Of the results, CEO Fabrizio Freda said, “In fiscal 2024’s fourth quarter, we achieved our organic sales outlook and exceeded expectations for profitability, closing a difficult year. Organic sales and adjusted EPS returned to growth in the second half.”markobe at Adobe Stock
The Estée Lauder Companies Inc. has announced net sales of $15.61 billion for fiscal 2024, reflecting a year-over-year decrease of 2%. Net earnings for the period totaled $0.39 billion, compared with net earnings of $1.01 billion in the prior year. At the same time, president and CEO Fabrizio Freda has announced his intent to retire by the end of fiscal 2025.
Estée Lauder Returned to Growth in 2H 2024
According to the Estée Lauder Companies’ the 2024 sales decline was driven by ongoing “softness” in China, which is anticipated to continue through fiscal 2025. That said, the company returned its net growth in the second half of the year and is expecting improvements in most sectors, excepting mainland China.
Key 2024 growth areas included Hong Kong SAR, Europe, the Middle East & Africa, Japan and Latin America.
For the full year, fragrance net sales grew 2% in fiscal 2024, while skin care was down 3%, makeup down 1% and hair care down 4% (led by declines in North American salon channels).
Recovery Plan: Outperforming Prestige Beauty in Fiscal 2026
Of the results, Freda said:
In fiscal 2024’s fourth quarter, we achieved our organic sales outlook and exceeded expectations for profitability, closing a difficult year. Organic sales and adjusted EPS returned to growth in the second half.
For fiscal 2025, we anticipate continued declines in the prestige beauty segment in China, mainly reflecting persistent weak sentiment among Chinese consumers. We intend to drive share gains in a market that continues to hold strong long-term promise. In the rest of our business, we are planning to deliver improved performance across both developed and emerging markets.
To fuel this, our priorities are reigniting skin care, capitalizing on the multiple growth drivers of high-end fragrance, moving faster in leveraging winning channels, launching accretive innovation inclusive of new, big opportunities, and enhancing our precision marketing capabilities. From La Mer’s entry into night-specific consumption, to The Ordinary’s expansion into new markets and more brands debuting in new channels, like on Amazon’s U.S. Premium Beauty store, we have a rich slate of initiatives to drive new consumer acquisition and continue to leverage our strength in retention.
Alongside this work, we are realizing initial benefits of the Profit Recovery and Growth Plan as we rightsize our cost structure and simplify the organization to be more agile and faster to market.
For fiscal 2025, the Profit Recovery and Growth Plan enables us to offset the pressure to profitability driven by the prestige beauty segment’s ongoing softness in China, yielding a more moderate pace of operating margin expansion than we’d previously expected. While our sales and profit outlook for fiscal 2025 is disappointing, this year we will make important strides, as we implement our strategy reset to continue rebalancing regional growth, deliver improved annual profitability, and strengthen go-to-market and innovation capabilities to elevate our execution in response to a more competitive market.
These efforts, coupled with the strengths of our brands, product portfolio, and talented teams around the world, will position us to both outperform prestige beauty in fiscal 2026 and accelerate profitability expansion.
Fabrizio Freda’s Retirement
Amid Freda’s retirement announcement, the Estée Lauder Companies’ board is reportedly “well advanced” in selecting a successor.
Per the company, “Until his successor is appointed, Mr. Freda will continue to lead and oversee the company’s strategic, financial and investment priorities, including the company’s Profit Recovery and Growth Plan and its efforts to reignite profitability and growth. Once a successor has been named, Mr. Freda will partner with this leader to ensure a smooth transition and will also be available in fiscal year 2026 as an advisor.”
“On behalf of the entire board of directors and the Lauder family, we wish to extend our sincere gratitude to Fabrizio for over 16 years of devoted service to the company,” said William P. Lauder, executive chairman. “We look forward to celebrating Fabrizio’s many amazing accomplishments as his formal retirement date nears. Until then, the board, Fabrizio and the entire leadership team are laser-focused on navigating the current challenges faced by the company.”
Lauder added, “On a personal note, Fabrizio has been an incredible partner to me as well as other members of the Lauder family. He understands the uniqueness of this family business and has used our long-term focus and principle of patient capital as a point of strength as he has transformed the business to meet evolving consumer aspirations.”gc
Of his retirement, Freda said, “Leading The Estée Lauder Companies for 16 years, is and has been, a true honor and privilege. I am so proud of our company’s incredible accomplishments, and to have built the most talented, dedicated, and passionate team in the industry. Together we have transformed the company in beautiful ways; and we have set new standards for excellence. I will continue to be fully focused on the execution of our strategic reset and the Profit Recovery and Growth Plan, as we continue to address the current challenges. As we manage for the long term, now is the right time to look ahead to the next generation of leadership for this great company. I look forward to continuing to work closely with our board of directors in the selection of my successor and ensuring a seamless transition.”