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Estée Lauder Companies 8-K/A Report, Exit or Disposal Costs (Dec 20, 2024)

Reports
Financial Events·Exhibits & Filings
Filing Date
Filed December 20, 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 December 20, 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 provide details on restructuring initiatives approved since October 25, 2024, under the Profit Recovery and Growth Plan (PRGP).

The PRGP, launched November 1, 2023, is intended to progressively rebuild profit margins in fiscal years 2025 and 2026 by improving gross margin, lowering the cost base, reducing overhead, and increasing investment in consumer-facing activities. The company's Restructuring Program, announced February 5, 2024, is a two-year program with restructuring and other charges previously expected to total between $500 milliona and $700 million before tax. Since October 25, 2024, the company approved four additional initiatives: Go-to-Market Operating Model Acceleration, Value Chain Optimization, Future of Brand-led Model, and Enabling Function Re-Invention.

These are expected to result in charges of approximately $122 millionb before tax, primarily employee severance from net workforce reductions, along with some asset write-offs. Cumulative charges approved through December 18, 2024 total $479 million, of which $366 million are restructuring charges and $103 million are other charges, with $366 million recorded in operating expenses across the period and $9 million in cost of sales and $1 million in sales returns.

The company states that it will file further disclosures for initiatives that individually or collectively become significant, once it can estimate the amount or range of amounts by major cost type and future cash expenditures. Cumulative approved charges of $479 millionc remain within the previously disclosed $500 million to $700 million range, and the non-cash portion aside, the company expects future cash expenditures funded from operating cash flow.

02—Key points

Key Highlights

  1. Filed as Form 8-K/A to disclose restructuring initiatives approved after October 25, 2024, under the PRGP's Restructuring Program.
  2. Four new initiatives approved: Go-to-Market Operating Model Acceleration, Value Chain Optimization, Future of Brand-led Model, and Enabling Function Re-Invention.
  3. Approximately $122 million (before tax) in additional restructuring and other charges expected for the newly approved initiatives, mainly employee severance.
  4. Cumulative charges approved through December 18, 2024 total $479 million: $366 million restructuring charges and $103 million other charges.
  5. Cumulative approved charges of $479 million are within the previously disclosed $500 million to $700 million (before tax) expected range for the Restructuring Program.
  6. Cumulative restructuring charges by cost type: $338 million employee-related costs, $13 million asset-related costs, and $15 million other exit costs.
  7. Further disclosures will follow for significant initiatives once major cost type and cash expenditure estimates can be made.

03—Questions

Frequently Asked Questions

  1. What is the Profit Recovery and Growth Plan (PRGP)?

    The PRGP, launched November 1, 2023, is designed to progressively rebuild profit margins in fiscal years 2025 and 2026 by improving gross margin, lowering the cost base, reducing overhead, and increasing investment in key consumer-facing activities, with the goal of greater operating leverage.

  2. How much restructuring cost has been approved so far?

    Cumulative charges approved through December 18, 2024 total $479 million, comprising $366 million in restructuring charges and $103 million in other charges, including $366 million in operating expenses, $9 million in cost of sales, and $1 million in sales returns.

  3. What are the newly approved restructuring initiatives?

    The company approved Go-to-Market Operating Model Acceleration, Value Chain Optimization, Future of Brand-led Model, and Enabling Function Re-Invention. These primarily involve employee severance through net workforce reductions, with some asset write-offs in Value Chain Optimization.

  4. How do the charges compare to the original estimate?

    The original Restructuring Program estimate was $500 million to $700 million before tax. Cumulative approved charges of $479 million through December 18, 2024, are below the low end of that range, and the company expects approximately $122 million in additional charges for the newly approved initiatives once accounting criteria are met.

  5. Will the company provide more details on these charges?

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

04—Continue

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