Estée Lauder Reports Decline in Q3 Financial Performance, Initiates Profit Recovery Plan

The Estée Lauder Companies Inc. reported a decline in financial performance for the third quarter and nine months ended March 31, 2025, as detailed in its latest 10-Q filing. The company recorded net sales of $3.55 billion for the third quarter, a decrease of 10% compared to $3.94 billion in the same period last year. For the nine months, net sales totaled $10.92 billion, down 7% from $11.74 billion in the prior year. The decline in revenue was attributed to lower sales across all product categories, particularly in skin care and makeup, as well as unfavorable foreign currency translation effects.

The company's operating income for the third quarter was $306 million, a 42% decrease from $531 million in the previous year. For the nine months, the company reported an operating loss of $395 million, compared to a profit of $1.20 billion in the same period last year. This significant drop was influenced by restructuring charges, impairment of goodwill and other intangible assets, and costs associated with litigation settlements, which collectively totaled $1.02 billion for the nine months.

In terms of strategic developments, Estée Lauder has initiated a Profit Recovery and Growth Plan (PRGP) aimed at enhancing profitability and operational efficiency. This includes a restructuring program that is expected to result in a reduction of approximately 5,800 to 7,000 positions globally, representing about 9-11% of its workforce. The company anticipates that these initiatives will yield annual gross benefits of between $800 million and $1 billion, before taxes, once fully implemented.

Geographically, the Americas saw a 6% decline in net sales for the third quarter, primarily due to lower consumer confidence and retail softness. Europe, the Middle East, and Africa experienced an 18% decrease, largely driven by challenges in the Asia travel retail business. Meanwhile, Asia/Pacific reported a 3% decline, with mixed results across various markets. The company continues to face challenges from subdued consumer sentiment, particularly in China and the United States, and is monitoring the impact of geopolitical tensions and inflationary pressures on its operations.

Looking ahead, Estée Lauder expects continued volatility and uncertainty in its business environment, particularly from ongoing consumer sentiment issues and changes in retail strategies. The company is focused on implementing its PRGP to stabilize and improve profitability while navigating these challenges.