Estée Lauder is intensifying its workforce reduction efforts, doubling the number of job cuts initially planned. The beauty giant faces growing uncertainty due to U.S. President Donald Trump's tariffs, which have forced the company to reevaluate its operations. In the last quarter ending December, Estée Lauder reported a substantial loss of $590 million (£474 million), attributed to a decline in consumer spending in China and Korea. The company now anticipates cutting between 5,800 and 7,000 jobs, with a portion of the staff expected to be redeployed into new roles.
The tariffs impacting Estée Lauder were suspended at the last minute for Canada and Mexico. However, the ongoing trade tensions have added pressure on businesses like Estée Lauder to adapt. The company, known for brands such as Clinique, MAC, and Jo Malone, is not alone in its struggles. The tit-for-tat tariff war is affecting many international companies' fortunes, highlighting the broader implications of global economic policies.
China has recently placed PVH, the American owner of Calvin Klein and Tommy Hilfiger, on its "unreliable entity" list. This move came after PVH allegedly took discriminatory measures against Chinese enterprises. The addition of PVH to this list underscores the escalating trade tensions and their impact on multinational corporations.
In response to these challenges, Estée Lauder is adopting a new strategy. Stéphane de La Faverie emphasized the company's commitment to transforming its operating model.
"We are significantly transforming our operating model to be leaner, faster, and more agile." – Stéphane de La Faverie
This transformation aims to navigate the complex landscape of international tariffs and economic disruptions. The risk of recession and potential sanctions further complicate the business environment for global companies like Estée Lauder.
On a parallel note, Diageo, another multinational company, is also taking measures to address these economic headwinds. According to CEO Debra Crew, Diageo is implementing actions to mitigate the impact of tariffs. The restructuring plan is expected to save approximately $1 billion (£805 million) through job losses and operational adjustments.
Estée Lauder employs around 62,000 people worldwide, and the impending job cuts reflect the company's commitment to building a more efficient framework. Despite the challenges, Estée Lauder aims to emerge more resilient by enhancing its operational agility.