UPDATE 2-Estee Lauder to cut jobs in expanded restructuring plan; shares surge
(Updates shares and adds details on China demand)
Feb 5 (Reuters) -
Estee Lauder expanded its restructuring program on Monday to include cutting about 3% to 5% of its workforce, as the MAC lipstick owner aims to rebuild its profit margins after a delayed rebound in its key China business.
Shares of the New York-based company were up 17% in premarket trading after Estee said it expects to drive incremental operating profit between $1.1 billion and $1.4 billion, compared to the $800 million to $1 billion it estimated earlier as part of its plan.
Estee had outlined a plan for fiscal years 2025 and 2026 to lower its expenditure and rebuild margins. The firm said it would start the program in the third quarter of fiscal 2024 and expects to take on restructuring and other charges of between $500 million and $700 million, before taxes.
As of June 2023, Estee had about 62,000 employees worldwide. Of these, 71% were full-time, 16% temporary and 13% part-time employees.
The company also cut its annual profit forecast as recovery in its businesses has been much slower, as consumption took a beating in China, which is witnessing a higher youth unemployment rate and a property crisis.
Estee expects full-year 2024 adjusted profit per share between $2.08 and $2.23, compared with the prior forecast of $2.17 to $2.42.
The company's net sales fell 7%, to $4.28 billion in the second quarter, compared to analysts' estimate of $4.19 billion, according to LSEG data. (Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Pooja Desai)
