On October 30, US cosmetics giant Estee Lauder announced the appointment of Stephane de La Faverie as its next CEO, effective January 1, 2025. Currently overseeing half of Estee Lauder’s brand portfolio, de La Faverie steps into a role many anticipated would go to Jane Lauder, chief digital officer and a granddaughter of the company’s founder. Instead, Jane Lauder will leave her executive position at the end of the year but will retain a seat on the board.
Both de La Faverie and William Lauder, the current executive chairman and grandson of the founder, share a similar management philosophy, advocating for reforms to reduce the company’s reliance on department stores and duty-free channels. Jane Lauder, in contrast, has championed her grandmother’s philosophy of maintaining Estee Lauder’s luxury identity, cautioning that overexpansion could dilute the brand’s premium status.
The market response to de La Faverie’s appointment was cautiously optimistic. After the news broke on October 28, Estee Lauder’s stock ticked up by 1%, reflecting investors’ hope for positive changes, though some board members had pushed for a more transformative choice.
In its Q1 2025 earnings report, Estee Lauder posted net sales of USD 3.361 billion, a 4% decline from the prior year, with an 11% drop in Asia leading the losses. While the company saw growth in Japan and emerging markets, these gains fell short of offsetting the broader slump. The report revealed a net loss of USD 156 million—a stark contrast to the USD 31 million profit reported in the same quarter last year.
China’s significance to Estee Lauder
The rise of de La Faverie at Estee Lauder is closely tied to his accomplishments in China. Since joining the company from L’Oreal in 2011, he has helped turn the Origins brand into a leading name in China. Initially tasked with managing Origins in China, he reshaped the brand’s retail strategy, a shift that, according to Estee Lauder’s executive group president Jane Hertzmark Hudis, significantly boosted customer traffic.
His work included launching the “Mega-Mushroom” treatment lotion, developed for Asian skin concerns, which soon became a top seller in China. Priced at RMB 200 (USD 28) for a 380-milliliter bottle, it quickly gained popularity among students and young professionals for its hydrating and soothing effects, making Origins a go-to brand.
According to Cosmetic Observer, Origins’ sales in China surged by 72.1% from January to May 2015, making it Estee Lauder’s fastest-growing brand—a trend that continued through 2019.
In 2016, de La Faverie took on global responsibilities for the Estee Lauder brand, spearheading a youth-focused transformation of this mature brand in China.
That year, the high-end cosmetics market in China grew faster than the mass market. Younger consumers increasingly turned to online platforms for luxury purchases. Zhu Zhenghua, then head of Estee Lauder’s e-commerce division, observed that luxury creams priced at RMB 3,000–4,000 (USD 420–560) were being purchased by customers as young as 24, surprising the global team. Embracing e-commerce, Estee Lauder, along with L’Oreal, Shiseido, and other international brands, sought to secure a significant share of the young consumer market.
According to Statista, from 2016–2020, Estee Lauder’s global skincare market share grew from 7.3% to 10.1%, largely driven by Chinese consumers. By 2020, Asia—primarily China—accounted for 30% of the company’s annual revenue.
In 2020, de La Faverie’s promotion to group president brought oversight of brands including The Ordinary. This level saw him overseeing fragrance and high-performance skincare, areas showing resilience in an otherwise challenging market. By 2023, while other divisions faltered, Estee Lauder’s fragrance segment held steady, with Le Labo reporting double-digit growth in the latest financial report.
In the announcement of de La Faverie’s appointment, Estee Lauder credited him with playing a pivotal role in strengthening the fragrance portfolio, demonstrating his ability to adapt to market shifts and changing consumer behavior.
Between 2023 and April 2024, de La Faverie visited Shanghai four times, underscoring his commitment to the market. In his latest visit, he highlighted the company’s diverse fragrance lineup, emphasizing the importance of localization. He cited Le Labo’s release of a second Shanghai-exclusive fragrance as an example of local inspiration meeting global innovation, suggesting more such launches are on the way.
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Could Estee Lauder enter Pinduoduo?
Recently, H&M announced its entry into Pinduoduo, becoming the first foreign fashion brand to do so. In a statement to 36Kr, H&M noted that joining Pinduoduo is an integral part of its omnichannel strategy.
Could Estee Lauder become the first foreign beauty brand to enter Pinduoduo? While speculative, this possibility aligns with Estee Lauder’s gradual shift toward accessibility in the US market.
In a move that defied his father Leonard Lauder’s wishes, William Lauder previously facilitated the entry of Estee Lauder’s cosmetics into discount chains like Target and Kohl’s. In March, Clinique launched on Amazon, becoming the company’s first brand to try third-party e-commerce.
According to Forbes, some executives grew anxious about potential acquisition talks involving Macy’s, spurring them to use Amazon as a quick way to clear inventory. Amazon, in turn, is expanding to include more beauty and fashion brands. If Estee Lauder’s department store sales continue to decline, Amazon could emerge as a key channel, potentially making Estee Lauder products widely available.
In 2023, Leonard Lauder, the company’s second-generation head, exited the board, removing one of the most vocal opponents of distribution reform. With Jane Lauder’s departure, the family will no longer be involved in daily operations. Unlike the brand’s rags-to-riches beginnings, the third and fourth Lauder generations, raised in privilege, are now more focused on top-line and bottom-line performance—prioritizing business success above all.
Estee Lauder’s recent acquisition of skincare company Deciem, owner of The Ordinary, also signals its ongoing shift toward mass market skincare. Deciem’s affordable products, averaging USD 10–20, have expanded Estee Lauder’s reach, with The Ordinary now available in North American and European Sephora locations.
As a marketing professional with a deep understanding of retail, de La Faverie’s background positions him well for his new role. His early career involved navigating relationships with luxury department stores and duty-free retailers, an experience that shaped his broad view of Estee Lauder’s distribution strategy.
At the onset of the pandemic, de La Faverie recognized the transformative potential of social media and e-commerce in retail. In a podcast, he remarked that while in-store shopping would eventually rebound, certain changes were here to stay.
Confronting the issue of “over-distribution” in Western markets, de La Faverie pointed to the untapped potential in China’s smaller cities, where online sales are increasingly crucial. He anticipated that online channels could eventually drive 50–60% of Estee Lauder’s sales in China, around 40% in the US, and roughly 30% in Europe.
To meet these targets, however, de La Faverie noted that it would take more than simply listing products online. Estee Lauder, he argued, would need an entirely new approach to connecting with consumers—beyond just lowering costs or boosting marketing efficiency.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by He Zhexin for 36Kr.