Estee Lauder (NYSE:EL) announced Monday, ahead of its earnings release, that its CEO, Fabrizio Freda, will retire at the end of the fiscal year 2025.
Estee Lauder shares are down around 1.9% shortly after the open.
Freda, who has led the company for over 16 years, informed the Board of Directors of his decision, marking the beginning of a significant leadership transition for the global beauty giant.
The company has stated that it is well advanced in its CEO succession planning, having considered a range of internal and external candidates.
Until a successor is appointed, Freda will continue to steer Estée Lauder's strategic, financial, and investment priorities, including the ongoing Profit Recovery and Growth Plan aimed at reigniting profitability and growth.
The company said that once a new CEO is named, Freda will work closely with them to ensure a smooth transition. He will also remain available as an advisor during fiscal year 2026.
William P. Lauder, Estee Lauder's Executive Chairman, thanked Freda for his service, highlighting his role in transforming the company and guiding it through evolving consumer demands.
"Fabrizio has been an incredible partner to me and other members of the Lauder family," Lauder said, noting Freda's deep understanding of the company's unique heritage.
Freda reflected on his tenure, saying it was an honor and privilege to lead the company. He emphasized his commitment to the current strategic initiatives and expressed confidence in the company's future leadership.
"Now is the right time to look ahead to the next generation of leadership for this great company," Freda stated.
Estee Lauder also reported its latest quarterly earnings on Monday. The company's fourth-quarter adjusted EPS came in at $0.64 with net sales of $3.87 billion. Analysts expected EL's earnings per share for the quarter to be $0.26 on revenue of $3.81 billion.
The 7% increase in sales compared to the prior-year period came despite the slowdown in key areas of the business, primarily mainland China, Asia travel retail and North America.
In addition, the company said organic net sales increased 8% due to growth across all product categories, led by Skin Care, driven by the global travel retail business.
Looking ahead, EL sees its first-quarter adjusted earnings per share between $.02 and $.10, with reported and organic net sales forecasted to decrease between 5% and 3% versus the prior-year period. For the full-year, adjusted earnings are expected to be between $2.75 and $2.95 a share, with reported and organic net sales predicted to range between a decrease of 1% to an increase of 2% versus the prior year.
Following the earnings report, analysts at Jefferies stated: "As expected, Q4 sales and EPS came in ahead of the co's guidance, but the
FY25 and Q1 guide fell well below estimates." The firm maintained a Hold rating on the stock.
Meanwhile, analysts at Bernstein said the Q4 results are slightly better than expectations, but they are "not the focus here whatsoever."
On the announcement of Freda's retirement at the end of FY25, analysts stated: "Freda has led EL for the past sixteen years, with the first thirteen or so a story of resounding success. But the past three years have been more challenging, and we expect that investors will view the change in leadership as a positive for the stock."
In addition, Bernstein said EL's FY25 guidance "disappoints materially; with organic growth steered to around flat, roughly 7%pts below current consensus. EPS guidance is fully 28% below current consensus."
"At the midpoint of the FY25 guide, the stock yesterday closed at around 33x earnings; a valuation which we think even EL bulls will struggle to justify, and even if Freda’s retirement spurs hopes of a 'turnaround', we think that the only appropriate reaction for the stock today is a sizeable downward move."