Consumers are spending again, but not so much on beauty and wellness.
Estée Lauder's CEO Fabrizio Freda said he plans to retire in 2025
Consumers are spending again, but not so much on beauty and wellness.
Estée Lauder (EL) reported quarterly earnings on Monday that revealed shoppers in the U.S. and in China remain cautious – so much so that the cosmetics giant is bracing for a decline.
The company warned that its sales and profit outlook for fiscal 2025 would be “disappointing.” Estée Lauder’s stock has lost about 75% since hitting a record high of $374 in January 2022. The decline is in part due to ongoing inflation and China-led weakness.
Fabrizio Freda, Estée Lauder’s current chief executive officer, also said he plans to retire in June 2025 after 16 years at the helm. The company’s board said it is considering both internal and external candidates for his replacement, which comes amid a season of CEO swaps at other big retailers like Chipotle $CMG, Starbucks $SBUX, and Victoria’s Secret.
Despite its gloomy outlook, Estée Lauder exceeded Wall Street’s earnings expectations for the fourth quarter, reporting revenue of $3.87 billion, or about 64 cents a share. Analysts had projected revenue of $3.81 billion, or about 26 cents a share.
Bank of America $BAC (BAC) downgraded Estée Lauder’s stock from “buy” to “neutral” and cut its price target from $140 to $100, citing a weaker-than-expected performance in the Chinese beauty market, which historically accounts for a third of the company’s sales.
Estée Lauder’s competitors and Chinese import data for perfumes, makeup and skincare items indicate a “sequentially slowing category” in the company’s major market, BoA said in their research note.
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