Estée Lauder, one of the world's leading cosmetics and skincare companies, has announced plans to cut up to 7,000 jobs, double the number initially anticipated, as it grapples with falling sales and economic uncertainty linked to US trade policies.
The company, which owns Bobbi Brown, Aveda, and Tom Ford, is undertaking a massive restructuring effort to become "leaner, faster, and more agile," according to CEO Stéphane de La Faverie.
The layoffs, impacting 9-11% of its global workforce, come as sales dropped 6% to $4 billion in the last quarter of 2024, with a $650 million pre-tax loss compared to a $519 million profit the year before.
The US government's new import tariffs, particularly those targeting China, have added further pressure to Estée Lauder’s already struggling business. While tariffs on Mexico and Canada were temporarily suspended for 30 days, companies that operate globally remain on edge over potential supply chain disruptions and rising costs.
Estée Lauder sources its ingredients from various countries, including Australia, Madagascar, and Indonesia, while its operations span across the UK, Canada, Switzerland, and China. Any increase in trade barriers could lead to higher import costs, which the company might struggle to absorb.
The company has not yet disclosed where the job cuts will take place. Estée Lauder currently employs around 62,000 people worldwide. Some affected employees may be redeployed into new roles, but the scale of layoffs signals a major shift in the company’s operations.
Estée Lauder is not alone in warning of tariff-related risks.
- Diageo, the maker of Guinness and Johnnie Walker, has expressed concerns about tariffs on Mexico and Canada, stating they "could very well" disrupt business operations.
- PVH Corp., owner of Calvin Klein and Tommy Hilfiger, has been placed on China’s “unreliable entity” list, potentially facing sanctions and restrictions on business activities in the country.
With consumer spending slowing in key Asian markets and trade tensions escalating, Estée Lauder faces a challenging road ahead. The company is betting on cost-cutting and restructuring to stabilize its business, but global economic conditions and shifting trade policies could determine its long-term success.
