Estee Lauder expresses plans of cutting up to 2,000 jobs as loss widens

Written by: Wajeeh Khan
August 20, 2020
  • Estee Lauder expresses plans of cutting up to 2,000 jobs as loss widens.
  • The American multinational's sales slide 32% on a year over year basis.
  • Estee Lauder gives weaker than expected guidance for the fiscal Q1.

Estee Lauder Companies (NYSE: EL) revealed to have swung to a broader than expected loss in the fiscal fourth quarter on Thursday as the Coronavirus pandemic pushed its stores into temporarily shutting down in recent months. It also said that travel restrictions further weighed on its premium makeup demand.   

In the fourth quarter, Estee Lauder said that its sales slid 32% on a year over year basis. The M.A.C. owner also expressed plans of slashing its workforce by 3% that will affect up to 2,000 jobs in total. A 10% to 15% of Estee’s freestanding stores may also be closed in the upcoming months.  

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Estee Lauder says makeup sales slid 18% in Q4

The American multinational had seen a 5% sales growth in its makeup brands in the fiscal H1. In contrast, it recorded a massive 18% decline in makeup sales in Q4.  Estee Lauder was targeted in a 401K lawsuit last week.

Estee reported £1.85 billion of net sales in the quarter that concluded on 30th June that fell shy of the experts’ forecast of £1.86 billion. On an adjusted basis, the U.S. manufacturer noted 40.31 pence of loss per share in the fourth quarter. Analysts, on the other hand, had estimated a much lower 14.45 pence of loss per share for Estee in the recent quarter.

Despite a dovish quarterly performance, the company’s board decided in favour of reinstating its quarterly dividend. It had suspended its dividend earlier this year in April to cushion the economic blow from COVID-19.

Estee Lauder’s guidance for the fiscal first quarter

For the first quarter, Estee Lauder now forecasts its adjusted EPS (earnings per share) to lie in the range of 60.85 pence to 64.65 pence. According to Refinitiv, analysts are predicting the company to see a higher 93 pence of adjusted earnings per share in Q1.

In terms of sales, Estee estimates a decline of 12% to 13% in the first quarter versus an 11.42% decline that analysts are expecting.

Estee Lauder is currently trading in the stock market at a per-share price of £149.25. Due to virus-driven store closures, it had plummeted to £110 per share in March. On a year to date basis, shares of the company are roughly 4% down. Here’s what you need to know about stock market volatility.

At the time of writing, it is valued at £53.59 billion and has a price to earnings ratio of 55.16.