Shares surge by 16% in early trading as Estee Lauder beats second-quarter profit estimates despite the workforce reduction.
A cost-cutting initiative is launched due to economic pressures in China, influenced by increased youth unemployment and a lingering property crisis impacting luxury goods spending.
Quarterly results reflect mixed demand in China, contrasting with some competitors experiencing strong sales growth while aligning with others facing a slower rebound.
Estee Lauder expects an incremental operating profit of $1.1-1.4 billion from restructuring efforts but forese.es charges of $500-700 million before taxes.
The company revises its annual profit forecast downward for the second time, citing a slowdown in its U.S. business post-pandemic.
Some investors express concerns about long-term brand growth, while analysts like Bernstein's Callum Elliott acknowledge the necessity for change in response to market challenges.