Estée Lauder CEO Fabrizio Freda plans to retire at the end of June 2025, capping a decade-and-a-half reign that transformed the company into a global cosmetics giant but ran into trouble in recent years.
Freda, 66, will continue to lead the company until a successor is named, the company said in a statement Monday. It said it is “well advanced” in the search for a new CEO and has considered several internal and external candidates.
Separately, the company on Monday forecast annual revenue growth that dramatically missed analysts’ expectations, in a sign that Freda’s turnaround pledge isn’t materializing as quickly as investors had hoped. The company has repeatedly cut forecasts during the past year, giving the impression at times that executives don’t have a solid grasp on the dynamics shaping their business.
Estée Lauder expects revenue in its current fiscal year in a range between a 1% decrease to a 2% increase. Analysts surveyed by Bloomberg were forecasting a 5.6% increase to $16.5 billion. The company also sees adjusted earnings of $2.78 to $2.98 per share for the fiscal year, below the average analyst estimate of $3.97.
Shares fell as much as 8% in premarket trading in New York on the poor earnings results but have pared losses. The company’s stock was down 35% this year as of Friday’s close, compared with a 16% rise in the S&P 500 Index.
The results are the latest blow to Freda’s longtime plan to turn China into an engine of growth for the company. But in the past couple of years, Estée Lauder’s sales at duty-free shops in the country have imploded, and demand across Chinese cities has been weaker than executives anticipated.
The company blamed the forecast on “persistent weak sentiment among Chinese consumers.”
“While our sales and profit outlook for fiscal 2025 is disappointing, this year we will make important strides, as we implement our strategy reset,” Freda said in the earnings statement.
Wall Street darling
Freda, who has been in the post since 2009, was instrumental in growing Estée Lauder into a cosmetics giant that sells brands including Clinique, the Ordinary, La Mer and Jo Malone across the globe. That growth in the years before the pandemic made Estée Lauder a Wall Street darling and helped members of the founding Lauder family billionaires. Freda is one of two CEOs to lead the company outside of the Lauder family. Shares have risen 467% during his long tenure, tracking just under the performance of the S&P 500 during that time.
But the company has stumbled since the pandemic, putting pressure on Freda to restore the cosmetics giant to its former glory. Estée Lauder’s business at duty-free shops in Asia, particularly China, imploded and has been slow to recover amid sluggish travel and poor planning by the company. It hasn’t been as agile as some startup competitors, either, failing to seize on social media beauty trends and ceding market share.
Those challenges had raised questions about how much longer Freda would remain at the company.
In February, Freda told Bloomberg News in an interview that “I’m not going anywhere” and that he was committed to the company. Estée Lauder announced at the time that it would cut as many as 3,000 positions as part of a restructuring plan.
Freda will continue to implement that plan during the next year and will be available as an adviser the year after he steps down, the company said. The plan will “position us to both outperform prestige beauty in fiscal 2026 and accelerate profitability expansion,” Freda pledged on Monday.
His exit is part of a changing of the guard at Estée Lauder following the financial turmoil at the company. Longtime CFO Tracey Travis is also stepping down on June 30, 2025, after more than 12 years in the role, the company said last month.