Estee Lauder forecasts dismal annual results; CEO Freda to leave

Estee Lauder It forecast annual profit and sales below expectations as the global beauty market struggles with slowing demand, mainly in China, and said Chief Executive Officer Fabrizio Freda is retiring after nearly 16 years at the helm.

Freda, 66, who will retire on June 30, 2025, was named CEO in 2009 and was responsible for expanding the company’s skincare portfolio to include brands such as Dr. Jart and The Ordinary owner Deciem.

He also steered the company through pandemic-induced supply chain hurdles when Estée Lauder was forced to raise prices to offset rising costs, and laid out a turnaround plan last year that included layoffs.

Shares of the company fell 3.6% to $91.56 in premarket trading. Since hitting an all-time high of $374.20 in January 2022, the stock has fallen nearly 75% as long-term inflation and China-led weakness have hit demand.

Freda’s retirement announcement comes just a month after Chief Financial Officer Tracey Travis announced she would be stepping down after 12 years in the role.

Estee Lauder said on Monday its board is considering internal and external candidates as part of its chief executive succession plan.

Estée Lauder expects sales to either fall 1% or rise 2% in fiscal 2025. Analysts are forecasting a 6.4% increase, according to the London Stock Exchange.

The La Mer maker forecast annual adjusted profit of $2.75 to $2.95 per share, while analysts expected $3.96.

The gloomy forecast suggests that even demand for “affordable luxury” items such as lipstick and perfume, which are widely seen as recession-proof, has been hit, with the firm predicting China’s high-end beauty market will continue to decline.

European counterparts L’Oreal It also noted that the global beauty market was growing slower than expected, highlighting the lack of a rebound in the Chinese market.