On Wednesday, Estée Lauder Companies reported first-quarter earnings that fell short of investor expectations, with sales down 10 percent to $3.5 billion, triggering the stock to drop more than 24 percent. In December 2021, ELC was trading at $370 per share. Today, it’s around $113 per share, and some insiders speculate that it could fall to as far as $70. 

During the past two years, Estée has blamed the macro environment for its troubles—in particular, the slower-than-expected return of Chinese consumers. The problem with that thesis, however, is that many of Estée’s competitors are thriving. While L’Oreal is challenged by China, too, with sales down 15 percent in the region in the last quarter, its overall numbers are up, and in line with investor expectations. 

For generations, Leonard Lauder was the chief architect behind the growth, and eventual global domination, of his mother’s namesake company. He joined the business in 1958, launched Clinique in 1967, and the rest is really history. In the 1990s, when he was C.E.O., the company went public, although the family initially kept a nearly 98 percent controlling stake in the business. (As of 2021, they owned about 38 percent of common stock, and control 86 percent of voting power, typical of dual-class family structures.)

The family floated shares on the public market in part to help pay off debt associated with acquiring M.A.C., Bobbi Brown, and La Mer—two makeup-artist driven brands and a luxury skincare line that Leonard saw as an investment in the future. In 1997, they bought modern haircare brand Aveda; in 1999, British niche fragrance line Jo Malone; in 2000, Bumble & Bumble. By then, Leonard was an active chairman, serving as a mentor to many employees, including long-standing executive John Demsey, who would go on to help broker the trailblazing deal with Tom Ford in the mid-aughts.