Estée Lauder restructuring costs reach US$1.75B as job cuts deepen

Estée Lauder Companies (ELC) has announced that it expects to spend up to US$1.75 billion on its restructuring plan. The scheme was first announced in November 2023, when the company originally estimated it would cost between US$500 and 700 million. 

The beauty giant attributes the higher spending to job cuts, asset-related costs, and terminated contracts, among other changes.

ELC first planned to cut between 5,800 and 7,000 positions, but in its latest earnings report, the company says it now expects to remove between 9,000 and 10,000. Most of these extra job cuts are in “unproductive” stores, the company says.

ELC is also shifting its focus to faster-growing areas and putting more effort into selling on Amazon and TikTok shop. It aims to offer more affordable products to attract younger buyers.

“The restructuring program is now expected to yield annual gross benefits of between US$1 billion and US$1.2 billion, before taxes — an increase from [the previously projected] US$0.8 billion and US$1 billion,” the company’s financial reporting reads. 

ELC says the changes will help it to restore its operating margin, offset inflation, and fuel increased reinvestments in consumer-facing areas, which it hopes will drive sustainable sales growth. The company is still pending approval for the expanded initiatives under the restructuring program, which it expects will be completed by the end of fiscal 2026.

ELC’s fragrance sector remains its most profitable.Eyeing a rebound

The restructuring program forms part of the company’s Profit Recovery and Growth Plan, which aims to help soften the blow of the US$1.13 billion loss it reported for fiscal 2025. At the time, the loss was attributed to falling sales and tariff pressures.

“Tariff rate reductions in the second half of fiscal 2026 are not expected to benefit fiscal 2026. This assumption does not reflect any subsequent or future changes, including potential refunds,” ELC says. “The company continues to expect tariff-related headwinds to impact fiscal 2026 profitability.”

The latest prediction of what the restructuring plan would cost is not the company’s first announcement of exceeding estimates. In December, ELC also announced that it surpassed the original US$500–700 million figure, bringing the then total to US$1.14 billion.

At the time, fragrance was its only growing division, partially attributed to the Jo Malone brand. While the division remains the company’s strongest, the skin care business has since rebounded.

ELC says it is leveraging available trade programs and further optimizing its regional manufacturing footprint to bring production closer to its consumers, including through its facility in Japan. The company hopes that these efforts, combined with increased supply chain agility, will further help offset approximately half of the expected financial impacts.