Estée Lauder has announced plans to cut up to 7,000 jobs worldwide, a significant expansion of its previously stated workforce reduction. The job cuts, which could impact about 10% of the company's global employees, come as part of a sweeping restructuring effort aimed at restoring growth and improving profitability.

The latest announcement marks a substantial increase from the company's February 2023 plan, which initially targeted a 5% workforce reduction—approximately 3,000 employees. The restructuring extends beyond job cuts, affecting leadership roles as well. Estée Lauder is currently searching for external candidates to fill key executive positions, including chief digital marketing officer and chief technology, data, and analytics officer.

The restructuring comes just a month after Stéphane de La Faverie assumed the role of CEO. In a statement, de La Faverie emphasized the need for Estée Lauder to become "leaner, faster, and more agile" to regain its competitive edge.

The company also introduced "Beauty Reimagined," a turnaround strategy designed to restore sustainable sales growth and achieve a double-digit adjusted operating margin in the coming years. The program is expected to deliver annual pre-tax benefits ranging from $800 million to $1 billion, with a portion of these savings reinvested in consumer-facing activities such as advertising and product innovation.

To streamline operations, Estée Lauder is set to simplify internal processes, outsource certain services, and accelerate time-to-market for new products. The company also plans to adopt a more competitive procurement strategy and improve demand forecasting. Additionally, Estée Lauder aims to implement a zero-waste approach, reducing excess inventory and product destruction.

Despite the restructuring efforts, analysts remain cautious about the company’s near-term prospects. TD Cowen analysts, led by Oliver Chen, noted in a research report that Estée Lauder faces multiple challenges, including sluggish consumer demand in Asia, which has been a key market for the beauty giant.

The company’s financial performance has also suffered. In its most recent quarter, Estée Lauder reported a 14.5% negative operating margin, marking a sharp reversal from the previous year’s $574 million operating income to a $580 million operating loss.

However, there have been some positive indicators. Estée Lauder has seen prestige beauty market share gains in the U.S., China, and Japan. The company also performed well during Black Friday and Cyber Monday TikTok campaigns in the U.S., demonstrating its ability to engage digital-first consumers.

Citing global geopolitical uncertainty and continued weakness in certain markets, Estée Lauder has declined to provide a full-year fiscal outlook. For the quarter ending March 31, the company expects a net sales decline of 10% to 12%.

While acknowledging the significant work ahead, de La Faverie expressed confidence in the company’s transformation strategy. “We are significantly transforming our operating model to better capture growth and drive profitability,” he said.

As Estée Lauder moves forward with its ambitious restructuring, the impact on its global workforce and business performance will be closely watched by analysts and industry observers.