Karishma Vanjani

Luxury beauty brand Estée Lauder offered weak earnings guidance, and will take more than $1 billion in pretax charges, and cut thousands of jobs. Shares are tumbling.

Early Tuesday, Estée Lauder posted adjusted earnings per share of 62 cents for the second fiscal quarter ended Dec. 31, well above the consensus estimate of 32 cents, according to FactSet. Sales of $4 billion topped the $3.98 billion estimate.

But Estée Lauder sees earnings per share of 24 cents to 34 cents for the third fiscal quarter ending March 31, far short of the consensus projection for 63 cents.

Estée Lauder stock is down 7.3% to $76.71 in Tuesday premarket trading.

In order to streamline, the company expects to take restructuring and other charges of $1.2 billion to $1.6 billion, before taxes, "consisting of employee-related costs, contract terminations, asset write-offs, and other costs associated with implementing these initiatives."

Estée Lauder estimates a net reduction in positions of 5,800 to 7,000, including approvals to date. The net reduction includes the elimination of positions after retraining, and "redeployment of certain employees in select areas."

The company's bet on Asia isn't paying off. Travel retail business in Korea was weak in the latest quarter, while overall sales trends in China continue to be poor. Sales have declined year-over-year for two straight quarters now.

"For the third quarter, we expect overall soft retail trends to persist in Asia travel retail, significantly pressuring our organic net sales despite the improvement we made with in-trade inventory levels in the first half of fiscal 2025, which we intend to maintain around current levels," CEO Stéphane de La Faverie said in the earnings release.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.

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February 04, 2025 08:48 ET (13:48 GMT)

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