Estée Lauder is yet another victim of the Covid-19 crisis: as consumers buy less cosmetics, the group feels forced to cut 2,000 jobs and close one in six stores.
In the last quarter of its broken financial year, Estée Lauder saw its turnover drop 32 % to 2.43 billion dollars (2 billion euros), which is (just) lower than the 2.45 billion dollars that analysts were expecting. Profits were completely erased: the cosmetics group recorded a loss of 462 million dollars (390 million euros), coming from a profit of 157 million dollars last year.
In its full financial year, ending 30 June, turnover dropped 4 % to 14.3 billion dollars (12 billion euros) as make-up sales stuttered. Estée Lauder's main make-up brand M.A.C. recorded an 18 % decrease, despite a 5 % growth in the July-December (2019) period. Many consumers were forced to stay at home for a significant period of time, and the obligation to wear face masks was also not exactly boosting make-up sales.
Trouble is not over yet, as the company expects a 12 % turnover drop for the current quarter (even worse than analysts' earlier prediction of 11.4 %). As a result, Estée Lauder is reviewing its store network to reflect the trends of more teleworking and more online sales: up to 15 % of its stores are threatened, just as 3 % of the group's employee pool. In the worst case scenario, 2,000 jobs may be cut.