With current CEO Fabrizio Freda’s impending retirement next year, insiders had speculated for months that his successor would likely be internal and that the two most likely candidates were Jane Lauder, executive vice president of enterprise marketing and chief data officer, and de La Faverie, executive group president.
Late Sunday, WWD reported that Jane Lauder was stepping down from her role at the end of this year, signaling that the outcome of the matchup had been decided.
“[He’s] obviously the most likely internal candidate,” said Olivia Tong, an analyst at Raymond James.
After many years at L’Oréal Paris, de La Faverie joined Lauder in 2011 as senior vice president, global general manager, Aramis and designer fragrances. Most recently, as executive group president, his portfolio of brands includes Estée Lauder and Aerin Beauty; Jo Malone London; Le Labo and Deciem, among others.
A source close to the company said the board chose de La Faverie because of his knowledge of both the industry and the inner workings of Lauder itself. It is hoped — and believed — that that combination will enable him to make the necessary changes quickly.
Another source said that de La Faverie will be a pragmatic voice in the company’s future direction. “He knows the company. He has commercial acumen.”
Industry sources speculated that the official announcement could come as early as Thursday when Lauder reports first-quarter fiscal 2025 earnings.
As for the news of Jane Lauder’s departure after three decades at the company, that came as a surprise to many beauty insiders.
“Totally shocked,” was one source’s reaction to the news. “It’s a real loss for the company, as Jane was a hard worker and real contributor. ”
During her tenure, she served as global brand president of several brands, including Clinique, Darphin and Origins. Most recently she has been leading the company’s push into artificial intelligence to support products and the consumer experience.
“She decided to become an owner and not an employee,” said one source of her exit announcement. “She has a lot of courage. I view it as the fact that she was not going to be the CEO of the company.”
According to Securities and Exchange Commission filings, Jane Lauder is the second-largest individual family shareholder in the company. She owns 143,592 Class A shares and 22,346,614 Class B Shares, giving her a 15 percent voting stake. Leonard A. Lauder personally has 281,638 Class A shares, while the LAL Family Corporation has 80,437,628 Class B shares with a 54 percent voting stake.
With her departure, executive chairman William Lauder will be the only family member working in the day-to-day operations of the company, although Aerin Lauder is a consultant on the brand that bears her name under the Estée Lauder banner.
That fact of dwindling Lauder family members in the day-to-day running of the company seemed to please Wall Street.
“I get the impression in talking to investors that there’s frustration in having the family seemingly as involved as they are,” said Mark Astrachan, an analyst at Stifel Corp. “Everybody understands that the family has the ownership it does. When you invest in the company, you invest alongside the family. But there’s frustration that we’ve gotten to a point where the share price is where it is, which is reflecting a more challenging environment. I think people were hopeful that maybe change could have come sooner rather than later. I just think there’s been a bit of strategic missteps over the last few years.”
Tong also highlighted that many other beauty giants have moved away from such tight family control. “If you think about most of the other large beauty brands, it’s all past the family at this point,” she said.
If de La Faverie is the new CEO, he will have his work cut out for him.
The company enjoyed many years of success under Freda, riding the wave of the Chinese beauty boom, as well as a focus on hero products. This resulted in a share price jump from $16.75 in 2009 when Freda became CEO to a peak of more than $370 in January 2022, giving it a market capitalization of more than $133 billion. On Monday it closed up 1.7 percent to $88.72.
The stock price tumbled as the company struggled to bounce back after the pandemic, and the Asia travel retail market and its Chinese business did not recover as quickly as it hoped. At the same time, analysts have pointed to a recent lack of innovation around product development and marketing, as well as weakness in its home market of the U.S.
Fiscal 2025 is lining up to be another tricky year. Reported and organic net sales are forecast to decrease between 1 percent and 2 percent, versus the prior year.
Both analysts and industry insiders stressed that the company needs to focus on innovation, tapping into a younger audience and tightening brand messaging.
“You’ve got to assess what’s working, what’s not working, figure out where you could do more, do less,” said Astrachan. “It’s important to try to figure out where the market is going geographically, by category, and figure out if you have the right collection of brands and exposures to optimize that and to put the company in the best position to succeed.
“Admittedly that’s a a very loaded comment,” he continued, “but the underperformance, and strategic missteps over the last few years would suggest there’s ample challenges. I do believe the collection of brands are still a very good one, probably above average compared to peers. It’s a question of just how do you execute on those and have them really excel again.”
Jane Lauder’s departure follows an exodus of other senior employees from the company: chief financial officer Tracey Travis is retiring next June, while a new leadership structure for key geographies was recently unveiled.
There have also been key moves in terms of distribution, with the company inking distribution deals with Amazon for key brands. The first was Clinique and most recently, its namesake brand Estée Lauder launched with an assortment of products across its three axes — skin care, makeup and fragrance.
By all accounts, the move has been a success, but this still has not been enough to make a significant impact to the share price.
In terms of timing, it is believed that Freda will leave the company before his stated departure date of the end of the company’s next fiscal year.
