Estée Lauder Companies (ELC) will cut more jobs as part of its turnaround plans, which are starting to show results, prompting an upgrade to its outlook for the full financial year.
The beauty giant, which owns Clinique and MAC Cosmetics, has said it expects to reduce its workforce by between 9,000 and 10,000.
Last year, ELC announced it was reducing its headcount by up to 7,000 as part of its ‘Beauty Reimagined’ turnaround plan.
The majority of the additional 2,000 to 3,000 job losses will come from retail roles in department stores and freestanding stores as ELC focuses on high-growth channels, such as Amazon and TikTok.
The latest cuts come as ELC said reported sales grew 5% in the third quarter to US$3.7bn, beating analysts’ forecasts and sending shares up 12% in pre-market trading in the US.
Organic net sales were also up 2% in the three months to 31 March.
ELC CEO Stéphane de La Faverie said 2026 is “promising to be the pivotal year we intended” in which the company expects to “restore organic sales growth and expand our adjusted operating margin for the first time in four years”.
“Looking ahead to fiscal 2027, we are confident in our improving trajectory and realising the benefits of One ELC [ELC’s move from regional silos to a more unified global business model], especially its One Operating Ecosystem, which will be fully deployed,” he said.
“Our preliminary view is to accelerate organic sales growth and for adjusted operating margin to approach 13%, albeit in an uncertain geopolitical and macroeconomic environment.”
ELC’s latest performance in the third quarter extends “strong year-to-date performance, driven by Beauty Reimagined”, de La Faverie said, as the company raised its outlook for the full year.
“In the first nine months of fiscal 2026, organic sales for fragrance rose double-digits, while three of four regions grew, led by high single-digit growth in Mainland China where we outperformed prestige beauty to gain share,” he added.
“With momentum across all five action plan priorities of Beauty Reimagined, today we raised our fiscal 2026 outlook, now expecting organic sales growth at the high-end of the prior range and adjusted operating margin expansion to approach 300 basis points, bolstered in part by adjusted gross margin expansion.”
ELC now expects organic net sales growth of around 3%, which is at the higher end of its prior range.
As part of the beauty giant’s update on restructuring, ELC now expects costs to increase to between $1.5bn and $1.7bn, before taxes, up from previous estimates of between $1.2bn and $1.6bn.
A bottle of Destin de Balmain, which helped Estée Lauder's fragrance sales
This is down to “employee-related costs, asset-related costs, contract terminations and other costs associated with implementing these initiatives”, the company said in a statement.
However, this is expected to result in higher gross benefits of between $1bn and $1.2bn annually before taxes, up from the previously expected benefit of between $0.8bn and $1bn.
The company did not comment on the status of its discussions over a potential merger with Puig.
Middle East impact on ELC
The conflict in the Middle East negatively impacted ELC’s third quarter sales growth by around one percentage point, said ELC CFO Akhil Shrivastava on a call with investors.
However, the impact on its consolidated results was not material, added.
“In terms of the conflict in the Middle East, our outlook assumes a greater year-on-year impact from disruption to our business in the fourth quarter relative to the third as shipments for key shopping moments had already gone out before the conflict began,” Shrivastava said.
“This helped to minimise the impact to our third quarter sales.”
In the fourth quarter, ELC expects “an unfavourable impact of approximately two percentage points to sales growth and six cents to EPS [earnings per share]”, he said.
For the full year, the impact of business disruptions in the Middle East is expected to be less than 1%.
How ELC’s divisions performed
In Q3, fragrance sales jumped 13% on a reported basis to $628m and 10% organically, driven by luxury brands, which grew across all regions.
New launches such as Le Labo’s Violette 30, Killian Paris’ Her Majesty, and Balmain Beauty’s first prestige fragrance Destin de Balmain helped push up sales.
Reported sales in ELC’s make-up division were up 4% to $1.072bn, but organic net sales were flat.
The Estée Lauder brand drove growth, with net sales up in the double-digits, which were partially offset by declines from Clinique and Too Faced.
Skin care sales were up 3% to $1.8bn but were flat on an organic basis as growth from La Mer and The Ordinary was offset by declines in Clinique and Origins.
ELC’s hair care brands grew 2% to $128m, but organic net sales were flat in the period, as growth from The Ordinary – including its Multi-Peptide Serum for Hair Density and distribution expansion – was offset by declines from Bumble and Bumble and Le Labo.
Operating income across all divisions apart from skin care declined as a result of costs connected with a potential settlement of a securities class action in the period.
“ELC’s organic sales growth was broadly in line with a mix of pluses and minuses by category and region,” said Jeremy Fialko, Senior Global Consumer Staples Analyst at HSBC.
“Yet profits were much better than forecast, with bottom line guidance being raised materially.”
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