Estee Lauder names insider de La Faverie as new CEO to kickstart turnaround
Adds analyst comments in paragraphs 7 & 10 and updates shares in paragraph 9
Oct 30 (Reuters) -Estee Lauder EL.N named insider Stephane de La Faverie its new CEO on Wednesday, as the company looks to revamp its business amid falling demand for cosmetics and premium fragrances with consumers getting picky with their spending.
De La Faverie, currently the cosmetic giant's executive group president, oversees high-end fragrance brands such as Jo Malone London, Frederic Malle, Le Labo and Kilian Paris.
He joined Estee in 2011 from L'Oreal OREP.PA and will take on the role on Jan. 1, 2025 from veteran Fabrizio Freda, who announced his retirement in August. However, Freda will continue to serve as an adviser to his successor in fiscal year 2026.
Freda became CEO in 2009 and was responsible for expanding the company's skincare portfolio with the addition of brands such as Dr. Jart and The Ordinary owner Deciem.
The MAC lipstick maker also said William Lauder, the grandson of the company founders and former CEO, would also step down from his current role as executive chairman and remain chair of the board.
As new CEO, de La Faverie will be tasked with reviving sales, especially in China, at a time when demand for even "affordable luxuries" such as lipsticks and perfumes, widely considered recession-proof, are seeing a hit.
"... promoting a longtime insider to the CEO position indicates that there will be a pretty smooth transition, though that doesn't necessarily make the task of turning the company's fortunes around any easier," said eMarketer analyst Sky Canaves.
Estee is set to report its quarterly earnings on Thursday. In the prior quarter, the company forecast its annual profit and sales below estimates due to weakness in China.
Shares of the company fell as much as 2.5% on Wednesday.
"This is not the change in direction we believe would have been well received by investors," Barclays analyst Lauren Lieberman said.
"To be clear, we are open minded that de La Faverie will use his larger purview to enact more comprehensive change at the company."
Reporting by Savyata Mishra, Ananya Mariam Rajesh and Anuja Bharat Mistry in Bengaluru; Editing by Shilpi Majumdar and Vijay Kishore
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