Estee Lauder makes organizational and executive changes

The measures have become particularly pertinent given the current global economic crisis which has had a significant impact on the financial performance of premium cosmetic players such as Estee Lauder.

The second phase of the restructuring incorporates a three-pronged plan that will shake up the company’s brands, geographic organization and its management.

A joint-announcement made by Fabrizio Freda, who will take over as CEO on July 1, and incumbent CEO William Lauder, who is soon to take the position of executive chairman, said that a new Executive Leader Team (ELT) would head up the regional, functional and branding management teams.

Formation of two executive management teams​

The upper management level will also benefit from the formation of a Management Team (PMT), a subcommittee of the ELT charged with the implemention of the company’s strategic priorities, specifically related to cost saving measures.

As the new CEO Freda will be responsible for overseeing the ELT, which will implement the company’s long-term strategic plans and annual goals, as well as focusing on global business issues and opportunities, the company said.

The restructuring means that brands will now be divided into four categories, according to channel and consumer segmentation, with each category being headed up by a newly appointed leader, reporting to Freda.

John Dempsey, currently in charge of the Estee Lauder, MAC, Tom Ford and Presriptive brands, will now add the Bobbi Brown brand to his responsibilities, and will benefit from the support of newly appointed Jane Hertzmark as his deputy.

Existing brand managers extend responsibilities​

The other three categories will be headed up by Lynne Greene, who will become global brand president of the Clinique, Origins and Ojon brands; Veronique Gabal-Pinsky who will be in charge of Aramis designer fragrances, BeautyBank and IdeaBank; and Dominique Consell who will have her responsibilities extended to cover salon and pharmacy channels, in addition to heading up Aveda.

On a regional basis the re-organization will focus on prioritizing economies of scale within the business, by developing marketing opportunities on a regional basis, a step that will see all the existing regional managers taking on new responsibilities as part of the ELT team.

“Our regional focus will simultaneously allow us to improve our local marketing capabilities by being closer to our consumers and to reduce costs across the company,“​ said Freda.

Likewise, the company will also be focusing on increasing marketing and productivity opportunities by having Harvey Gedeon, VP of research and development and product innovation, Gregory Polcer VP of global supply chain and Dennis McEniry, president of ELC online, all report directly to Freda as part of their new responsibilities to the ELT.

Economic crisis has hit Estee Lauder hard​

Since the start of the year shares in Estee Lauder have fallen 13 percent after the company reported a 30 percent fall in net income and a 6 percent decline in net sales.

In light of the results Freda said consumers were delaying purchases or simply going without for a while, especially in the fragrance category.

In response, the company announced a restructuring program in February involving the loss of 2,000 jobs, a figure that represents 6 percent of the workforce.

At the beginning of the month an analyst from UBS downgraded Estee Lauder’s stock market rating saying the company was struggling because of its reliance on luxury and travel retail.