Estée Lauder is deepening its restructuring plan, delivering a difficult update to thousands of workers even as the beauty giant reports stronger sales and raises its annual outlook.
The parent company of well-known, well-loved brands like Clinique, M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, and others is pushing ahead with a sweeping cost-cutting plan to make the company leaner, faster, and more profitable after several challenging years.
But that turnaround is coming with a high cost for its employees.
The expanded layoffs are part of Estée Lauder’s Profit Recovery and Growth Plan (PRGP), an operational restructuring aimed at simplifying the business, outsourcing select services, and reducing costs across parts of the company.
Estee Lauder now expects a final net reduction of 9,000 to 10,000 positions, according to its latest fiscal 2026 third-quarter results filing.
In its latest SEC filing, Estée Lauder said that more than 70% of the increase in planned job cuts is tied to reductions in point-of-sale demonstration roles at select underperforming department stores and freestanding store locations.
The move signals a broader shift away from weaker retail doors and toward channels Estée Lauder believes offer stronger growth potential.
Estée Lauder sharply expands job cuts
Estée Lauder’s recent update in a final net reduction of 9,000 to 10,000 positions is a sharp increase from the company’s previous estimate of 5,800 to 7,000 job cuts, roughly 3,000 more than its prior estimate.
This is around 17.5% of its global workforce of over 57,000, Reuters reported.
The restructuring is expected to be completed by the end of 2026.
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The latest update marks another expansion of a restructuring effort that has grown significantly since it was first announced.
In February 2024, Estée Lauder said it would cut about 3% to 5% of positions as sales weakened and the company looked to restore profitability.
At the time, the company employed about 62,000 people and expected the restructuring program to cost between $500 million and $700 million, while producing between $350 million and $500 million in gross benefits, according to Retail Dive.
A year later, the cuts became much deeper. In February 2025, Estée Lauder warned that it would eliminate 5,800 to 7,000 jobs globally, representing up to 11% of its workforce.
That expansion came shortly after Stéphane de La Faverie took over as CEO and launched the company’s “Beauty Reimagined” turnaround strategy.
Image source: Shutterstock
Restructuring costs rise as savings target grows
Under the latest 2026 update, Estée Lauder expects the restructuring program to result in $1.5 billion to $1.7 billion in restructuring and other charges before taxes, up from its prior range of $1.2 billion to $1.6 billion.
These include ”employee-related costs, asset-related costs, contract terminations, and other costs associated with implementing these initiatives,” notes the company release.
The company also raised its expected annual gross benefits from the program to $1 billion to $1.2 billion, compared with its previous estimate of $0.8 billion to $1 billion.
For workers, that means the company’s turnaround is becoming more aggressive. For investors, the company argues that the deeper cuts are part of a plan to rebuild margins, offset inflation and tariffs, and free up funds for consumer-facing investments.
In an SEC filing, the company said the restructuring is focused on:
- Reorganization and rightsizing of certain areas
- Simplification and acceleration of processes
- Outsourcing of select services
- Evolving its go-to-market footprint
Earnings improve despite restructuring pressure
The harsh workforce update came alongside signs that the company’s turnaround is gaining traction.
For the quarter ended March 31, 2026, Estée Lauder reported net sales of $3.71 billion, up 5% from $3.55 billion a year earlier.
Organic net sales rose 2% and gross margin improved to 76.4% from 75% in the prior-year quarter, helped by benefits from the Profit Recovery and Growth Plan, which offset impacts from tariffs and inflation.
“Fiscal 2026 is promising to be the pivotal year we intended, one in which we restore organic sales growth and expand our adjusted operating margin for the first time in four years,” said Stephane de La Faverie, President & CEO.
Further adding that for 2027 the company expects to “accelerate organic growth” and for the adjusted operating margin to approach 13%.
Adjusted operating income rose 38% to $557 million, while adjusted operating margin increased to 15%, compared with 11.4% a year earlier. Adjusted diluted earnings per share rose 40% to 91 cents.
Still, the quarter was not without pressure.
Reported operating income fell 19% to $249 million, and reported diluted earnings per share dropped 45% to 24 cents, weighed down in part by restructuring and legal costs.
The company also disclosed an $84 million loss contingency, net of estimated insurance recoveries, tied to an agreement to settle a consolidated securities class action lawsuit in the Southern District of New York.
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Fragrance and China help drive Estée Lauder’s growth
Estée Lauder’s latest results showed uneven momentum across its business.
- Fragrance remained the standout category, with net sales rising 13% on a reported basis and 10% organically in the quarter.
- Skin care sales rose 3% on a reported basis, helped by La Mer and The Ordinary, though the company said Clinique and Origins declined.
- Makeup sales rose 4% on a reported basis, driven partly by the Estée Lauder brand’s next-generation Double Wear foundation launch, while Clinique and Too Faced remained weak spots.
By region, Mainland China was one of the brighter spots, with net sales up 11% on a reported basis and 6% organically. The company said it outperformed prestige beauty in Mainland China for the third consecutive quarter of fiscal 2026, helped by brands including La Mer, TOM FORD, Le Labo, and The Ordinary.
Estée Lauder also raised its full-year fiscal 2026 outlook. The company now expects organic net sales growth of about 3%, at the high end of its prior range, adjusted operating margin of 10.7% to 11%, and adjusted diluted earnings per share of $2.35 to $2.45.
But management remains cautious. Estée Lauder said it still expects tariffs to hurt fiscal 2026 profitability by about $100 million, even after mitigation efforts.
The company also warned that business disruptions in the Middle East are expected to have a bigger impact in the fiscal fourth quarter, with an estimated 2% hit to sales growth and a 6-cent impact to diluted earnings per share.
Estée Lauder investing in digital and brand expansion
The company is also making several strategic moves as part of its transformation.
In the filing, Estée Lauder said it entered a strategic partnership with Shopify in October 2025 to modernize its digital infrastructure, signed a global strategic agreement with Accenture in November 2025 for enterprise business services, and appointed WPP as its first global media partner in April 2026.
The company also announced plans to acquire the remaining interest in Forest Essentials, an Indian beauty brand, subject to regulatory approvals, and disclosed a minority investment in luxury skin care brand 111Skin.
Another transformation is in the works as Estée Lauder confirmed earlier in March that it was in discussion with PUIG, a Spanish beauty company, about a potential merger. The company said no agreement or final decision has yet been made.
While the company is positioning these moves as part of a stronger long-term strategy, the near-term human impact is significant. What began as a plan to cut up to 5% of roles in 2024 has now grown to eliminate as many as 10,000 positions worldwide.
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