• The company estimates a final net reduction in positions of up to 10,000, which is a 70% increase from its prior estimate.
• For the third quarter, net sales were $3.71 billion, and earnings per share on an adjusted basis were $0.91.
• For the full year, the company said organic net sales growth would be approximately 3%, at the high end of its prior range. 

Estée Lauder Companies (ELC) on Friday said it now expects to slash up to 10,000 positions by the end of the year, as part of an ongoing cost-cutting effort by the debt-laden cosmetics giant to deleverage its balance sheet.

In its official first-quarter earnings statement, the company said it now estimates a final net reduction in positions of 9,000 to 10,000, an increase from the 5,800 to 7,000 positions indicated earlier. 

“Over 70% of the increase is attributable to the reduction in point-of-sale demonstration roles at select unproductive doors in its department store and freestanding store channels,” Estée Lauder said in its third quarter (Q3) earnings release. Instead, the company will now turn its focus toward high-growth channels.

The cuts are part of a previously announced restructuring program, which is now expected to yield annual gross benefits of between $1 billion and $1.2 billion before taxes, up from $800 million to $1.0 billion.

As of March 30, the company’s long-term debt stood at $6.81 billion. Reuters has estimated that Estée’s ​net debt stands at nearly five times annual earnings before interest, taxes, depreciation, and amortization.

Results At A Glance

For the third quarter (Q3), net sales rose 5% to $3.71 billion, ahead of the $3.61 billion polled by Fiscal AI. Earnings per share (EPS) on an adjusted basis were $0.91, ahead of the $0.65 estimate.

For the full year, the company said organic net sales growth would be approximately 3%, at the high end of its prior range. Adjusted EPS is expected between $2.35 and $2.45, ahead of the $2.22 per share estimate.

How Did Retail Traders React? 

On Stocktwits, retail sentiment about EL turned ‘bullish’ from ‘bearish’ amid a 200% spike in message volumes over the last 24 hours.

EL stock has fallen nearly 24% so far this year but has risen 36% over the last 12 months.

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