Meanwhile, Estée Lauder announced that after days of intense speculation, the approval of new CEO Stéphane de la Faverie was not much of a surprise, but that William P. Lauder’s resignation as chairman came as little surprise. The news shocked industry insiders.
William Lauder’s appointment as Chairman of the Board marks the first time since the company’s founding 75 years ago that his family has not been actively involved in day-to-day operations.
“My decision to focus solely on my role as Chairman of the Board represents an important evolution for the Lauder family,” he said in a statement. “The day-to-day management of the company, which has been in our family’s hands for many years, has evolved and reflects my desire to focus more on the overall strategic direction of the company.”
After Jane Lauder announced Sunday that she is stepping down from her role as the company’s executive vice president of enterprise marketing and chief data officer, it means there will be no family member involved in day-to-day operations.
In an internal memo sent by William P. Lauder and current CEO Fabrizio Frida, seen by WWD, they further explained their future family involvement.
“As ELC begins its next chapter, the Lauder family intends to remain meaningful shareholders, ensuring that their values and approach to long-term patient capital continue to play a key role in the company’s governance. ” the company said.
Jane Lauder, Gary Lauder, Ronald Lauder and William Lauder will continue to serve as directors. Leonard Lauder will remain Chairman Emeritus, and Aerin Lauder will continue as founder and creator of Aerin and Style and Design Director of Estée Lauder Re-Nutribe.
Family members and people with close ties to the company called the move “very shocking.”
“The fact that the family is not involved in the day-to-day running of the business is huge,” one person said. He pointed out that this shows that
Another person familiar with the matter agreed, speculating that the move was made to appease nervous investors. This person points out that Mr. de la Faverie is a capable executive, but lacks experience in the CEO position, and it is clear that a successor will take over as chairman by the end of the year. I claim that it will happen. “He will need a strong executive chairman to guide him,” the person said.
De la Faveri will take over the reins from Frieda on January 1, about six months earlier than Frieda’s previously announced retirement date, the company confirmed in a statement early Wednesday morning.
“As we work together to return to our preeminent position as a global prestige beauty leader, we are committed to our family heritage, exceptional brands, exceptional talent, consumer-centric approach and creativity – the very essence of who we are. We will leverage core elements that reflect our DNA.” Regarding the appointment of Mr. de la Faverie.
Mr. de la Faverie joined Lauder in 2011 as senior vice president and global general manager of Aramis and Designer Fragrances. Most recently, as Executive Group President, his brand portfolio includes Estée Lauder and Aerin Beauty. Jo Malone London. Le Labo, Deciem, etc.
He is credited with playing a pivotal role in strengthening the company’s fragrance portfolio and was co-head of the company’s profit recovery and growth plan alongside Jane Lauder.
William Lauder said of de la Faverie’s appointment: “His strategic vision will enable us to develop innovative new approaches for the future and ensure the company’s long-term position in the face of current challenges. We will be able to drive strong growth.”
However, the stock market seemed unconcerned by the news, with shares falling 1.8% to close at $87.15.
TD Cowen retail analyst Oliver Chen said in a note earlier this week that while Mr. de la Faverie’s background at L’Oréal, fragrance expertise, and track record of successful brand building are favorable, some investors said he believed that the company would have preferred an outside method. Candidates “have the potential to make a faster and bigger impact from a fresh perspective.”
But while several analysts say an outside candidate would have had an advantage, one source said they are joining the company to embed themselves in a very specific company with very specific policies. He stressed that such a move would delay the company’s recovery by a year or more. culture.
“We are thrilled to be working with the Board of Directors,” Charlene Barszewski, chair of the board of directors, said in a statement. “After a comprehensive CEO succession planning process and thorough consideration of external and internal candidates, Stefan was the board’s clear choice for his combination of strategic vision and global vision.” experience, deep ambition for the company and its remarkable brand, and a unique ability to address the challenges facing the company to fuel growth. ”
The reaction from retailers was positive.
“Over the years, Stephen has shown unwavering support for Sephora,” said Artemis Patrick, president and CEO of Sephora North America. “His collaborative nature is one of the many leadership qualities we value, and together we will continue to lead in this dynamic and exciting industry.”
Still, de la Faverie will have a job in store for him. During Frida’s tenure, Lauder became one of the world’s top luxury beauty companies, a position it recently lost to L’Oréal.
Lauder’s stock price soared from $16.75 in 2009, when Frieda became CEO, to a high of more than $370 in January 2022, giving the company a market capitalization of more than $133 billion.
However, the stock has since fallen as the company struggled to recover post-pandemic, with its Asian travel retail market and China business not recovering as quickly as expected. At the same time, analysts point to a recent lack of innovation in product development and marketing, as well as weakness in its home U.S. market.
2025 is expected to be another challenging year. Reported net sales and organic net sales are expected to decline 1% to 2% year-over-year. The company is scheduled to release its first-quarter valuation on Thursday.
Analysts and industry insiders alike emphasized that Lauder needs to focus on innovation, develop a younger audience and strengthen its brand message.
“We think the stock price could remain flat until performance improves significantly under de la Faveri, including M&A, innovation and R&D, and personalized marketing. “We may need to implement new strategies that focus on EL’s traditional core competencies, such as brand development,” Chen said.
The issue goes beyond a change in management and calls into question Lauder’s future on the public markets, including the possibility of delisting.
Other scenarios include M&A involving Unilever, L’Oréal and LVMH Moët Hennessy Louis Vuitton, which could raise antitrust concerns.
