Fabrizio Freda, the longtime chief executive officer of the Estée Lauder Cos. who has been at the helm since 2009, will retire at the end of next year, the company said Monday.
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Until a successor is appointed, Freda will continue to lead the company, whose brands include La Mer, Mac, Clinique, Tom Ford and many more.
According to an internal company memo by William P. Lauder, executive chairman of the board, and seen by WWD, the board of directors is “well advanced” in its CEO succession planning process and has considered a number of candidates.
“On behalf of the entire board of directors and the Lauder family, we wish to extend our sincere gratitude to Fabrizio for over 16 years of devoted service to the company,” said William P. Lauder. “We look forward to celebrating Fabrizio’s many amazing accomplishments as his formal retirement date nears. Until then, the board, Fabrizio and the entire leadership team are laser-focused on navigating the current challenges faced by the company.”
He added that on a personal note, Freda has been an “incredible partner” to him and other members of the Lauder family. “He understands the uniqueness of this family business and has used our long-term focus and principle of patient capital as a point of strength as he has transformed the business to meet evolving consumer aspirations.”
Freda, who turns 67 later this month, called his 16 years at the company a “true honor and privilege.”
“I am so proud of our company’s incredible accomplishments, and to have built the most talented, dedicated, and passionate team in the industry. Together we have transformed the company in beautiful ways and we have set new standards for excellence,” he said. “As we manage for the long term, now is the right time to look ahead to the next generation of leadership for this great company.”
The news of Freda’s impending retirement comes after it was confirmed in July that Tracey T. Travis, executive vice president and chief financial officer, will retire in June 2025. She will be succeeded by Akhil Shrivastava, effective Nov. 1. Travis will remain at the company until her retirement on June 30, 2025 to support the transition.
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. He also oversaw a number of high profile acquisitions like Deciem and Tom Ford.
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This resulted in a share price jump from $16.75 in 2009 when Freda became CEO to a peak of over $370 in January 2022, giving it a market capitalization of more than $133 billion.
But the company struggled to bounce back after the pandemic as the Asia travel 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, as well as weakness in its home market of the U.S. On Friday, its share price closed at $94.97.
As for who could follow in Freda’s footsteps, industry sources believe it will most likely be an internal candidate.
Jane Lauder, executive vice president of enterprise marketing and chief data officer, and Stéphane de La Faverie, group president, are said to be contenders, per industry sources. They were recently named “co-executive leaders” of the company’s newly named Profit Recovery and Growth Plan (PRGP). They are tasked with the implementation of the plan, which is expected to drive incremental operating profit of $1.1 billion to $1.4 billion. They each will continue to report to Freda.
During an earnings call with analysts, Freda said he would be very involved in helping the board with its search for his successor, which he stressed is well under way.
“The successor has to be obviously a great leader and understand the key elements of our company,” he said. “We are a growth company, and we are a global company so obviously, being able to drive growth globally and being able to continue reshaping the cost structure of the company in the proper way that will become even more leverageable with future growth, are going to be essential characteristics. The options that the board has developed all have these characteristics.”
In a note to investors, TD Cowen analyst Oliver Chen said: “New leadership needs to have a background conducive to digital and direct to consumer innovation, new brand and M&A execution capabilities, and a bias for speed and agility. Furthermore, we believe the company needs to continue to build out more responsive supply chain capabilities.”
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