(Reuters) -Estee Lauder on Tuesday forecast third-quarter profit well below estimates, citing persistent weak demand at airports and travel destinations such as Korea and China, while also expanding its restructuring plan to include up to 7,000 job cuts.
Shares of the company fell about 6% in premarket trading.
Estee Lauder expects to take restructuring and other charges of between $1.2 billion and $1.6 billion.
The company estimates a net reduction of 5,800 to 7,000 jobs by the end of fiscal 2026 as part of an expanded plan to help the cosmetics giant return to sales growth and restore a solid double-digit adjusted operating margin over the next few years.
As of June 30, 2024, the New York-based company had about 62,000 employees worldwide.
Estee Lauder said the plan aims to “manage external volatility, such as potential tariff increases globally.”
For the third quarter, Estee Lauder expects adjusted earnings per share between 24 cents and 34 cents, below analysts’ estimates of 63 cents per share, according to data compiled by LSEG.
“For the third quarter, we expect overall soft retail trends to persist in Asia travel retail, significantly pressuring our organic net sales,” new CEO Stephane de La Faverie, who took over at the start of the year, said in a statement on Tuesday.
In October, the parent company of Clinique and MAC lipstick withdrew its annual sales and profit forecasts while reducing its dividend as part of a planned turnaround after facing declining sales.
Ongoing challenges in Asia’s travel retail sector, decreased demand in China, and strong competition from newer beauty and skincare brands targeting younger consumers have negatively impacted Estee and severely affected its stock prices.
In the second quarter ended Dec. 31, sales fell 6% to $4 billion, compared with analysts’ estimates of $3.97 billion. On an adjusted basis, the company earned 62 cents, beating estimates.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Tasim Zahid)
