Estee Lauder (EL) surges 15% on results, job cuts

Estee Lauder (NYSE: EL) stock soared over 15% in premarket trading Monday after the company reported better-than-expected Q2 results and announced plans to cut 3-5% of its workforce.

The company posted second-quarter earnings per share (EPS) of $0.88, topping the consensus estimates of $0.54. Revenue came in at $4.28 billion, ahead of the projected $4.19 billion.

The beauty products maker also trimmed its annual profit forecast, and now expects full-year 2024 adjusted EPS to be in the range of $2.08 to $2.23, down from the previous forecast range of $2.17 to $2.42. The analyst consensus stands at $2.33.

Simultaneously, Estee Lauder announced a restructuring program to slash costs, including layoffs affecting 3% to 5% of its workforce.

The firm said it would initiate the program in the third quarter of the 2024 fiscal year, projecting to incur restructuring and additional charges ranging from $500 million to $700 million, pre-tax.

The program is expected to produce yearly gross savings ranging from $350 million to $500 million, before taxes. A part of these savings is planned to be allocated towards customer-oriented areas to foster sustainable and profitable expansion.

Consequently, the company anticipates that the plan’s actions will contribute to an increase in operating profit by $1.1 billion to $1.4 billion, this includes the net advantages stemming from the restructuring efforts.

As of June 2023, Estee employed approximately 62,000 individuals globally, with around 71% being full-time workers, 16% on temporary contracts, and 13% in part-time positions.

In the previous quarter, Estee launched a strategy aimed at reducing its costs and enhancing its profit margins for the fiscal years 2025 and 2026.

Through this plan, the company anticipates generating an additional operating profit between $1.1 billion and $1.4 billion.

By Vahid Karaahmetovic

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