BIG UPDATE: Estée Lauder’s struggling CEO makes a major announcement
Estée Lauder (EL) is actively searching for a new CEO following Fabrizio Freda’s announcement of his retirement, which is set to occur at the end of June 2025.
Freda’s Long Tenure at Estée Lauder
Fabrizio Freda joined Estée Lauder in 2008 as president and took over as CEO in 2009, succeeding William Lauder, the son of Leonard Lauder, heir to the Estée Lauder Companies. He has been one of the highest-paid CEOs in the beauty industry and the longest-serving CEO outside the immediate Lauder family.
Rumors of Lauder Family Division
Despite his successful tenure, rumors have swirled about Freda being at the center of a supposed family feud within the Lauder family, which has allegedly been divided over his management of the company for years. This supposed rift, however, has been publicly denied by the family multiple times.
Speculation about Freda’s potential dismissal gained traction amid reports of declining sales, making his retirement announcement less surprising to some observers. The Lauder family remains heavily involved in the business, owning approximately 38% of the company and controlling about 86% of the voting power.
Estée Lauder’s Q4 2024 Earnings Report
On Monday, Estée Lauder released its 2024 Q4 earnings report, revealing a 2% decrease in net sales compared to the previous year. Net earnings dropped from $1.01 billion in 2023 to $390 million this year, while net earnings per common share fell to $1.08 from $2.79 in the prior year.
The company’s stock also experienced a significant decrease, down about 43% from the previous year and another 5% in early market trading on Tuesday. Major product categories saw declines, with skincare dropping by 4%, haircare by 4%, and makeup by 1%.
The company attributed the decline primarily to reduced sales in China, one of its key growth markets, and a lack of travel to Asia in 2024. Meanwhile, the North American market showed flat net sales, driven by declining demand for makeup.
Freda’s Restructuring Plan Ahead of Departure
In February, Freda unveiled a restructuring plan to boost Estée Lauder’s net sales, enlisting consulting firm Alvarez & Marsal for guidance. The plan includes focusing on generating over 60% of sales from outside the U.S. and reducing the workforce by 5%.
Despite the recent downturn, Freda played a vital role in Estée Lauder’s growth during his tenure as CEO. He diversified the company’s distribution channels and acquired notable brands like Tom Ford, Le Labo, and Deciem.
Estée Lauder’s Future Outlook
Looking ahead, Estée Lauder expects the prestige global beauty market to grow by 2% to 3% in 2025, with a return to positive numbers anticipated by 2026. The company plans to focus on expanding in emerging markets and broadening its distribution channels to drive sales, as outlined in its Q4 reports.
“While our sales and profit outlook for fiscal 2025 is disappointing, this year we will make important strides, as we implement our strategy reset to continue rebalancing regional growth, deliver improved annual profitability, and strengthen go-to-market and innovation capabilities to elevate our execution in response to a more competitive market,” Freda stated in the earnings report.
