Estée Lauder, the American group dedicated to prestige beauty, has announced disappointing forecasts for its 2023-2024 financial year and the departure of its historic CEO, Fabrizio Freda, at the end of 2025. The company’s business model is set to change…
Estée Lauder is looking for its new winning model.
The American group specializing in prestige beauty has just announced both a below-expectations forecast for its 2023-24 results and the departure at the end of 2025 of its historic CEO, Fabrizio Freda, who has been at the helm for 16 years.
Despite a better-than-expected fourth quarter, the owner of brands such as Estée Lauder, Bobby Brown, Clinique, La Mer, Jo Malone, The Ordinary and Tom Ford (among others) closed its 2023-24 financial year on June 30, badly affected by the Chinese market and Travel Retail.
Chinese market and travel retail at half-mast
Sales fell by 2% to $15.6 billion in 2023-24, despite an 8% surge in sales to $871 million in the final quarter.
In more detail for the full year, only fragrance sales rose (+2%), while beauty products (-3%), hair care (-4%) and make-up (-1%) were down. Net profit fell to $0.39 billion, compared with $1.01 billion the previous year.
These under-performances are linked both to the slowdown in the Chinese luxury goods market, particularly in travel retail, and to a sluggish domestic market across the Atlantic.
Following the announcement of its results on August 19, Estée Lauder shares fell back slightly. Since hitting a record high of $374.20 in January 2022, it has plummeted by almost 75%, with demand affected by inflation and a suffering China.
The Group is obviously reacting to avoid slipping further down the slope.
Change of era
On Monday August 19, the same day as the group’s results, Fabrizio Freda, Estée Lauder’s CEO since 2009, announced his retirement at the end of 2025. This represents a real change of governance and era, while last July, CFO Tracey Travis had already announced her departure in June 2025 after 12 years in the post.
Together, we have transformed the company in a beautiful way, and set new standards of excellence,” said Fabrizio Freda. As we apply long-termist management,the time has come to look to the next generation of leaders of this great company.”
The Board of Directors has already considered “numerous highly qualified internal and external candidates” to succeed Fabrizio Freda. Upon his appointment, Freda will work alongside him to ensure a smooth transition, and will remain available as an advisor in 2026.
In the meantime, the current CEO will continue to direct and oversee the company’s strategic, financial and investment priorities. And in particular, a profit growth and recovery plan (PRGP) aimed at outperforming the global prestige beauty industry.
Gentle relaunch
The company plans to focus on skincare, high-end fragrances, conquering fast-growing channels and precision marketing.
However, it expects a soft relaunch.
During a conference call with analysts following the publication of the results, CFO Tracey Travis announced that profits should increase in fiscal 2024-2025, mainly thanks to the turnaround plan, but also to growth in the Americas, Asia-Pacific excluding China and Europe. The Group does not, however, expect retail sales of travel products to improve.
Instead, it expects annual sales to evolve in a range of only -1% to +2%, whereas analysts were expecting a 6.4% increase, according to LSEG data. According to Estée Lauder, the Group will therefore be less dynamic than the global prestige beauty sector, which is expected to grow by 2-3% over the same period.
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Read also > Estée Lauder completes acquisition of DECIEM Beauty Group
Featured Photo: © Estée Lauder
