Estee Lauder stated on Monday that its third-quarter profit fell 70%! That is a big loss. The reason for the decline is due to restructuring of the company and weakness in the company's travel retail business. The company is in the middle of a four year restructuring, led by Chief Executive Fabrizio Freda. The changes will boost sales over time, but we are in the middle of a slow economy. Consumers have been saving money and that means less travel. Because of little traffic through the airports, Estee Lauder saw few customers in their airport based stores. The company is now turning its sights to its Asian market. The marketing program in Asia is very effective and the market is expanding. Estee Lauder can look to those markets to see rising profits.
It is really sad to see the company struggle like this. They makes some of the finest cosmetic products, in my opinion, like Mac, Origins and Clinique. If you have some extra money, splurge on that designer fragrance or perfect shade of lipstick! Sometimes you just can say no!
Associated Press (May 4, 2009). Estee Lauder Profit Falls 70% on Charges. Retrieved May 4, 2009 from NT Times http://www.nytimes.com/aponline/2009/05/04/business/AP-US-Earns-Estee-Lauder.html?_r=1&ref=business
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