Estee Lauder Stock Dives Amid Plans To Cut Upto 7,000 Jobs, Lower Revenue Outlook, But Retail’s Hopeful

Shares of Estee Lauder Cos Inc. ($EL) fell more than 16% on Tuesday as the company warned of ongoing economic uncertainty while announced job cuts of up to 7,000 positions, but retail sentiment stayed positive.

For its latest quarter, the company posted $0.62 in earnings per share, beating estimates of $0.32. Revenues came in at $4 billion, down 6% year-over-year, beating estimates of $3.98 billion quoted by Wall Street analysts. The company’s Americas sales were flat, driven by the decline in North America, reflecting retail softness from some brands, it said.

Estee Lauder said it is seeing ongoing challenges in its Asia travel retail business, subdued consumer sentiment in China and Korea. Given these factors and the evolving global geopolitical uncertainty, it warned of continued volatility and low visibility in the near term while issuing outlook for the third quarter.

Stéphane de La Faverie, president and CEO of Estee Lauder, warned the company expects sales to decline 10% to 12% for the quarter ending March 31. It expects Q3 adjusted EPS to range between $0.20-$0.30, below the consensus estimates of $0.63.

“While we recognize there is much work to do, we are confident that ‘Beauty Reimagined’ is the way to realize our ambition,” de La Faverie said of the company’s turnaround strategy.

The job cuts are part of its turnaround and Estee Lauder expects to take restructuring and other charges of between $1.2 billion and $1.6 billion as part of the plan, the company said.

“We are significantly transforming our operating model to be leaner, faster, and more agile, while taking decisive actions to expand consumer coverage, step-change innovation, and increase consumer-facing investments to better capture growth and drive profitability,” de La Faverie said.

Sentiment on Stocktwits inched up on the ‘extremely bullish’ category. Message volumes jumped to ‘extremely high.’

Estee Lauder products are sold across 150 countries under brands such as Aramis, Clinique, Bobbi Brown Cosmetics, Tom Ford, Smashbox, among others.

Estee Lauder stock is down 7.3% year-to-date.

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