Beauty Giant Estée Lauder’s Stock Crashes 19% To 6-Year Low—Heirs Lose Nearly $3 Billion - Forbes

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Shares of Estée Lauder cratered Wednesday after the cosmetic company delivered a far worse outlook for its financial performance than anticipated, citing weak results from its Asian segment, an increasingly common theme for many multinational firms—causing the descendants of the company’s founder to lose billions.

Key Facts

Estée Lauder’s stock sank 19% Tuesday after the company revised its estimates for 2024 fiscal year sales from 5% to 7% annual growth to -2% to 1% growth and chopped its full-year earnings per share estimates from between $3.50 and $3.75 to between $2.08 and $2.35.

It’s the slumping firm’s lowest share price since 2017, furthering its 59% year-to-date stock losses.

The makeup and skincare company’s CEO Fabrizio Freda cited a further slowdown in growth in China and Asia broadly, which accounts for about 30% of global sales, as the primary reason for the downward revision, which was particularly ill received considering Estée Lauder’s revenues declined 10% annually in its fiscal year ending June 30.

Estée Lauder’s guidance was “disappointing and partly reflective of overly ambitious assumptions about the pace of recovery,” according to Stifel analyst Mark Astrachan.

Key Background

Estée Lauder’s $37 billion market capitalization still makes it the second most valuable public beauty company by market value, coming in behind only L'Oréal. A host of other companies, including luxury conglomerate and Sephora parent LVMH, Apple and high-end jacket maker Canada Goose, have experienced significant stock losses in recent months tied to a slowdown in their once high-growth Chinese businesses as the world’s second-largest economy struggles to return to its pre-pandemic growth levels. Estée Lauder brands include La Mer, Tom Ford and Bobbi Brown Cosmetics.

Forbes Valuations

Forbes estimates there are five billionaire Lauder heirs: Patriarch brothers Leonard and Ronald Lauder and their children Jane, William and Aerin Lauder. The five Estée Lauder descendants experienced a $2.9 billion slide in their collective net worths Wednesday due to the stock crash, though they are worth about $23 billion combined. Gary Lauder, William’s brother and Leonard’s son, lost his billionaire status earlier this year as shares tanked.

Contra

Despite “understandably dented investor confidence,” Goldman Sachs analyst Jason English wrote to clients Wednesday “it is hard to argue for meaningful downside from where the stock is currently trading,” setting a $185 price target for Estée Lauder, implying about 75% upside.