Estee Lauder to cut up to 2,000 jobs globally and close some stores

Store closures due to the Covid-19 pandemic had dampened demand for Estee Lauder's premium make-up brands. PHOTO: REUTERS

NEW YORK (REUTERS) - Estee Lauder forecast first-quarter profit below Wall Street estimates on Thursday (Aug 20) after posting a bigger-than-expected quarterly loss as travel restrictions and store closures put in place to contain the spread of coronavirus dampened demand for its premium make-up brands.

The M.A.C. brand owner also said it would cut about 1,500 to 2,000 jobs globally, including point of sale employees.

It also estimated closure of 10 to 15 per cent of its freestanding stores.

Cosmetics makers, including Estee Lauder, that rake in millions from sales at duty-free stores at airports, cruises and downtown locations have seen sales plummeting in its travel retail channel, as tourist spending has dried up due to restrictions on overseas travel and Covid-19 flare-ups in some tourist attractions.

Estee Lauder projected first-quarter adjusted profit per share to be between 80 and 85 US cents.

Analysts on average were expecting a profit of US$1.22 per share, according to IBES data from Refinitiv. Net sales fell to US$2.43 billion (S$3.33 billion) in the fourth quarter from US$3.59 billion a year ago. Analysts on average had expected revenue of US$2.45 billion.

Estee Lauder posted a loss attributable to the company of US$462 million, or US$1.28 per share, in the quarter ended June 30, compared with a profit of US$157 million, or 43 US cents per share, a year earlier. Excluding items, the company reported a loss of 53 US cents per share. Analysts had expected a loss of 19 US cents per share.

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