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And now, here’s Rachel…

Say what you will about the leadership at the Estée Lauder Companies, but they sure know how to spin the massive layoffs that have become regular electroshock events at America’s largest beauty conglomerate. First there was “Leading Beauty Forward,” which cut 2.5 percent of E.L.C.’s workforce in 2016; then there was “Project Fuel,” a few years ago, which “consolidated roles and fired a substantial portion of the field team” in North America, according to an insider. The latest reduction in force came under the inspiring moniker “Beauty Reimagined”—downsizing staff by 4,000 people, DOGE-style, on top of the 3,000 or so employees who were released last year, for a combined total of nearly 12 percent of Estée’s workforce. But possibly because of the layoff announcement, this earnings week is proving to be materially less dramatic. On Tuesday, the beauty giant released pretty dismal numbers—net sales declined by 6 percent in the quarter ending December 31, worse than the 4 percent dip the previous quarter—alongside another cost-cutting plan and a slew of well-deserved promotions. The share price fell about 16 percent on Tuesday, but all things considered, it could have gone worse for newly installed C.E.O. Stéphane de La Faverie.

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Technically, the most recent quarter didn’t happen under de La Faverie’s watch, given that he stepped into the role only five weeks ago. And yet, despite the seemingly never-ending layoffs and those persistent divestiture rumors (I hear Lauder plans on keeping its haircare brands, by the way), everyone at the GM Building is really talking about the “clusters”—E.L.C.’s new structure for managing its brands by category. “They’re no longer calling leads ‘executive group presidents,’” said a person with knowledge of the matter. “E.L.C. has traditionally segmented their brands by tiers––luxury markets versus masstige, etcetera––which is an old-fashioned way of looking at it, so segmenting by category is a ‘big change’ for them.”

When I first heard about the clusters idea, I thought it was a welcome development. Estée Lauder should be organizing brands by category rather than allowing favored executives to gerrymander their portfolios by picking their favorite brands. But I quickly realized most of the changes were merely, alas, cosmetic. Aside from newly formed clusters in skincare (La Mer, Clinique, Origins, Dr.Jart+, Darphin, and Lab Series) and makeup (MAC Cosmetics, Bobbi Brown, Too Faced, Smashbox, and Glamglow) that will be overseen by Sandra Main and a “to-be-named” executive, much of the brand leadership is the same. To wit: Estée Lauder the brand, as well as Aerin, will continue to operate independently under Justin Boxford, who’s been global brand president since 2022. The same goes for “couture brands” Tom Ford and Balmain, under Guillaume Jesel; haircare lines Aveda and Bumble and Bumble, under Shane Wolf; Deciem, parentco of The Ordinary, under Jesper Rasmussen; and Le Labo, under Deborah Royer. Then there’s Jane Hudis, the longtime executive group president and de La Faverie’s onetime boss, who I previously reported would receive the biggest promotion of all. Indeed, Hudis was just anointed chief brand officer, a newly created role. My Instagram was abuzz with congratulatory praise for Hudis, who has spent more than 30 years at the company and will now essentially act as de La Faverie’s number two. So much of the insider chatter at the company also coalesced around an executive who was notably absent from the lengthy list of promotions and updates: Michelle Freyre, global brand president of Clinique and Origins, whom a current executive credited with “catapulting Clinique back to popularity with younger customers.” Even though Freyre has “a lot of street cred with employees,” she won’t be heading up any of the newly formed clusters. I’m told she was a top contender to lead the skincare group, but it’s Main––responsible for La Mer’s explosive growth in the 2010s––who ultimately got the job. I’m hoping that Freyre, who joined Lauder in 2020 after nearly two decades at Johnson & Johnson, eventually gets elevated in some way, even if it’s not leading makeup. I did hear Lauder is looking both internally and externally for this position, but it seems like no one’s in line to fill the role yet.

As for the other restructuring taking place, the person with knowledge of the matter said that the “other changes are more about how the brands will function regionally,” and with respect to global, more about “combining areas like product marketing with consumer marketing—an obvious thing they should have done all along.” To that point, I know there were significant layoffs early last week, where smaller brands like Origins were more heavily impacted by the merging of global and North American teams, but I’m told almost no brands made it through unscathed.

Many E.L.C. employees have described de La Faverie, who has been at Lauder since 2011, as someone “genuinely willing to try something different,” with a leadership style that’s a “breath of fresh air.” But there’s also a prevailing notion that there hasn’t been enough change at the highest levels. “If E.L.C. really wanted to shake it up, they would have cleaned house at the top,” the executive said. Sure, but to an extent, the company has done just that. Over the past year, there has been considerable reshuffling at the top: Fabrizio Freda, Tracey Travis, Deirdre Stanley, and Jane Lauder––former C.E.O., C.F.O., general counsel, and chief data officer, respectively––have all departed, as well as the heads of North America, International, and Travel Retail, who have all left or announced they would be exiting. I’m also hearing it was announced internally that E.V.P. of Online Gibu Thomas will be leaving his role effective April 1. Even H.R. is getting a millennial makeover, following the announcement that longtime human resources head Michael O’Hare is retiring, to be replaced by Michael Bowes, who will have a new, slightly warmer-sounding title: chief people officer. Another former executive told me that they would’ve had more confidence in E.L.C.’s future if the new leadership team had more of a 50-50 split between internal promotions and external hires. “To say that everyone in a position of leadership needs to come from the outside is not realistic, because it’s a huge organization to have to traverse,” this person said. They added that “to keep all of the same people in essentially the same roles signals that nothing has really changed.” I tend to agree. So what, if anything, do the leadership changes say about the future of the company—and which brands they may soon offload? Well, probably not as much as the layoffs do. As for divestitures, it’s Lauder’s haircare “cluster” (Aveda, Bumble and Bumble) that actually has a chance to excel in the hands of different owners, at least according to the executive I spoke to. “Growth in beauty is happening in fragrance and hair… period,” this person said. “And the challenge is that we don’t know the salon network. We don’t know how to optimize the salon channel and West Coast brands.” Another high-level source told me that Henkel, which counts GOT2B, Schwarzkopf, and Joico among its haircare brands, was at one time looking at Bumble and Bumble and Aveda. I think this would be a good fit—as would Yellow Wood Partners, which in 2023 completed its acquisition of Suave, another haircare brand, albeit mass priced. A person with knowledge of the matter told me that Lauder’s haircare brands are not for sale at this time. “The goal is to put them in the right spots and to turn them around,” this person said. Really, the only place for Smashbox and Glamglow to go is private equity, but I’m not sure why Lauder doesn’t just shutter them altogether, like it did with Becca Cosmetics a few years ago.

Tina Craig’s U Beauty is opening a pop-up in New York and launching fragrance, both of which pique my interest. [Instagram] Carol Hamilton, who oversees all M&A at L’Oréal, is retiring from the company after 40 years. She’s not as public facing as certain C.E.O.s and founders in the industry, but Hamilton is one of the most important people in all of beauty. [WWD] Tate McRae is in high demand for beauty brands. Hailey Bieber’s Rhode just tapped the 21-year-old singer to be the face of its new Lip Shape, and this week, Kenvue’s Neutrogena announced McRae as its new ambassador. [Elle]

That’s it from Rachel and me. Remember that I love tips and you are more than welcome to text me at +1 646-241-3902. Also, can anyone help me track down a lawsuit in France? Until tomorrow, Lauren

Puck fashion correspondent Lauren Sherman and a rotating cast of industry insiders take you deep behind the scenes of this multitrillion-dollar biz, from creative director switcheroos to M&A drama, D.T.C. downfalls, and magazine mishaps. Fashion People is an extension of Line Sheet, Lauren’s private email for Puck, where she tracks what’s happening beyond the press releases in fashion, beauty, and media. New episodes publish every Tuesday and Friday.

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