Estée Lauder: Leadership Change and Market Challenges Weigh on Stock

The stock of cosmetics giant Estée Lauder is coming under significant pressure. The company has withdrawn its forecast for 2025 and cut the quarterly dividend by a hefty 47%. These decisions reflect the challenging market conditions in China as well as recent changes in corporate management. As of January 1, 2025, Stéphane de La Faverie will assume the position of President and CEO. Pauline Brown, former chairwoman of LVMH North America, commented on the leadership change in a conversation with Catalysts. She criticized the company's management and spoke of a failure of governance on the part of the board. In her opinion, the problem extends beyond individual leadership and concerns challenges in succession planning and corporate development. Brown would have preferred an earlier leadership change, as the company’s management has been on a downward trajectory since 2021. "It does not surprise me that the market is reacting this way," she stated in an interview. The changes affect not only the CEO position: Jane and William Lauder, grandchildren of founders Estée and Joseph Lauder, are stepping down from operational roles. Jane Lauder served as Chief Data Officer and Executive Vice President for Corporate Marketing, while William Lauder held the position of Chairman of the Board. However, they will remain active on the board along with Gary Lauder and Ronald Lauder, with Leonard Lauder remaining as Honorary Chairman. According to Brown, these profound changes could fundamentally influence the long-term orientation of the company. "Whether the company will remain in the form we have known for the past decades is questionable," said Brown. For further insights and analyses on the current market situation, visit Catalysts.