Estée Lauder exceeds US$1B in restructuring amid AI and fragrance funding

Estée Lauder Companies’ (ELC) restructuring program is costing far more than the US$500–$700 million figure the group first expected, with approved charges now reaching US$1.14 billion. Much of this spending comes from job cuts, contract terminations, and a broad shift toward more outsourced and technology-driven operations.

The push toward technology is shaping how ELC invests in future growth, which is now visible in an AI-powered scent advisor the company has launched for its Jo Malone London brand. These digital flexes indicate how ELC is transitioning away from older, manual structures while investing in digital systems that may be essential to its future.

The restructuring program, first announced in November 2023, is part of the company’s Profit Recovery and Growth Plan (PRGP). The strategy is expected to help soften the blow of the company’s US$1.13 billion loss reported for fiscal 2025 — a loss that is anticipated to escalate through FY2026.

In its latest financial earnings, ELC reported that fragrance was its only growing division, partially attributed to the Jo Malone London brand.

The British fragrance brand stands at the intersection of a billion-dollar loss and the reliance on fragrance for growth — and ELC appears to recognize Jo Malone London as a strategic lever.

Cost of change

ELC disclosed the latest restructuring charges in a filing to the US Securities and Exchange Commission (SEC). The update confirms rising costs tied to outsourcing, process redesign, and workforce reductions. These efforts are central to the company’s PRGP.

The SEC filing shows ELC approved US$1.14 billion in restructuring and related charges since the program began in late 2023. This total includes US$285 million in new charges approved between October 27 and November 29, 2025.

The company reported that US$75 million of this period’s spending went to employee-related costs such as severance. It also reported that US$22 million went to contract termination fees within the same period.

The company is redesigning its core business processes to remove bottlenecks and work more efficiently. ELC wants a leaner structure that is cheaper to run and better equipped to respond to changing consumer demands.

One pillar of the plan aims to use advanced technology to support the company’s redesign and improve its overall productivity. ELC has already begun work in this regard, with the recent launch of its global Fragrance Atelier in Paris, France.

The facility blends AI, olfactive science, neuroscience modeling, and real-time patent and regulation tracking to reduce fragrance development lead times. ELC projects the atelier to bring scents from its Jo Malone London, Le Labo, Tom Ford, and Kilian Paris brands to market around 30–50% faster.

ELC plans to focus on categories that show resilience while improving operational efficiency and innovation speed.However, the company’s tech push will reduce its global workforce, leading to severance costs and role eliminations. The actions will also end certain contracts, which results in additional termination charges.

The company says these changes will help drive future sales growth and restore margin performance. ELC expects all PRGP-related initiatives to be approved by the end of fiscal 2026, and that most of the work will be completed by the end of fiscal 2027.

Virtual notes

Jo Malone London’s AI-powered scent advisor comes amid the company’s tech-focused fragrance push. The tool recreates the brand’s in-store fragrance consultation in a digital, conversational format. It is available on the brand’s US and UK sites.

The advisor prompts users to describe what kind of scent they want in their own words. “We are entering a new era of digital scent discovery where AI can bridge the gap between curiosity and confidence,” says Jo Dancey, global brand president for Jo Malone London.

“This smart advisor lets people describe in their own words what they’re drawn to and translates that into meaningful, tailored scent recommendations. It’s designed to feel like having one of our fragrance experts at your side, wherever you are.”

The system uses Google’s Gemini and Vertex AI to interpret natural language and match it to Jo Malone London’s scent data. The tool then gives personalized fragrance recommendations based on these interpretations.

Jose Gomes, VP of retail and consumer packaged goods at Google Cloud, says the partnership is an example of “how Google Cloud’s AI capabilities can solve complex business challenges while preserving what makes a brand distinctive.”

“This innovation marks a pivotal step in ELC’s ongoing commitment to leveraging technology to elevate consumer experiences,” adds Brian Franz, chief technology, data, and analytics officer at ELC.

On the consumer side, the tool is designed to help online shoppers make confident fragrance choices without having to smell products in person.

Commercially, the advisor is expected to improve online conversion rates while gathering information about consumer preferences. It can then translate the data into insights for ELC that may support future product or marketing decisions.