Estée Lauder(US:EL) 虎嗅APP·2026-02-06 14:10Core Viewpoint - Estée Lauder is experiencing a paradoxical situation in 2026, marked by significant layoffs and restructuring while simultaneously seeing a recovery in performance driven by cost-cutting measures. Despite this, major Wall Street firms have raised their ratings and target prices for the company. Over the past five years, Estée Lauder's market value has plummeted by $110 billion, but it managed to recover $21 billion last year. However, its stock performance starkly contrasts with that of its competitor L'Oréal, which has seen a different upward trajectory [4][6][17]. Group 1: Company Performance - Estée Lauder's main brand saw its average price on the Taobao platform drop below 600 yuan, leading to questions about its declining premium status [7]. - The company reported a 4% year-on-year increase in net sales and a recovery in adjusted operating margin to 7.3% after a five-year decline in operating profit [11]. - In fiscal year 2025, Estée Lauder faced a significant loss of $11.33 billion, marking a shift from profit to loss [14]. Group 2: Market Challenges - The high-end beauty market is facing challenges, with Estée Lauder's sales declining by 7% and net profit dropping by 69% in 2023, attributed to a weak high-end beauty market in the Asia-Pacific region [17][18]. - In contrast, L'Oréal experienced an 11% increase in sales and a 9.2% rise in operating profit during the same period, highlighting a stark market divide [18]. - Estée Lauder's reliance on travel retail has led to complications, with a 45% decline in organic sales in global travel retail channels due to reduced replenishment orders [31]. Group 3: Strategic Adjustments - The company initiated a "Profit Recovery and Growth Plan" in November 2023, aiming to cut costs and improve efficiency, which has now evolved into a major operational transformation [18][19]. - Estée Lauder plans to integrate travel retail with regular retail in the Asia-Pacific market to address pricing conflicts between the two channels [37]. - The company has expanded its layoffs to 5,800-7,000 employees as part of its restructuring efforts [19]. Group 4: Competitive Landscape - The beauty industry is witnessing a shift, with domestic brands like Pechoin gaining significant market share, while Estée Lauder struggles to maintain its premium positioning [40]. - The U.S. high-end skincare market saw a 1% decline in the first half of 2025, contrasting with the growth of mass-market brands [41]. - Estée Lauder's historical reliance on travel retail has created vulnerabilities, as evidenced by the significant inventory buildup and subsequent discounting in regular channels [31][32].