Estee Lauder leaders promise to cut underperforming product lines

By Guy Montague-Jones

- Last updated on GMT

Related tags Estée lauder Estée lauder companies

Estee Lauder has promised to eliminate unprofitable product lines and geographies to focus energies on growth areas like the Asian skin care market.

William Lauder, current Estee Lauder head, and Fabrizio Freda, who will take over as CEO on July 1, made the comments at the Sanford C. Bernstein & Co. Strategic Decisions Conference.

Geographical overview

Both business leaders began their talk by giving an overview of the performance of the company in different markets.

Lauder said North America was the first region to be affected by the economic downturn but that the market was leveling out. He said it took some time for the “virus to cross the Atlantic” but that the full force of the global crisis has now hit European shores.

However, Freda said the UK was proving to be an exception thanks to the weakness of pound sterling and the attractiveness of London as a shopping destination.

Among the major geographical regions, Asia Pacific is the best performer, described as “strong and robust” by Lauder, with the exception of Singapore and Japan.

Lauder said the company would make skin care in Asia a key focus moving forward. He said Estee Lauder would also change its product mix and eliminate unprofitable product lines and geographies.

Nevertheless, both executives said they remained committed to the Estee Lauder fragrance business which has experienced disappointing sales and tight margins in recent times.

Current sales environment

Talking generally about the current sales environment Lauder said the company was seeing both trade destocking and “consumer destocking”. He said women are not replenishing their stock of beauty products until they really need to.

Nevertheless, the business leader said that consumers still respond to products that offer value and performance. The days of conspicuous spending and status symbol products may be numbered, but consumers are still very sensitive to new ideas, good innovation and value.

Lauder said the company would be adjusting its focus to take account of this shift.

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