(Reuters) – Estee Lauder (NYSE:) pulled back its 2025 sales and profit forecasts on Thursday on weak demand for its luxury makeup and fragrances in China, sending its shares down 15% before the bell.
The company, which named insider Stephane de La Faverie as CEO on Wednesday to revamp its business, also nearly halved its quarterly dividend payout.
“We anticipate still-strong declines near-term for the industry in China and Asia travel retail,” outgoing CEO Fabrizio Freda said. The new CEO will take charge on Jan. 1.
Demand in the beauty sector in China has slowed in the last one year as customers shun purchases of even “affordable luxuries” such as lipsticks and skincare.
The China government had earlier this month pledged stimulus to revive its economy, but analysts and investors have said it could take time to seep into businesses through consumer spending.
Estee said it was “cautiously optimistic” about the medium- to long-term growth opportunities from the stimulus, but it does not expect a boost in the second quarter performance.
First-quarter sales in Estee’s Asia Pacific region fell 11%, compared to a 3% decline in the fourth quarter of fiscal 2024.
Last week, European peer L’Oreal, which missed quarterly sales expectations, had flagged poor spending for beauty products in the region.
Estee now expects second-quarter profit per share between 20 cents and 35 cents, compared with estimates of $1.06, according to LSEG data. It expects net sales to drop between 6% and 8%, compared with an estimate of 0.24% rise to $4.29 billion.
The company, whose shares have already dropped 40% this year, declared a quarterly dividend of 35 cents per share.
The MAC lipstick maker is the third consumer-facing company in the last two months after Nike (NYSE:) and Starbucks (NASDAQ:) to pull back annual forecasts following a change at the helm.