Lauder exit could spell end of dynasty

By Simon Pitman

- Last updated on GMT

Related tags: Estée lauder, Estée lauder companies, Ronald lauder, William lauder

Cosmetics giant Estee Lauder is expected to announce the departure
of William Lauder as company executive, to be replaced by a Procter
& Gamble executive, a report says.

The grandson of company founder Estee Lauder is expected to step down within two years, to be replaced by P&G veteran Fabrizio Freda, who is being appointed to the executive board as president and chief operating officer, according to a Wall Street Journal article. The company is expected to make the announcement at its annual general meeting, to be held in New York today, at 10am EST. The speculation comes at a time when Estee Lauder's profitability and market share has been under a great deal of strain, particularly in the mainstay US market, where competition is intense and retail conditions have been unfavourable. The company most recently announced a 4.9 per cent growth in its first quarter sales, which came in at $1.71bn (€1.16bn), but said that net profits for the period fell by 27 per cent to $77.9m. Investor pressure​ Investors are said to be pressuring the Estee Lauder executive board to replace the existing CEO, as share prices and returns continue to fall, highlighted by tired brands that appear not to have adapted to the fast changing retail landscape, particularly in the US. Share prices have shown a steady decline since April of this year when they hit a high of $52.31. However, trading prices have fallen steadily, tailing off more dramatically after the last financial results were announced at the end of October. Share prices closed yesterday on the NYSE at $41.08. The Wall Street report said that a P&G executive had confirmed Fabrizio would be taking up his executive post at Estee Lauder in March of next year. Does P&G want to buy Estee Lauder? ​ Although P&G has officially declined confirmation that it might be interested in buying up the Estee Lauder business, industry experts believe it would be a good fit for its fast-growing prestige skin care and fragrances portfolio. Speculation over whether or not P&G is considering the acquisition has been rife recently, and the subject was raised several times at the company's annual shareholder meeting, headed up by CEO A.G. Lafley on 9 October. Estee Lauder has remained a family business since it was set up by William Lauder's grandmother in 1946. However, since Estee Launder's death in 2004, speculation as to how much the family will continue to play an active part in the governing of the business has grown. William Lauder has been CEO of the business since 2004 and works under his father Leonard Lauder, who holds the position of chairman. Likewise, the family still holds considerable weight in the governing of the business, maintaining an 88 per cent share of the company vote and holding a 46 per cent shareholder stake.

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