Estée Lauder expanded its restructuring target Friday to between 9,000 and 10,000 net position reductions globally, up from a prior ceiling of 7,000 jobs, as CEO Stéphane de La Faverie pushes a cost-cutting program called Beauty Reimagined that the company expects to generate as much as $1.2 billion in gross benefits.
The new upper limit of 10,000 positions represents roughly 17.5 percent of Estée Lauder's total workforce of 57,000 as of June 30, 2025. Cumulative restructuring charges will exceed the prior $1.5 billion to $1.7 billion range.
More than 70 percent of the additional 3,000 cuts will come from eliminating department store staff roles—a deliberate shift in distribution strategy away from traditional department store counters toward faster-growing digital and specialty channels including Ulta, Sephora, Amazon and TikTok Shop.
The earnings report showed quarterly net sales of $3.71 billion, beating Wall Street's consensus estimate of $3.69 billion. Adjusted earnings per share of 88 cents cleared the 65-cent estimate handily. Shares rose about 11 percent in premarket trading.
Estée Lauder lifted its adjusted earnings-per-share target to $2.35 to $2.45 from a prior forecast of $2.05 to $2.25. The company also said it now expects organic net sales growth at the high end of its prior 1 percent to 3 percent range.
The guidance carries a material carve-out: Estée Lauder assumes no deterioration in geopolitical conditions, including tariffs and consumer sentiment, and no further business disruptions in the Middle East beyond May 2026. That condition leaves meaningful downside exposure if trade tensions escalate.
The restructuring runs alongside active merger talks with Puig, the Spanish fashion and fragrance group that owns Jean Paul Gaultier. The expanded job-cut target signals pre-merger positioning—Estée Lauder shedding positions on its own ledger while preserving Puig's workforce ahead of any combination. A deal would give the combined entity broader reach in fragrance and luxury fashion, categories where Estée Lauder has historically lagged rivals.
Beauty Reimagined centers on premium product launches and supply chain consolidation. Those efforts drove improved quarterly sales in luxury markets including China and Europe, two regions that weighed on results through most of 2024 and into early 2025 as post-pandemic consumer spending normalized and Chinese demand softened.
The department store channel has been the structural drag. That retail format has lost share consistently to specialty beauty retailers and e-commerce over the past decade. Estée Lauder's concentration of more than 70 percent of new cuts in that segment accelerates a repositioning the company began before the current restructuring plan.
The $1.2 billion gross savings target is cumulative across the program's life. Charges to achieve those savings will exceed the original $1.7 billion high-end estimate, though the company did not specify by how much.
Estée Lauder's Clinique and M.A.C brands anchor its mass-premium positioning, while higher-end names including La Mer and Tom Ford Beauty target the luxury segment where China and Europe showed improvement this quarter. The quarterly beat across both revenue and adjusted earnings suggests the brand mix is holding as the cost structure gets rebuilt.
With Puig merger talks active, restructuring charges accelerating, and full-year guidance dependent on stable geopolitics, the next key disclosure will be whether a deal structure is announced before the next quarterly report—and whether department store traffic data through the second half of 2026 supports the pivot to digital and specialty retail fast enough to justify the pace of cuts.
