Estee Lauder forecasts profit below expectations, to cut up to 2,000 jobs

Estee Lauder forecast current-quarter profit below analysts’ estimates on Thursday after posting a bigger-than-expected quarterly loss, as travel restrictions and store closures put in place to contain the spread of coronavirus dampened demand for its premium makeup brands.

The company and other cosmetic brands have been struggling in recent months with consumers adapting to the new work-from-home lifestyle and ordering more skincare products than makeup.

This led to Estee Lauder posting a 32% decline in sales in the fourth quarter, pushing its shares down about 6% in premarket trading.

The Covid-19 crisis has also made the M.A.C. brand owner reassess its business as consumers increasingly shop for beauty products online.

Estee Lauder said on Thursday it would cut about 1,500 to 2,000 jobs or about 3% of its workforce globally and also expects to close about 10% to 15% of its freestanding stores.

Sales of makeup brands such as M.A.C. and Too Faced have taken a hit on falling demand for the New York-based company’s foundations and lip products. Overall annual sales for its makeup brands fell 18% as the COVID-19 pandemic offset the 5% growth seen in the first half of the year.

Estee Lauder forecast first-quarter adjusted profit per share to be between 80 cents and 85 cents, below estimates of $1.22, according to IBES data from Refinitiv.

The company also expects sales to decline between 12% and 13%, compared to expectations of an 11.42% drop.

Net sales fell 32% to $2.43 billion in the fourth quarter ended June 30, missing estimates of $2.45 billion. Excluding items, the company reported a loss of 53 cents per share, much bigger than Wall Street estimates of a 19-cent loss.

Still, the company reinstated its quarterly dividend payment after suspending it in April.