The Estée Lauder Companies Inc. (NYSE: EL) today announced
initiatives it is undertaking in response to COVID-19 to support
its employees, consumers, stockholders and communities.
“As COVID-19 has expanded globally in recent weeks, we remain
first and foremost focused on the health and well-being of our
employees, beauty advisors and consumers. 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,” said Fabrizio Freda, President and Chief
Executive Officer. “I am inspired by the continued resilience,
collaboration, creativity, and—most importantly—heart of our
employees, which are guided by our company values. In this moment,
their commitment and the desirability of our brands and their hero
franchises are leading to an acceleration of our online sales
growth. I am confident that the actions we are taking will enable
us to effectively navigate through this challenging environment
with agility and position us well for the recovery, much as we are
starting to see in our Asia/Pacific region as stores reopen.”
Donating Globally
As the world confronts the wide-ranging impacts of the COVID-19
pandemic, The Estée Lauder Companies stands with the global
community to help limit the spread of the virus and ease the
related economic hardships faced by those it affects. The Company,
its brands and its foundations have made numerous donations and
commitments, including:
- Globally, a $2 million grant was awarded to Doctors Without
Borders/Médecins Sans Frontières (MSF) to support their continued
life-saving response to coronavirus in under-resourced and highly
impacted countries.
- In New York City, where the Company is headquartered, a grant
was provided to support the establishment of The NYC COVID-19
Response & Impact Fund, administered by the New York Community
Trust. The new $75 million fund, jointly formed through
contributions from multiple philanthropic partners, will provide
critical support for New York City’s vital social services and
cultural community organizations.
- In China, over $800,000 was awarded to relief efforts. Funds
will support the Red Cross Society of China, Shanghai Charity
Foundation and Give2Asia. Additionally, $1.4 million worth of
in-kind donations were provided to the China Women's Development
Foundation to support front line medical staff.
- The Estée Lauder brand is donating two million surgical masks
for front-line workers in New York as part of our continued effort
towards COVID-19 relief.
- Clinique is donating 50,000 skin care products as a thank you
to the doctors and nurses in New York City's hospitals.
- M∙A∙C Cosmetics' VIVA GLAM Fund will be allocating $10 million
to 250 local organizations all over the world that are providing
essential needs and services to people at higher risk during the
COVID-19 pandemic.
The Estée Lauder Companies is also contributing to the broader
COVID-19 relief efforts by producing hand sanitizer in its United
States, United Kingdom and Belgium manufacturing facilities for
high-need groups and populations, including front-line medical
staff.
Adapting Retail and Manufacturing Operations
To help contain the spread of COVID-19, the Company has modified
its business practices, guided in part by legislation, executive
orders and advice from government entities and healthcare
authorities (collectively, “COVID-19 Directives”). These directives
include the temporary closing of businesses deemed “non-essential,”
travel bans and restrictions, social distancing and
quarantines.
As a result of COVID-19 Directives, most retail stores in The
Americas and Europe, the Middle East & Africa, whether operated
by the Company or its customers, have been closed since mid-March,
and air travel continues to be largely curtailed, primarily
impacting the Company’s travel retail business. However as noted
above, in recent weeks, many retail stores have been reopening in
Asia/Pacific, and sales growth of the Company’s products online has
accelerated globally.
The Company will continue to assess, in accordance with the
guidance of governments and healthcare authorities, when its stores
in The Americas and Europe, the Middle East & Africa can
reopen. Furthermore, as the Company has done in Asia/Pacific, it
stands ready to support its retailers when they reopen their
stores. At this time, a majority of the Company’s facilities
continue to manufacture and distribute products globally, albeit in
a reduced capacity in light of the challenging environment.
Enhancing Financial Flexibility and Liquidity
As the Company prioritizes areas of growth and cash generation
among its geographic regions, product categories, brands, and
channels of distribution, it has taken the following actions:
- Announced salary reductions effective May 1, 2020 through
October 31, 2020 for:
- Executive Chairman William P. Lauder and President & Chief
Executive Officer Fabrizio Freda of 50%.
- Executive Leadership Team of 30%.
- Other management of 10%-20%.
- Announced that its Board of Directors will forgo their cash
retainers through November 2020.
- Announced salary reductions for Leonard A. Lauder, Chairman
Emeritus, and Ronald S. Lauder, Chairman Clinique Laboratories,
LLC, of nearly 100% effective May 1, 2020 through October 31,
2020.
- Announced that regional decisions are being made for
point-of-sale and field employees in locations where retail
operations are closed or experiencing slow recovery, which will
include unpaid temporary leaves of absence that allow employees to
maintain healthcare benefits and access to COVID-19 support where
permissible.
- Expanded cost control measures to include, among other efforts,
optimizing advertising and promotion spending, delaying certain
capital investments, restricting business travel, and ceasing
non-essential hires and certain professional services.
- Issued $700 million aggregate principal amount of 2.6% Senior
Unsecured Notes due 2030.
- Borrowed the full amount under its $1.5 billion revolving
credit facility.
- Temporarily suspended share repurchases of its Class A Common
Stock.
- Suspending the next quarterly cash dividend on its Class A and
Class B Common Stock, which would have been paid in June 2020.
The Company will continue to monitor the impact of COVID-19 and
may adjust its action plans accordingly as the situation
progresses.
The Company expects to provide an update when it reports fiscal
2020 third quarter earnings on May 1, 2020. Management will host a
conference call at 9:30 a.m. (ET) on that date, which will be
webcast live at
http://www.elcompanies.com/investors/events-and-presentations.
Cautionary Note Regarding Forward-Looking Statements
The forward-looking statements in this press release, including
those in the quoted remarks and those relating to the Company’s
liquidity, financial results and the initiatives described herein,
involve risks and uncertainties. Factors that could cause actual
results to differ materially from those forward-looking statements
include the impacts attributable to the COVID-19 outbreak,
including disruptions to the Company’s global business, current and
developing economic and other conditions in the global marketplace,
actions by retailers, suppliers and consumers, competition, and
those described in the Company’s current report on Form 8-K dated
April 7, 2020, quarterly report on Form 10-Q for the quarter ended
December 31, 2019 and annual report on Form 10-K for the year ended
June 30, 2019.
The Estée Lauder Companies Inc. is one of the world’s leading
manufacturers and marketers of quality skin care, makeup, fragrance
and hair care products. The Company’s products are sold in
approximately 150 countries and territories under brand names
including: Estée Lauder, Aramis, Clinique, Prescriptives, Lab
Series, Origins, Tommy Hilfiger, M·A·C, Kiton, La Mer, Bobbi Brown,
Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and
bumble, Michael Kors, Darphin, Tom Ford, Smashbox, Ermenegildo
Zegna, AERIN, RODIN olio lusso, Le Labo, Editions de Parfums
Frédéric Malle, GLAMGLOW, By Kilian, BECCA, Too Faced and Dr.
Jart+.
ELC-F
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Investors: Rainey Mancini (212) 284-3049
Media: Jill Marvin (212) 572-4438
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