data.

The La Mer maker expects annual adjusted profit per share of $2.75-$2.95, compared with analysts’ expectations of $3.96.

Demand for even “affordable luxuries” such as lipsticks and perfumes, widely considered recession proof, are seeing a hit, with Estée expecting continued declines in the prestige beauty segment in China and European peer L’Oreal highlighting a lack of a rebound in the region.

Reuters

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