NEW YORK – Estee Lauder (EL) saw a significant jump in its stock early Monday after announcing layoffs and a new restructuring plan during its Q2 earnings report. Meanwhile, ELF Beauty experienced a slight decrease from its all-time-highs ahead of its Q3 report to be released late Tuesday.
Estee Lauder reported a 43% adjusted earnings drop to 88 cents per share, surpassing FactSet estimates of 54 cents. The company’s net sales fell 7% to $4.28 billion, but exceeded forecasts of $4.19 billion.
The decline in organic net sales was attributed to challenges in Asia travel retail and ongoing softness in prestige beauty brands in mainland China. The decline also reflected a 1% impact due to business disruptions in Israel and the Middle East.
Estee Lauder expects to return to “strong” organic sales growth in the second half of fiscal 2024 and announced a new restructuring program to begin in Q3 as part of its Profit Recovery Plan in 2025 and 2026. The company aims to rebuild more sustainable profitability and support sales growth acceleration while lowering its cost base and reducing overhead expenses, as well as investing in key consumer-facing activities.
As part of the restructuring plan, Estee Lauder plans to reduce its workforce by 3% to 5% and retrain and redeploy some employees. The company expects the initiative to yield annual gross benefits of $350 million to $500 million, and to drive $1.1 billion to $1.4 billion in incremental operating profit.
Estee Lauder’s stock spiked 14% early Monday to its highest level since September on the restructuring news, and ELF Beauty (ELF) reports Q3 results late Tuesday. The Q3 forecast for ELF Beauty includes a 19% earnings increase to 57 cents per share and a 63% spike in revenue to a record $238.9 million.
ELF stock fell more than 4% early Monday, erasing its premarket surge on the Estee Lauder news. Last week, it hit a record high after breaking out above a three-weeks-tight entry at 164.71. Shares of the cosmetics brand have run up nearly 18% through Feb. 2 following a cup-base breakout in early December.