This Omni Talk Retail Fast Five segment breaks down Estée Lauder’s plan to cut up to 10,000 jobs as part of its ongoing restructuring efforts.

Chris Walton and Jenn Hahn discuss whether the cuts are more about merger strategy or the declining relevance of department store beauty counters, and what this means for the future of in-store beauty experiences. They also unpack how retailers are reevaluating labor investments as AI and digital commerce continue to evolve.

⏩ Tune in for the full episode here.

#EsteeLauder #BeautyIndustry #RetailNews #RetailStrategy

Estee Lauder has expanded its restructuring program for the second time in the last year, now targeting a net reduction of between 9,000 and 10,000 positions globally, which is up from its previous estimate of between 5,800 and 7,000 as the cosmetics giant accelerates its beauty reimagined turnaround plan.

So a lot of turnaround plans here, Chris.

According to Retail Dive, again, more than 70% of the increase in planned cuts is tied to a reduction in point of sale positions at what the company calls select unproductive doors in the department store and freestanding store channels at the upper end.

It should also be noted that along with the expanded job cuts, Estee Lauder raised its annual profit forecast and now expects gross annual benefits from the restructuring of between 1 billion and 1.2 billion before taxes, which is up from a prior estimate of 800 million to 1 billion.

And that its shares jumped approximately 11% in pre market trading following the announcement.

To add even further intrigue, Chris.

Oh, intrigue, yes.

Who?

There's a lot here.

Estee Lauder is also currently in talks to merge with Pooch Spelled Puig, the owner of Jean Paul Gaultier, which would create a $40 billion luxury beauty group.

All right, Chris, I'm curious.

That was a lot of information here.

Does Estee Lauder's drastic employee reduction say more about Estee Lauder itself or do you think this is more about the stuff state of department stores in general?

Oh, man, that's a really tough question.

You know, as much as I've been short on department stores in the history, the eight year history of Omnitalk, Jen, I, I actually think this says a lot more about Estee Lauder.

One could spin it as a marker demerit against the department store industry, but I don't think, I don't think that's, that's what I'd start to do.

Because the pattern that I've recognized doing this podcast for as long as I've done it is that a bold move like this tends to happen in front of big time corporate restructurings.

It's just par for the course.

Companies want to make their books look as clean as possible and they can always add the jobs back in over time.

So I think, you know, from a leadership perspective, and Jen, you probably know this too.

Like, you know, they're probably like, if I cut too hard I can always bring them back or rehire again or try to.

So I just chalked this up to quote, unquote, merger math.

That's my new term of the day, merger math.

But it is pretty darn sizable.

You said it kind of as you were reading the headline.

17, 17 And a half percent of your employee base.

Oh, man.

The one thing I would like to know is in what department stores is that reduction concentrated?

Because I would probably short all of them immediately if I could.

I'm not a financial advisor, so don't take my advice.

But.

But, you know, I probably would because that would be pretty damning if those are, you know, concentrated in certain chunks of the department store industry, not just in the US but globally too.

Yeah, it's interesting.

Those unproductive doors or whatever the headline reads, right?

It's.

It'll be interesting to see where those.

Where those are.

Initially, I read this as a sign of what's to come for department stores.

So I was on the flip side.

But once I started reading about sort of this potential merger and the way it impacts profit and the amount of financials that was highlighted in the headline, I. I could see where you're at with your merger math, for sure.

I think it's probably a both.

And if I have to guess, I mean, in my very limited time that I spend in department stores, being an ops girl, when I walk through, I'm always wondering, like, who is paying them to stand there?

Because I've never seen it busy.

Right.

So you do have to wonder, like, man, their margins are high enough to just have that person stand there.

So I wouldn't be surprised if it's a sign of what's to come for department stores and sort of the commercial strategy as a whole or the go to market strategy for Estee Lauder and how it could be different, but maybe both.

Maybe it's merger math and a sign of what's to come for department stores.

Yeah, I think that's.

I think as I sit back, I think that's probably the right way to look at it.

It's probably a little bit of both because, you know, Estee Lauder is also saying, like, there's better ways to invest our money to get a better return, you know, whether it's through social media, influencer tie ins, whatever.

Then, you know, and there's probably a whole host of things they're looking at, but that there's more options out there than just putting somebody, you know, and in a department store and not having them, you know, interact with Customers.

Because like you said, there's many hours in a department store where there's just no traffic into the beauty counters.

At this point in time, the traffic.

Is drastically different than it used to be.

I guess this would almost go in a similar way to the last headline where I'm like, oh, I'm surprised they didn't already cut.

Like, I, I didn't think about it.

But from a financial standpoint, if you're looking at opportunities to improve margin or improve, Improve your P L, that has to be the most obvious.

I, I would think, again, I haven't seen their numbers, so maybe there is a lot of revenue that points back to that point of sale interaction at that beauty counter.

But it isn't the 90s anymore, you know, like, there just isn't the traffic in those department stores to justify it, I would think.

Yeah.

So, Jen.

Yeah, I've spoken like a true talent expert too, and a pragmatic one at that.

I mean, if I read between the lines of what you're saying, it's also just good business practice to constantly be shaving your base where it's not needed anymore as well.

Right?

Yeah.

And shaving your base.

I mean, I'm not saying constantly cut back, but I do think constantly reevaluate.

Reevaluating.

Right.

Like, where is your labor contributing to.

And labor can be corporate salaries.

Right.

I'm not just talking about people in stores, but where's your labor contributing to your revenue?

And if it isn't, we should reinvest that labor into where revenue is coming from tomorrow.

And so whether it's shaving or not, I would certainly say restructuring.

I think restructuring gets a bad word out or a bad rap out there because it feels like all people lose jobs, but people also gain jobs.

They might put those, those dollars into e commerce strategy.

They might put those dollars into investing in agentic AI and the way people can shop for makeup online.

Right.

But yes, I guess you're reading that correct.

I think it's, it has to be a strategy every.

Every year, Every quarter.

Yeah.

Which is an interesting word because that's the word they're using too.

They're using restructuring as the, the, the, the modus operandi here for what they're doing.