Estée Lauder stock surges, plans to cut up to 5% of staff

Shares of the The Estée Lauder Companies (EL) surged after announcing it was planning on laying off 3% to 5% of its workers as part of a restructuring plan. The beauty products company reported better-than-expected profits in the second quarter, but results have been dragged down by ongoing weakness in Asia.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Stephanie Mikulich

Video Transcript

- And now we have an example of a company that cut jobs and the shares are higher.

- Yes.

- Not in tech though. Estee Lauder is what we're talking about. It also topped earnings estimates and announced that restructuring plan. It includes reducing the company's workforce by 3% to 5%, but the shares are surging by 13%. It's as many as 3,000 people that are going to be affected by these cuts, out of a workforce of about 62,000.

Estee Lauder is known not just for its namesake brand, but it owns a lot of other brands-- The Ordinary, Clinique, Mac, Le Labo, Jo Malone, Tom Ford. It's just a behemoth in this industry here. But it's been suffering from Chinese travel, in particular, that basically because of what's going on with the Chinese economy, Chinese shoppers are not traveling as much, they're not shopping at duty free as much, and that's something that has hurt Estee Lauder.

- And we should note even with today's big jump there, this stock is still down about 40% in the past 12 months. And the Street still is not convinced yet, even with that drop that you're smart to step in here, most still on the sidelines.

- Yeah. And I should mention they were surprised, it seems to be, by this restructuring plan announced today. So that's part of the share pop as well is that, it feels like that the perception seems to be that the company is taking some necessary steps to deal with the slowing growth.

- All right, we'll keep watching.