Estée Lauder Cos. Backs Group CEO, Leadership Team
An internal memo, obtained by WWD, was sent out following media speculation about a possible activist investor.
NEW YORK — The Estée Lauder Cos. board of directors and Lauder family has strongly backed group president and chief executive officer Fabrizio Freda and the company's leadership team in an internal memo sent to employees Tuesday, which was obtained by WWD.
In a move to quell any concern produced by a recent report that the Estée Lauder Cos. could soon face pressure from a billionaire activist investor, William Lauder, the Estée Lauder Cos. executive chairman, wrote the memo on behalf of the board and his family.
As previously reported, on Sunday The New York Post published an article saying that Nelson Peltz is considering making Lauder his next activist play after the Walt
Disney Co., including potentially pushing a sale of the group and ousting Freda.
That set off a flurry of media speculation. “As a family-controlled company, and with our approach to ‘patient capital,' we are guided by our long-term vision and strategy, the way we have been for over 75 years, and will not be deterred by outside noise,” wrote William Lauder.
“We are united in our appreciation for, and support of, our president and CEO, Fabrizio Freda, and the broader leadership team as they lead this company, and our powerful portfolio of brands, into the future,” he continued. “Under Fabrizio's leadership, the company is executing a successful long-term strategy to drive our business. Fabrizio and our management team, like the Lauder family, continue to be focused on the best interest of our employees, customers and stockholders, to deliver long-term value.
“Guided by our talented leaders, our sound strategy and above all, your incredible commitment and dedication, we have clarity of focus and the proven ability to executive and deliver into the future,” wrote Lauder.
“Together, we will continue to focus on the power of possibilities to deliver upon the exciting promise of prestige beauty for our consumers,” he continued.
Lauder wrote that since his grandmother, Estée Lauder, started the company in 1946, the group has believed in respect for the individual, integrity, generosity of spirit and entrepreneurship, with the group's employees at the heart of those beliefs.
He also extended gratitude to the company's employees.
“It is inspiring to witness the creativity, spirit of innovation and sense of collaboration that you bring with you to work each day,” wrote Lauder.
The Lauder family holds around 84 percent of voting control and four of the 17 board seats at the Estée Lauder Cos. No filings have been made through the SEC showing Peltz has bought stock, meaning that if he has any, it would be less than 5 percent.
The speculation regarding Peltz came after last week the Estée Lauder Cos. once again cut its full-year forecasts for both the top and bottom lines, due to a slower-than-expected recovery in travel retail in Asia, causing the company's share price to tumble around 18 percent to $202.70 that day.
Lauder's overall net sales for the full year are now forecasted to decrease between 10 percent and 12 percent, greater than the previously expected 5 percent to 7 percent drop. Adjusted diluted earnings per common share are anticipated to slide between 50 percent and 51 percent, compared with the previous forecast for a 27 percent to 29 percent decline.
While there had been speculation that Freda, who has been in the top job for close to 14 years, might retire, he stressed at a banking conference last year that he is “completely committed to continue leading this company for the foreseeable future.”