Estee Lauder is considering significant job cuts, potentially impacting up to 7,000 employees, which represents more than 11% of its total workforce, by the fiscal year 2026. This decision comes in the wake of a financial downturn, with the renowned beauty company reporting a 6% decline in sales during its most recent quarter, resulting in a loss for the period.

The New York-based firm, known for its prestigious brands such as MAC, La Mer, and Aveda, has lowered its profit forecasts due to slowing economic activity in markets like China and South Korea, compounded by ongoing global geopolitical tensions.

Recent developments have seen China imposing retaliatory tariffs on certain American imports, coinciding with a broader antitrust inquiry into Google. This announcement occurred shortly after a significant tariff initiative by the U.S. government took effect, highlighting the intensifying trade conflict.

In light of these challenges, Estee Lauder anticipates incurring restructuring and additional charges related to the workforce reductions, projected to range between $1.2 billion and $1.6 billion before tax implications.

As of June 30, 2024, the company’s workforce was approximately 62,000 strong around the globe, based on their latest annual report.

“Our objective is to fundamentally reshape our operational approach to become more streamlined, quicker, and adaptable,” stated CEO Stéphane de La Faverie, who took the helm of the company just last month.

In the most recent quarter, Estee Lauder reported sales of $4 billion, a decrease from the $4.28 billion recorded in the same quarter a year prior.

Looking ahead, the company now predicts earnings per share to fall between 24 cents and 34 cents for the current quarter, a stark contrast to the expected 61 cents per share as estimated by analysts from FactSet.

In response to these revelations, shares of The Estée Lauder Companies Inc. experienced a sharp decline, plummeting nearly 15%, translating to a drop of $12.14 on the stock market on Tuesday.