The beauty and cosmetics company Estée Lauder has appointed Stéphane de La Faverie as the new Chief Executive Officer (CEO) in a decisive leadership change. Starting January 1, de La Faverie will take over the management of the company and also join the board of directors, as the company announced on Tuesday in Chicago. This marks the end of Fabrizio Freda's 16-year tenure, as he retires.
Simultaneously, William P. Lauder, the grandson of the company's founder, will step down from his position as Executive Chair on November 8 but will remain Chairman of the Board. These changes mark the withdrawal of the Lauder family from daily management duties and their focus on the strategic direction of the company. In an internal memo obtained by the Financial Times, Lauder and Freda stated that these steps are necessary to create long-term shareholder value.
Jane Lauder, the granddaughter of the founder and previous candidate for the CEO position, is also stepping down from her operational roles. These comprehensive leadership changes come at a time when Estée Lauder is pursuing an extensive turnaround, after the company struggled with declining profits and sales over the past two years.
In the third quarter of 2024, Estée Lauder reported a 2% decrease in revenue to $15.6 billion and a net profit of $390 million compared to $1 billion the previous year. These figures highlight the current challenges, particularly the ongoing weakness in the important Chinese market. The sales forecast for the final quarter has been revised downward, further amplifying uncertainties regarding future business development.
Despite declining sales, Estée Lauder is working intensively to stimulate growth again through more affordable product lines and an expanded brand selection. Strategic acquisitions and cost-cutting measures are intended to improve margins and increase profitability. The introduction of new, more affordable models and a focus on the ready-to-eat (RTE) segment are part of this strategy.
Stéphane de La Faverie, who has been with Estée Lauder since 2011 and currently oversees leading brands such as Estée Lauder, The Ordinary, and Le Labo, will play a central role in the turnaround process. "Stéphane has significantly contributed to the implementation of our Profit Recovery and Growth Plan, driving it forward with discipline and empathy," stated the memo. "We are confident that he will lead Estée Lauder Companies to success with a clear vision.
Despite the positive leadership changes, Estée Lauder's stock responded with disappointment to after-hours trading on Tuesday, falling by 0.59% to $295.03 on the NYSE. This price movement reflects investor concerns about declining sales and ongoing challenges in the Chinese market, despite increased profitability and the optimistic outlook from the new management.
