During the most recent trading session, Estée Lauder Companies Inc. (NYSE: EL) had a notable boost in its stock price, rising 12.05% to close at $150.28. This increase comes after the massive cosmetics company revealed its reorganization plan and released financial data.
Estée Lauder (EL) announced revenue of $4.28 billion for the second quarter ending on December 31, 2023, marking a 7% drop from the prior year. This decrease was mainly due to challenges in Asia’s travel retail sector and the ongoing slump in China’s high-end cosmetics market. However, growth was observed in various regions like Latin America, Europe, Asia/Pacific, and the Middle East & Africa.
The company’s quarterly earnings were $313 million, down from $394 million year-on-year, despite the revenue decline. Diluted earnings per share stood at $0.87 compared to the previously reported $1.09. Estée Lauder expressed contentment with its second-quarter performance, highlighting that organic sales met expectations and profitability exceeded targets. Key brands contributing to this success include Jo Malone London, Clinique, The Ordinary, La Mer, and Le Labo.
With a focus on the future, Estée Lauder declared that its Profit Recovery Plan will now include a thorough restructuring program for the fiscal years 2025 and 2026. The objectives of this effort are to improve operational agility, boost profitability, and quicken sales growth. The plan calls for increasing expenditures in customer-focused projects, lowering operating expenses, and maximizing gross margins.
The third quarter of fiscal 2024 is when the restructuring program is expected to start. Its objectives include process acceleration and simplicity as well as the reorganization and shrinking of specific business sectors. As of June 30, 2023, a net decrease of around 3-5% of posts is anticipated, including provisions for retraining and staff redeployment.
Prior to taxes, Estée Lauder expects to pay $500 million to $700 million in restructuring and related charges, which include asset write-offs, employee-related costs, contract terminations, and related implementation costs. Nonetheless, when the initiative is completely implemented, it is anticipated to provide gross benefits per year between $350 million and $500 million.
