The Estée Lauder Companies Announces today unveiled a bold new strategy
The Estée Lauder Companies Announces today unveiled a bold new strategy, “Beauty Reimagined,” aiming to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years. In addition to launching this new strategic vision, the company also shared its financial results for the second quarter of fiscal 2025, ending December 31, 2024. Stéphane de La Faverie, the President and CEO of Estée Lauder, emphasized that Beauty Reimagined would guide the company towards its goal of becoming the best consumer-centric prestige beauty company. De La Faverie acknowledged the challenges ahead but expressed confidence that the company’s new vision, supported by significant transformation, would put Estée Lauder back at the forefront of the prestige beauty industry.
Beauty Reimagined: A Strategic Vision for the Future
“Beauty Reimagined” is Estée Lauder’s plan to accelerate its growth and position itself for long-term success. The vision involves a fundamental transformation of the company’s operating model, making it leaner, faster, and more agile. Key priorities under this strategy include:
- Accelerating Best-in-Class Consumer Coverage: The company plans to put the consumer at the center of its strategy by expanding its portfolio into high-growth channels, markets, media, and price tiers. The goal is to tap into key growth opportunities within the prestige beauty segment, ensuring the brand is more visible and accessible to consumers across the globe.
- Creating Transformative Innovation: Estée Lauder aims to deliver groundbreaking innovations in the prestige beauty space. This includes rapid, on-trend products targeting key consumer subcategories, occasions, and benefits. The company is committed to introducing fast-to-market innovations that will capture the attention of modern consumers, particularly in the skincare, makeup, and fragrance categories.
- Boosting Consumer-Facing Investments: To drive brand awareness and consumer acquisition, Estée Lauder will increase advertising spending, optimize its marketing programs, and eliminate low-return activities. These efforts will enhance visibility and connect the company more directly with new and existing consumers, boosting sales across various channels.
- Fueling Sustainable Growth Through Bold Efficiencies: The company has committed to optimizing operations and enhancing efficiencies across its supply chain and procurement processes. This includes consolidating spending, improving supplier relationships, and seeking cost savings through outsourcing select services. The goal is to ensure that consumer-facing investments are funded in a way that positions the company for an accelerated return to a double-digit adjusted operating margin over the next few years.
- Reimagining the Way We Work: Simplifying the organization and removing unnecessary complexities are central to Estée Lauder’s future vision. By fostering a flatter and leaner organizational structure, the company aims to empower faster decision-making, enabling more efficient execution at all levels. Smaller brands will be given greater autonomy, while larger brands will benefit from more significant economies of scale.
Operational Highlights and Market Performance
Estée Lauder reported a strong performance in several key markets for the second quarter of fiscal 2025. The company achieved notable share gains in prestige beauty in several regions:
- United States: Skin Care, led by Clinique, and Hair Care, led by Bumble & bumble, performed well, demonstrating significant market growth.
- China: Estée Lauder’s Makeup, led by the flagship Estée Lauder brand, achieved impressive growth, while La Mer and Le Labo saw strong performance in Skin Care and Fragrance, respectively.
- Japan: The Fragrance category, led by Le Labo, saw notable success, while La Mer led in Skin Care. For the calendar year 2024, Estée Lauder’s Fragrance brands ranked #1 in Japan.
In addition to its regional successes, Estée Lauder excelled during major global shopping events. The 11.11 Global Shopping Festival saw Estée Lauder and La Mer ranking either #1 or #2 in the Prestige Beauty and Luxury categories, while Jo Malone London performed similarly well in Fragrance across Douyin, JD, and TMall. Additionally, during TikTok’s Black Friday and Cyber Monday campaigns in the U.S., Estée Lauder and The Ordinary were among the top-selling brands, further illustrating the company’s growing influence in key digital spaces.
The Ordinary, a brand within Estée Lauder’s portfolio, made significant strides in expanding its reach, launching on the U.K. TikTok Shop in December 2024 and on Amazon’s U.S. Premium Beauty store in January 2025. The brand also introduced a disruptive anti-aging serum at a competitive price point, the GF 15% Solution, in January 2025. Geographically, The Ordinary expanded further, entering Thailand in January 2025 and planning to launch in mainland China in February 2025.
The Fragrance division also demonstrated impressive growth, with over 20 new freestanding stores opening globally in the second quarter of fiscal 2025. Jo Malone London and Le Labo led this expansion, showcasing the demand for luxury fragrances worldwide.
Innovative Launches and New Developments
Estée Lauder’s commitment to innovation is evident through its exciting new product launches across several brands:
- MAC launched the MACximal Sleek Satin Lipstick in October 2024, a new addition to its iconic collection.
- Clinique introduced Clinique CX, an advanced post-procedure treatment franchise tailored for the Chinese market in November 2024.
- Estée Lauder expanded its Re-Nutriv longevity collection with the introduction of an eye treatment in January 2025.
- Jo Malone London partnered with GQ for the Men of the Year Awards 2024, reinforcing its prestige and appeal.
The company also announced the opening of its Fragrance Atelier location in Paris in December 2024, set to open in 2025, as well as the launch of a new BioTech Hub in Belgium. This initiative, alongside a collaboration with the Massachusetts Institute of Technology, is designed to accelerate the development of cutting-edge biotechnology innovations.
Financial Performance by Product Category
Estée Lauder’s performance across its product categories revealed some challenges as well as successes.
- Skin Care: Net sales for Skin Care declined by 12%, mainly due to weaker retail environments in the Asia/Pacific region, particularly in the company’s travel retail business, where consumer sentiment in China remained subdued. The decline in sales from Estée Lauder and La Mer in this category contributed to the overall drop.
- Makeup: Makeup sales decreased by 1%, largely due to declines from TOM FORD, M·A·C, and Smashbox, particularly in their eye and face subcategories. However, Clinique experienced high-single-digit growth, driven by its U.S. Amazon launch and the ongoing success of its Almost Lipstick in Black Honey.
- Fragrance: Fragrance sales grew by 2%, driven by strong performance from luxury brands like Le Labo, which saw double-digit growth across regions. However, Estée Lauder’s fragrance sales were impacted by lower shipments of holiday sets. Le Labo’s growth was bolstered by both hero products and innovation, including the release of Osmanthus 19, the City Exclusive scent for Kyoto.
- Hair Care: Hair Care sales fell by 8%, primarily due to soft performance from Aveda, reflecting ongoing challenges in the salon channel and shipment timing.
