The Estee Lauder Companies is launching a strategic vision, “Beauty Reimagined” amid a 6% decline in net and organic sales for Q2 2025, which resulted in a flat $4.0 billion for the Happi Top 50 Company.

“Today, we are excited to launch Beauty Reimagined, a bold strategic vision to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years as we aim to become the best consumer-centric prestige beauty company,” said Stéphane de La Faverie, president and chief executive officer. “While we recognize there is much work to do, we are confident that Beauty Reimagined is the way to realize our ambition.”

With the new initiative, the company plans to significantly transform its operating model to be more agile, while taking decisive actions to expand consumer coverage, step-change innovation and increase consumer-facing investments to better capture growth and drive profitability.

Action Plan

Beauty Reimagined hopes to achieve the following goals:

Accelerate best-in-class consumer coverage by putting the consumer at the heart of its business and rapidly expand its portfolio presence in consumer-preferred, high-growth channels, markets, media and price tiers to participate in key growth opportunities in prestige beauty.

Create transformative innovation via step-change innovation across prestige price tiers, to deliver fast-to-market, on-trend innovation focused on in-demand subcategories, benefits and occasions.

Boost consumer-facing investments to increase visible advertising spending, optimize marketing programs and eliminate low-return activities to accelerate new consumer acquisition.

Fuel sustainable growth through bold efficiencies to expand profit recovery and growth plan to
address the impact of further volume deleverage by adopting a more competitive approach to procurement by further consolidating spending and strategically re-evaluating key supplier relationships; improving supply chain network efficiencies; and outsourcing select services.

Fund consumer-facing investments to drive sales growth and position the company for an accelerated return to a solid double-digit adjusted operating margin over the next few years.

Remove complexity and simplify how the company works to allow greater focus on execution excellence for the consumer; unburden smaller brands so that they can be more successful in its organization, while driving greater benefits of scale for our larger brands; and empower faster decision-making, in part through a leaner organization.

The plan aims to position the company to lead the prestige beauty industry once again, said De La Faverie.

Q2 2025 Fiscal Breakdown by Category

Skin care net sales decreased 12%, primarily due to impacts from the overall challenging retail environments in Asia/Pacific and the company’s Asia travel retail business, including ongoing pressure from subdued sentiment from Chinese consumers, which drove declines from Estée Lauder and La Mer.

Skin care operating income decreased, primarily due to the decline in net sales, partially offset by lower cost of sales and disciplined expense management.

Makeup net sales decreased 1%, primarily due to the declines from Tom Ford, reflecting the impacts from the overall challenging retail environment in Asia/Pacific and the company’s Asia travel retail business. In addition, net sales decreased from MAC and Smashbox, driven by their softness in the eye and face subcategories, respectively.

The declines were partially offset by high-single-digit growth from Clinique, reflecting growth across each geographic region, driven by the brand’s launch in Amazon’s US Premium Beauty Store and the continued success from Almost Lipstick in Black Honey.

Makeup operating results decreased, driven by $258 million of goodwill and other intangible asset impairments relating to Tom Ford and Too Faced.

Fragrance net sales increased 2%, driven by the company’s Luxury Brands, led by Le Labo and its strong double-digit growth across each geographic region, partially offset by the decline from Estée Lauder, due in part to reduced shipments of holiday sets. The growth from Le Labo benefited from both hero products, such as its Classic Collection, innovation, such as Osmanthus 19, the City Exclusive scent for Kyoto and targeted expanded consumer reach.

Fragrance operating results decreased, primarily due to the $549 million other intangible asset impairment relating to Tom Ford.

Hair Care net sales decreased 8%, primarily driven by Aveda, reflecting continued softness in the Company’s salon channel and the timing of shipments. Hair care operating loss was flat, reflecting disciplined expense management and lower cost of sales, partially offset by the decline in net sales.