Estée Lauder ends succession drama with new CEO amid demand drop and granddaughter’s departure

The Estée Lauder Companies (ELC) names a new CEO just ahead of a quarterly earnings report that is better than expected. Starting January 1, 2025, Stéphane de La Faverie will replace longtime CEO Fabrizio Freda, who announced two months ago that he would retire next year.

William Lauder will step down as executive chairman but remain chair of the board of directors. Jane Lauder was seen as a contender for the top role, but she announced her departure this week.

Granddaughter steps down

Jane Lauder joined the family business in 1996 and, in 2020, became the first executive VP of Enterprise Marketing and chief data officer. As an heiress from the other side of the family, she was seen as a potential successor to replace outgoing CEO Fabrizio Freda. However, the board looked past William Lauder’s cousin, who announced she would depart the company but remain on the board of directors as an advisor to the CEO. Jane Lauder and her family still own 38% of a company started by their grandmother in 1946. 

Estée, born Josephine Esther Mentzer in 1908, started by making skin creams in the kitchen with help from her uncle. The New York native and her husband grew the company through launches, brand acquisitions and practices that included gift set offerings and designer licensing deals.

Beauty business woes

The global beauty business faces turbulence as consumers become cautious with discretionary spending. “Affordable luxuries” have historically been recession-proof, however,  various companies report sales are slowing down. Ongoing weakness in China is also putting downward pressure on beauty companies, and ELC will rely on the new CEO to revive sales in a region that has historically craved premium beauty products, which in turn has helped boost the beauty giant’s bottom line.

Stéphane de La Faverie appointed president and CEO at ELC.William Lauder praised the incoming CEO and stated that de La Faverie’s ”strategic vision will position [ELC] to drive long-term growth in the face of its current challenges, as he deploys transformational new approaches for the future.”

De La Faverie joined the company in 2011 and currently serves as executive group president, overseeing many brands across a portfolio that includes Jo Malone London, The Ordinary, Le Labo, La Mer, MAC and Aveda.

In the company’s press release, he stated plans to revive growth through innovation:

“As we work together to return to our pre-eminent position as the leader in global prestige beauty, we will draw on our family heritage, extraordinary brands, exceptional talent, consumer-centric approach and creativity — core elements that reflect our very DNA. We are extremely focused on revitalizing our growth via groundbreaking innovation, unforgettable experiences and cutting-edge marketing to inspire our consumers worldwide.”

Rivals reveal weakness

Personal Care Insights recently reported on rival companies grappling with weaker sales and revising growth targets. Coty admitted the global beauty market is still solid but predicts “slightly lower” growth in the short term. 

Ulta Beauty unveiled quarterly earnings that fell short of Wall Street’s estimates. The retailer blamed growing market competition on the diversifying omnichannel playing field, particularly for premium beauty.

ELC just reported quarterly earnings that beat Wall Street estimates with EPS of US$0.14 and revenue for the quarter coming in at US$3.36 billion. While the market digests this better-than-expected report and news of the new CEO, the stock is still down almost 17% in the last 12 months. 

In the previous quarter, ELC warned its annual profit and sales might not meet the expectations of Wall Street analysts due to weakness in China. That sentiment was reflected in L’Oréal’s earnings. Last week, the French cosmetics giant reported a quarterly sales miss. CEO Nicolas Hieronimus admitted, “The situation in the Chinese ecosystem has become even more challenging, but we believe in the future of this market and hope that the governmental stimulus will help improve consumer confidence.”