THE WHAT? The Estée Lauder Companies has announced a slew of measures to cut costs during the coronavirus pandemic, including pay cuts, suspended payments and a freeze on hiring.
THE DETAILS The beauty company will cut salaries for its executive leadership team, senior-vice president-level, and directors to vice presidents by 30 percent, 20 percent and 10 percent respectively. Executive Chairman William Lauder and President and CEO Fabrizio Freda will have base salaries cut by 50 percent.
The company board will also see pay cuts, with Leonard Lauder and Clinique Chairman Ronald Lauder set to take a hit of ‘nearly 100 percent.’
Other cost-cutting measures include optimizing advertising and marketing spend, restricting business travel and freezing hiring until January 2021, merit based pay rises on hold for fiscal 2021 and stock repurchase plans temporarily stopped.
ELC is also reallocating capital to go towards areas of business recovery, such as online and China.
According to an internal memo, “While in our company’s history we have enjoyed many successes and overcome numerous obstacles, the current health crisis is unlike anything we have faced before in terms of scope and impact. Globally, in most locations, our office employees continue to work from home, stores remain closed, and two of our manufacturing sites have temporarily stopped producing our products.
“In some areas and markets, however, we are starting to see momentum. Online, for example, has experienced accelerated growth, but more time will be needed for our brick and mortar and travel retail operations to recover their momentum
THE WHY? Due to the widespread economic consequences of the COVID-19 pandemic, ELC is looking to cost cutting measures to “optimize cost structure.”
Taking to statement, Freda said, “As COVID-19 has expanded globally in recent weeks, we remain first and foremost focused on the health and well-being of our employees. As a company, we are continuing to find meaningful ways to lend our support as the world fights this health crisis.
“We are also taking actions to optimize our cost structure, in light of ongoing temporary store closures in many regions, and to enhance our liquidity during this unprecedented time.”