As shares of the beauty conglomerate have fallen nearly 40% this year, the succession plan for the leadership at The Estée Lauder Companies (ELC) is finally revealed.
The week started with news of a leaked internal company memo announcing Jane Lauder's plans to step down from her role as Chief Digital Officer and Executive Vice President of Enterprise Marketing at the end of this year. Lauder has occupied her dual role since 2020. She will retain her board seat, but the departure marks the first time in 75 years that a member of the Lauder family has not been involved in the day-to-day operations.
This news was followed by a long-awaited announcement that ELC veteran Stéphane de La Faverie would assume the Chief Executive Officer role, succeeding Fabrizio Freda, who has been CEO since 2009. The company also said William P. Lauder, a grandson of the founder, is stepping down as Executive Chairman but will remain Board Chair.
Charlene Barshefsky, Presiding Director of the Board of Directors, said, “Stéphane is the ideal transformational leader needed to drive this extraordinary Company through its current challenges and into its next chapter of growth. Following a comprehensive CEO succession planning process and a thorough review of external and internal candidates, Stéphane was the clear choice of the Board for his mix of strategic vision, global industry knowledge and experience, profound ambition for the Company and its remarkable brands, and unique ability to address the challenges facing the Company to revitalize growth. His deep knowledge of our Company will enable Stéphane to quickly assess opportunities and implement strategic plans. His inclusive leadership style will enable him to inspire and mobilize the Company with speed and agility and set us on a path to long-term, sustainable growth and drive shareholder value.”
De la Faverie is one of two Executive Group Presidents at the company overseeing its namesake brand and others, including Le Labo, Kilian Paris, Jo Malone, and The Ordinary. He joined Estée Lauder in 2011 from competitor L’Oréal.
William Lauder said, “As I reflect on sixteen years of working alongside Fabrizio and so many talented leaders and employees, I am immensely proud of what we have accomplished. My decision to focus solely on my role as Chair of the Board represents an important evolution for the Lauder family. Our family’s long-standing, day-to-day management of the Company is evolving and reflects my desire to focus more on the overall strategic direction of the Company. As a family, we remain committed to this incredible Company and continue to view our investment through the lens of long-term patient capital. I am confident that Stéphane will be an effective, impactful CEO, able to take the decisive actions needed in the face of our current challenges, and that he and the next generation of the Company’s leadership will steer us towards even greater success.”
Word on the Street:
“Some in the investor community were likely hoping for an external hire who could lend a fresh perspective and make more dramatic changes to the organization,” TD Cowen analyst Oliver Chen wrote in a research note. “We believe the stock could continue to trade sideways until results improve materially under de La Faverie.”
In an interview, Barclays analyst Lauren Lieberman said the incoming CEO relied heavily on China when expanding the Estée Lauder brand, mirroring the broader missteps at the company, with “growth that was too limited in scope.”
