Estée Lauder’s struggling CEO makes a major announcement

According to The Street, Estée Lauder (EL) is in the process of looking for a new CEO after current CEO Fabrizio Freda announced his retirement, set for the end of June 2025. Freda, who has been with the beauty giant since 2008, first joined as president before stepping into the CEO role in 2009, succeeding William Lauder, son of Leonard Lauder, heir to the Estée Lauder empire.

Lauder Family Division Rumors

Freda, one of the highest-paid CEOs in the beauty industry and the longest-serving outside of the Lauder family, has been at the center of rumors about a potential family feud. Allegedly, the Lauder family has been divided over Freda’s leadership and handling of the company for several years, with some family members reportedly unhappy with the company’s recent financial performance. However, the Lauder family has consistently denied these claims in public.

Despite the denials, whispers of dissatisfaction, especially in light of declining sales, have led to speculation that Freda’s retirement may have been influenced by internal family pressure. As Estée Lauder’s owners of approximately 38% of the company and holders of 86% of the voting power, the Lauder family remains highly involved in the company’s future direction.

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Estée Lauder’s Q4 Earnings Decline

On Monday, Estée Lauder released its 2024 Q4 earnings report, revealing a 2% decline in net sales compared to the previous year. Net earnings plummeted from $1.01 billion in 2023 to $390 million in 2024, while earnings per common share dropped to $1.08, a significant decrease from $2.79 the prior year.

The company’s stock has taken a hit, down 43% over the past year and dropping another 5% in early market trading on Tuesday. The company’s core categories also struggled, with skin care and hair care both declining by 4%, while makeup saw a 1% decline.

Estée Lauder attributed much of this decline to weak sales in China, a key growth market for the company, and a slowdown in travel to Asia in 2024. Meanwhile, North American sales remained flat, driven by decreased demand for makeup.

Freda’s Restructuring Plan Before Departure

In February 2024, Freda unveiled a restructuring plan designed to turn around the company’s fortunes before his departure. As part of this plan, he enlisted consulting firm Alvarez & Marsal and aimed to boost international sales to account for 60% of the company’s revenue. The plan also involved a 5% reduction in the workforce.

Despite the current financial struggles, Freda has been credited with driving significant growth during his time as CEO. Under his leadership, Estée Lauder diversified its distribution channels and made high-profile acquisitions, including Tom Ford, Le Labo, and Deciem.

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Estée Lauder’s Future Outlook

Looking ahead, Estée Lauder anticipates a 2%-3% growth in the global prestige beauty market by 2025 and expects to return to positive numbers by 2026. The company plans to achieve this by focusing on emerging markets and expanding its distribution channels to drive higher sales.

Freda addressed the challenges and future strategies in the Q4 earnings report, stating, “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.”