In order to be more financially flexible in the uncertain time of the COVID-19 pandemic, Estée Lauder Companies announced its company-wide action plan to generate more cash.
After reporting better-than-expected results for Q2, the multinational cosmetics company, which owns such brands as Estée Lauder, Clinique and La Mer, is being hit hard by COVID-19. Most of its global retail stores are closed, including its travel retail, although its stores in Asia Pacific, which saw 31% increase last quarter, are now beginning to reopen.
“Our global business is more broadly impacted by COVID-19 than we initially expected,” CEO Fabrizio Freda said in a filing to the Securities and Exchange Commission when withdrawing the company’s financial guidance for investors last month.
As a result, the company has implemented a host of measures to reduce spending in advertising, administration, and human resources, as well as furloughing part of its vast retail staff and cutting salaries of top management: 50% on Executive Chairman William Lauder and CEO Freda, effective May 1st through October 31st of this year. Leonard Lauder and Ronald Lauder, Lauder family members who hold chairman positions, will also have “nearly 100%” of pay cuts for the same period of time.
Several other companies are using the cost savings from executive pay cuts to set up a fund to aid employees during the ongoing crisis, while maintaining their payroll at least until June 1st.
Estee Lauder European Headquarters in Londoon
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