The American cosmetics giant Estée Lauder is facing a crucial phase. The company, which has been a dominant force in the global beauty market for decades, has lost its former luster. After years of continuous growth, sales and profits have fallen significantly in the past two fiscal years. The downward trend is particularly noticeable in comparison to competitors like the French rival L’Oréal. While L’Oréal lost only 14 percent of its value during this period, Estée Lauder's stock has plummeted by 76 percent since the beginning of 2022.

The resignation of CEO Fabrizio Freda, announced last month, presents the company with an opportunity to reposition itself. Freda's successor will face the challenge of revitalizing declining business in China and North America, strengthening the core brand's reputation, and appealing to younger target audiences. All this must be managed while the influential founding family Lauder continues to maintain control over the company and holds four seats on the supervisory board.

The downward trend is also reflected in the business figures. In the fiscal year up to June 2023, sales fell by 2 percent, especially in the skincare sector, the company's largest business division. Net profit plunged by 61 percent to 390 million US dollars. The outlook remains subdued: Estée Lauder forecasts a sales growth of a maximum of 2 percent for the fiscal year up to June 2025 – far short of the 9 percent expected back in May.

A particular problem for Estée Lauder is the reliance on the markets in China and travel retail. Approximately 40 percent of sales in 2023 came either directly from China or from sales in airport shops. While many companies are struggling with weak consumer demand in China, Estée Lauder's reliance is particularly strong.

The company is also facing major challenges in North America.

While L’Oréal achieved an operating margin of 6.2 percent in the fiscal year 2023, Estée Lauder's is less than a third of that. The new CEO will not only face economic challenges but also the need to strategically reposition the company and prepare it for the future.