Estée Lauder Cuts Jobs in Digital Catch-up

C-Suite Notes: Estée Lauder's elimination of 7,000 positions and external hiring for digital marketing and data roles signals that traditional beauty marketing executives face existential pressure to reimagine their organizational models or risk obsolescence in an increasingly digital-first consumer landscape.

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In a move that underscores the seismic shifts reshaping prestige beauty marketing, Estée Lauder Companies Inc. unveiled plans to eliminate up to 7,000 positions—11% of its 62,000-strong workforce—as part of an aggressive restructuring program aimed at revitalizing its marketing model and digital capabilities.

From Traditional to Digital: A Marketing-Driven Restructuring

The expanded layoffs, significantly beyond the initial 3,000 cuts announced last year, come as new CEO Stéphane de La Faverie struggles to navigate a fundamental transformation in beauty consumer behavior. "Simply said, we lost our agility. We did not capitalize on the higher growth opportunities", de La Faverie admitted, pointing to the company's sluggish adaptation to digital-first innovation trends.

The restructuring specifically targets marketing capabilities, as Estée Lauder said it's looking externally to fill its chief digital marketing officer and chief technology, data and analytics officer positions. The departure of Jane Lauder from her role as executive vice president of enterprise marketing and chief data officer last October now appears to have catalyzed a complete reimagining of the company's marketing function.

L'Oréal's Head Start: Beauty Tech Leadership in Focus

Estée Lauder's struggles come into sharper relief when compared to L'Oréal's proactive beauty tech strategy. At CES 2025, L'Oréal showcased its Cell BioPrint device, a "tabletop hardware device" that "provides personalised skin analysis in just five minutes, using advanced proteomics", demonstrating the company's position as a "Beauty Tech powerhouse."

In 2024, L'Oréal became the first beauty company to deliver a CES keynote, with CEO Nicolas Hieronimus declaring, "At L'Oréal, we believe technology can expand the limits of what is possible, help improve the lives of consumers around the world, and meet individuals' infinite beauty needs and aspirations". This early embrace of beauty tech leadership has allowed L'Oréal to maintain market momentum while Estée Lauder now plays catch-up.

Marketing Implications of the Asia-Pacific Struggle

The company's challenges in China—which accounts for roughly a quarter of total sales—highlight a critical marketing misjudgment. Estee Lauder has faced challenges in boosting sales growth in China, which accounted for roughly a quarter of the company's sales in 2024, due to high unemployment, a struggling economy, and an increasing preference for local brands.

This shift toward domestic brands reflects a broader trend of marketing localization that sophisticated international beauty brands must master. Traditional luxury positioning alone no longer resonates with younger Chinese consumers who increasingly value culturally relevant innovation and local brand heritage.

Financial Performance Reflects Marketing Inefficiencies

The numbers tell a sobering story about marketing effectiveness. The company's net sales for the quarter ended Dec. 31 fell 6% year over year to $4 billion from $4.28 billion, with deeper declines expected ahead. The company projects a net sales decline of 10% to 12% for the current quarter. This performance gap comes despite the company's historically strong portfolio of prestige brands including MAC, Clinique, La Mer, and Tom Ford Beauty—suggesting systemic marketing and execution failures rather than brand equity issues.

The restructuring reveals a belated recognition of digital marketing's growing importance. Over the last nine months, for example, Estée Lauder's key brands like Clinique and The Ordinary have launched on Amazon, while in Europe, the company is eager to leverage the strength of its skin-care category in the pharmacy channel. However, these moves represent catch-up rather than innovation. Competitors have long established sophisticated direct-to-consumer strategies and data-driven personalization capabilities that Estée Lauder is only now beginning to prioritize.

The company plans to reinvest annual pre-tax gross savings in the $800 million to $1 billion range into consumer-facing initiatives. This massive reallocation signals a fundamental shift from traditional brand management overhead to performance marketing and digital customer experience investments. The strategy also involves boosting innovation, increasing visible advertising spending and simplifying the way its employees work, according to company statements. This suggests a pivot toward more agile marketing operations and data-informed campaign execution.

Takeaways for Beauty Marketing Leaders

1. Digital Transformation Can't Be Delayed: Estée Lauder's challenge underscores the fatal consequences of delayed digital marketing investment in beauty

2. Local Brand Relevance vs. Global Prestige: The China example demonstrates that traditional luxury positioning requires cultural relevance to maintain market share

3. Innovation Speed Defines Marketing Success: The inability to capitalize on "higher growth opportunities" suggests organizational structures must evolve to enable faster marketing execution

4. Data and Technology Leadership Are Non-Negotiable: The external recruitment for chief digital and data roles highlights the critical capabilities gap in traditional beauty marketing organizations

For marketing leaders, this restructuring serves as a stark reminder that marketing transformation is no longer optional in the beauty industry—it's essential for survival. The complete overhaul is targeted for completion by fiscal 2027, giving marketing executives across the industry a critical blueprint for how not to fall behind in an increasingly digital, data-driven beauty landscape.

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