Estée Lauder Companies has confirmed the elimination of over 2,600 positions as part of its expansive restructuring initiative, aiming to reduce its global workforce by up to 7,000 employees by the end of fiscal 2026. This move follows a 10% decline in third-quarter sales and a 42% drop in net profit, underscoring the challenges the cosmetics giant faces in a shifting global market.

In February 2025, Estée Lauder unveiled an ambitious restructuring plan, expanding its initial job cut projections from 3,000 to between 5,800 and 7,000 roles. The company has already approved $623 million in severance costs, with the total restructuring expected to cost up to $1.6 billion. These measures aim to achieve annual savings of up to $1 billion, which will be reinvested into consumer-facing areas to drive sustainable sales growth. 

For the third quarter of fiscal 2025, Estée Lauder reported net sales of $3.55 billion, a 10% decrease from the previous year. Net profit fell to $306 million, down from $531 million in the same period last year. Despite these declines, the company's adjusted earnings per share of 65 cents surpassed analyst expectations of 31 cents.

The company's gross margin improved by 310 basis points, reaching 75%, attributed to cost-saving efforts such as inventory optimization and reduced promotional activities. 

Estée Lauder continues to face headwinds in its global travel retail segment, particularly in Asia. The company anticipates a wider double-digit net sales decline in this sector for the fourth quarter, citing retailer shifts towards more profitable duty-free business models in Korea and mainland China, along with weak consumer sentiment among Chinese consumers. 

In the U.S., the company is grappling with softening demand among middle-to-lower income consumers and intensified competition from smaller brands. Tariff uncertainties under the current U.S. administration are also exerting pressure on costs.

CEO Stéphane de La Faverie, who took the helm in January 2025, is steering the company through this transformative period. Under his leadership, Estée Lauder is focusing on accelerating product launches, introducing new luxury pricing tiers, and increasing marketing investments to rejuvenate its brand appeal. 

The company is also consolidating its procurement processes, re-evaluating supplier relationships, and outsourcing services to proven global partners to enhance operational efficiency.

Estée Lauder has revised its full-year adjusted earnings per share forecast to $1.30–$1.55, down from the previous estimate of $2.75–$2.95. The company also lowered its sales forecast to a range of $14.20 billion–$14.36 billion, below the earlier projection of $15.45 billion–$15.92 billion. 

As Estée Lauder navigates these challenges, its strategic initiatives aim to restore operating margins and position the company for sustainable growth in the evolving global beauty market.