Estée Lauder Announces CEO Fabrizio Freda’s Retirement Amidst 2024 Challenges

Company Faces Declining Sales and Market Volatility, But Plans Strategic Reset for Future Growth

Estée Lauder Companies (ELC) reported a challenging fiscal year ending June 30, 2024, with net sales declining by 2% to $15.6 billion. The dip reflects ongoing struggles in the Chinese market and other global challenges, including a decrease in organic net sales by the same margin. Net earnings fell sharply to $390 million from $1.01 billion the previous year.

In a significant leadership change, ELC has announced that President and CEO Fabrizio Freda will retire in June 2025 after a successful 16-year tenure. Freda has been a key figure in guiding the company through numerous transformations and expressed pride in the accomplishments and the talented team he helped build. Despite the company’s current difficulties, Freda remains focused on executing ELC’s strategic reset, which includes a profit recovery and growth plan.

Fiscal 2024 was marked by several challenges for ELC, including weakened demand in China, declining travel retail sales across Asia, and the high costs associated with acquiring Tom Ford. Additionally, disruptions in regions such as Israel and the Middle East further impacted the company’s performance. However, Freda highlighted a rebound in the final quarter of the fiscal year, with net sales rising by 7% year-over-year to $3.87 billion and organic net sales increasing by 8%. This marked a return to growth and underscored ELC’s resilience.

The Asia Pacific region experienced a 3% decline in net sales, mainly due to poor performance in China. Nonetheless, stronger sales in Hong Kong and Japan helped mitigate some of the losses. Competitor L’Oréal also faced similar issues, with North Asia sales falling by 3.1%.

Despite these hurdles, ELC achieved double-digit net sales growth in Latin America, driven by emerging markets such as Mexico and Brazil. North America saw flat net sales, influenced by a decline in the makeup category, although Clinique experienced double-digit growth following its launch on Amazon’s Premium Beauty store. Sales in EMEA grew modestly by low single digits.

By category, fragrance sales outperformed other segments, growing by 2% with notable contributions from Le Labo and Jo Malone London. Skincare sales dropped by 3%, primarily due to weak demand in Mainland China for brands like Estée Lauder and Clinique. However, the second half of the year saw a double-digit increase in skincare sales, led by La Mer, Estée Lauder, and The Ordinary. Makeup sales decreased by 1%, and haircare sales fell by 4% after a 6% rise in 2023, with ELC citing challenges for Aveda in North America.

Looking forward to fiscal 2025, ELC anticipates a more tempered performance due to its exposure to China and the travel retail market in Asia. The company plans to focus on reigniting skincare growth, seizing high-end fragrance opportunities, accelerating progress in key channels, launching innovative products, and enhancing marketing capabilities. Freda remains optimistic that these efforts, coupled with the strengths of ELC’s brands and global teams, will position the company for stronger performance in fiscal 2026 and beyond.