05.08.23
Update: CNBC's Jim Cramer disputes the New York Post's report and puts the Estée Lauder rumor to rest.
Billionaire activist investor, Nelson Peltz, is reportedly exploring options for a potential shakeup at Estée Lauder, which could include the removal of CEO Fabrizio Freda, according to the New York Post.
Peltz’s Plans
Peltz is CEO and a founding partner of Trian Fund Management, L.P., an investment management firm. He has previously served on the Boards of several major global consumer goods companies, including The Procter & Gamble Company, H.J. Heinz Company and Mondelēz International.Recently, he pushed Walt Disney to reduce costs and oversaw the 7,000 job cuts under CEO Bob Iger.
Also, last year, he joined Unilever as a non-executive director and a member of its Compensation Committee.
Peltz has not confirmed whether he has acquired any shares of The Estée Lauder Companies. Nevertheless, insiders suggest that Peltz may launch a shareholder campaign against the current CEO, as a number of directors and institutional investors believe that Freda has lost his touch.
Possible Sale to LVMH
While cost-cutting measures and brand restructuring are possible, Peltz's ultimate goal may be to sell the company.Before the pandemic, French luxury conglomerate LVMH expressed interest in buying Estée Lauder, which could provide Bernard Arnault, the world’s richest person, with one of the biggest global beauty companies.
However, the Lauder family, who control the stock, would have to approve any sale. Chairman Emeritus Leonard Lauder is still active in the business and is believed to be against selling the company. Still, with only four Lauder family members on the 16-member board, a majority of directors could replace Freda.
This news comes after The Estée Lauder Companies Inc. reported net sales of $3.75 billion for its third quarter ended March 31, 2023, a decline of 12% from $4.25 billion in the prior-year period.
Furthermore, the company forecasts reported net sales to decrease between 12% and 10% versus the prior-year period in the fourth quarter of 2023.