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Estée Lauder Companies 8-K/A Report, Exit or Disposal Costs (Jul 23, 2024)

Reports
Financial Events·Exhibits & Filings
Filing Date
Filed July 23, 2024
Period End
February 1, 2024
Security
EL
In the record · 2016–202610-K1110-Q338-K126

EL filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 126 current reports (8-K) between 2016 and 2026.

  1. Restructuring8-K · Mar ’18Mar ’18
  2. Restructuring8-K · Aug ’20Aug ’20
  3. Leadership change8-K · Jul ’22Jul ’22
  4. Leadership change8-K · Jul ’26Jul ’26

01—Abstract

Summary

Summary of the 8-K/A filed July 23, 2024. Cited figures are marked; the original filing is the authoritative source.

The Estée Lauder Companies Inc. filed this Form 8-K/A under Item 2.05 (Costs Associated with Exit or Disposal Activities) to disclose additional initiatives approved under its Restructuring Program, which is part of the previously announced Profit Recovery and Growth Plan (formerly the Profit Recovery Plan).

The Company previously indicated restructuring and other charges to implement the program are expected to total between $500 milliona and $700 million (before tax). This amendment covers initiatives approved after April 24, 2024, for which the Company expects to record approximately $137 million (before tax) in restructuring and other charges once the relevant accounting criteria are met, with the non-cash portion excluded from future cash expenditures funded from operating cash flow. Cumulative charges approved through July 19, 2024 total $233 million, comprising $96 million approved through April 24, 2024 and $46 million approved between July 1 and July 19, 2024 along with the $91 million approved from April 25 through June 30, 2024.

Of the $233 millionb, $133 million is classified as restructuring charges (primarily employee-related costs of $116 million) and $90 million as other charges. The initiatives span value chain optimization, enabling function re-invention, a future brand-led model, and a go-to-market operating model that includes exiting unprofitable brands from specific markets and distribution channels, plus a Project Management Office.

For investors, the filing shows the restructuring is moving from planning into execution, with workforce reductions and brand exits as the main drivers. The Company states it will file further disclosures for significant initiatives once it can make good-faith estimates of amounts by cost type and future cash expenditures.

02—Key points

Key Highlights

  1. Restructuring Program, part of the Profit Recovery and Growth Plan, carries total expected charges of $500 million to $700 million (before tax).
  2. Newly approved initiatives since April 24, 2024 are expected to generate approximately $137 million in restructuring and other charges (before tax).
  3. Cumulative charges approved through July 19, 2024 total $233 million, including $133 million in restructuring charges and $90 million in other charges.
  4. Employee-related costs account for $116 million of the $133 million cumulative restructuring charges approved through July 19, 2024.
  5. Initiatives include value chain optimization, enabling function re-invention, a future brand-led model, and exiting unprofitable brands from specific markets and distribution channels.
  6. Exit actions are expected to cause inventory write-offs, sales returns costs, and asset write-offs, in addition to employee severance.
  7. The Company will file further disclosures for significant initiatives once it can estimate amounts by major cost type and future cash expenditures.

03—Questions

Frequently Asked Questions

  1. What is the total restructuring cost expected under the Restructuring Program?

    The Company previously indicated that restructuring and other charges to implement the program are expected to total between $500 million and $700 million (before tax).

  2. How much in charges has the Company approved so far?

    Cumulative charges approved through July 19, 2024 total $233 million, made up of $133 million in restructuring charges and $90 million in other charges.

  3. What types of initiatives are included?

    The initiatives cover value chain optimization, enabling function re-invention, a future brand-led marketing and creative organization, and a go-to-market model that exits unprofitable brands from certain markets and channels. A Project Management Office is also included.

  4. Will the company disclose more detail on these costs?

    Yes. The Company says it will file additional disclosures for initiatives that are individually or collectively significant, once it can make good-faith estimates of amounts by major cost type and future cash expenditures.

  5. How will the restructuring be funded?

    Apart from the non-cash charges, the Company expects the costs of these initiatives to result in future cash expenditures funded from cash provided by operations.

04—Continue

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