Could a family squabble tear apart Estée Lauder? Emily Glazer and Sabela Ojea discuss the troubles the company faces today in The Wall Street Journal, writing:
For years, the Lauder family hosted the annual meeting for shareholders of their cosmetics giant at the elegant Essex House overlooking the southern edge of New York’s Central Park.
In a scene that looked more like a wedding than a corporate meeting,attendees would nibble on gourmet pastries and tropical fruit and leave with goody bags filled with face-cream samples, perfumes and lipsticks.
In between, they would mingle with the legendary New York clan that has controlled Estée Lauder since its founder first put her creams in jars more than 70 years ago: her son Leonard, who secured the brand’s place in America’s department stores; his brother Ronald, who ran for mayor of New York and became an art connoisseur; Ronald’s daughter Jane, a marketing executive with stints leading Origins and Clinique; and her cousin William who helmed the company from 2004 to 2009.
This year, instead of going to a luxury hotel, shareholders will log into a virtual meeting, a Covid carry-over. And behind the screens, a family skirmish over the struggling business and its future is roiling the empire just as Leonard, aged 90, officially ends his term as a board member.
Estée Lauder shares have plunged about 50% this year, erasing roughly $45 billion in market value. Its China business has become a drag on profits. Some of its brands have been slow to tap into TikTok to reach younger consumers. Competitors are faring better, such as French giant L’Oréal, whose shares are up nearly 30% this year, or luxury conglomerate LVMH, which owns Sephora and is behind brands such as Dior fragrances and Fenty Beauty.
The founding family and board are divided about what to do—a state of disagreement the Lauders prefer to keep out of public view. Leonard, and other members of the board are dissatisfied with Estée Lauder’s current chief executive Fabrizio Freda, according to people familiar with the matter. Leonard’s 63-year-old son William, who is executive chairman, and other directors still want Freda at the helm to execute a turnaround plan he’s set in motion to clear out unsold inventory and boost profits. Jane, age 50, an heir from the other side of the family, is on the shortlist of internal CEO contenders, some of the people said.
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