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Estée Lauder has picked a longtime senior executive as its new chief executive at a time of transition that will see the Lauder family take a step back from day-to-day operations at the beauty and cosmetics company.
Stéphane de La Faverie will take over as chief executive and president of the owner of brands Mac and Clinique from January 1, and will also become a member of the board, the company said on Wednesday. He succeeds Fabrizio Freda, who will retire after more than 16 years at the New York-listed company.
As part of the transition William P. Lauder, the grandson of the group’s founder, will step down as executive chair of the company his family controls on November 8, although he will remain chair of the board.
“This decision comes as the Lauder family evolves their long-standing day-to-day management of the company and reflects a desire to focus more on the overall strategic direction of Estée Lauder,” Lauder and Freda wrote in a memo to staff seen by the Financial Times.
It was reported last week that Jane Lauder, the granddaughter of Estée Lauder’s founder who had been seen as a potential contender for chief executive, would step down from her operational roles in the company at the end of the year.
In the memo Estée Lauder said that since its founding “subsequent generations of the Lauder Family have had significant involvement in the business and management of the company” and added that “as [the company] begins this next chapter, the Lauder family intends to remain meaningful stockholders, ensuring that their values and approach to long-term patient capital continue to play a vital role in the company’s governance”.
Taken together the changes set the stage for a new chapter in Estée Lauder’s leadership and relationship with the family at a time when the company is undergoing a turnaround following two years of falling profits and sales.
The group has forecast lower than expected earnings and sales in the coming fiscal year due in large part to ongoing weakness in the key Chinese beauty market. Sales slipped 2 per cent to $15.6bn in the fiscal year to June 30, while net earnings fell to $390mn compared with $1bn in the prior year.
While the global beauty market is coming under pressure as sales in China slow, rivals such as L’Oréal have outperformed Estée Lauder in recent years. Shares in Estée Lauder have fallen nearly 40 per cent since the start of the year giving the group a market capitalisation of about $32bn.
De La Faverie joined Estée Lauder in 2011 and as executive group president currently oversees many of the company’s top brands including its namesake Estée Lauder, as well as fast-growing names The Ordinary and Le Labo.
He has also played a key role in implementing the group’s turnaround plan which includes cuts to its workforce, investing in brands and product innovation and shoring up its margins.
De La Faverie “has been instrumental in implementing the Profit Recovery and Growth Plan across the organisation and has done so with discipline and empathy as the company manages through our current complex challenges”, the memo said. “As we look to the future, we are confident that Stéphane will steer Estée Lauder Companies in the direction of success with a clear vision for how to get there.”
