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Layoffs and Scaled

Jul 27, 2023Jul 27, 2023

Trouble in California?

While the Estée Lauder Cos. has been grappling with much talked-about issues in China as its travel retail market failed to bounce back after the coronavirus pandemic, it’s also been quietly dealing with other struggles out West.

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Its California brands — Smashbox, Too Faced and Glamglow — have all initiated layoffs in the past year as those businesses face challenges, while international operations have also been scaled back for some.

As part of that, there will be 22 employees laid off at Too Faced’s office in Irvine, according to filings by the California Labor Department first reported by Retail Dive. The makeup brand founded by Jerrod Blandino and Jeremy Johnson in the ’90s was acquired by Lauder in 2016 for $1.4 billion, its largest purchase ever at the time.

At Smashbox, the Los Angeles-born cosmetics brand best known for its primers that was acquired by Lauder in 2010, 37 employees at its Culver City office will be impacted.

In a statement, Lauder pointed to its Post-COVID Business Acceleration Program, set up to realign its business to address the shifts in distribution landscape and consumer behaviors in the wake of the COVID-19 pandemic.

“ELC made the decision to strategically reposition Smashbox, which unfortunately involved employee impacts. This decision was made to ensure Smashbox remains an attractive business in the competitive landscape, reinforcing the brand’s heritage and roots through a modern lens,” it said.

“Also under the PCBA Program, Too Faced implemented a restructure of positions primarily within creative, and although these changes also involved employee impacts, they will help us accelerate growth, ensure the brand is digitally focused, and continues to be relevant and exciting to new and existing consumers,” it added.

Glamglow, the one-time hot indie skin care brand which Lauder acquired in 2014 for an undisclosed amount, initiated layoffs in 2022, although exact numbers are unknown.

At the same time, Lauder took the decision to scale back Glamglow’s international presence, meaning that it is now only sold in the U.S., with sales having been impacted by changes in the brand’s retail space and location, combined with competitive challenges in key subcategories.

Glamglow will also streamline its product offering to an estimated 13 top sellers, focusing on hero and high replenishment.

“This initiative will help return Glamglow to profitability and will leave a distribution point for loyal consumers to experience and purchase the brand and support future growth opportunities,” Lauder said in a statement.

This comes after Glamglow and Smashbox both exited the U.K. market last year, with Lauder citing “accumulation of challenges” as the reason at the time.

Lauder did not immediately respond to request for comment Thursday on whether Smashbox has made any further changes to its international distribution.

It’s not just the California brands that have been impacted by the Post-COVID Business Acceleration program. Over the course of the pandemic, Lauder has scaled back or closed multiple brands, including Deciem, which narrowed its brand assortment, and Becca and Rodin Olio Lusso, which were both shut down.

Nevertheless, Mark Astrachan, an analyst at Stifel Financial Corp., told WWD that Smashbox, Too Faced and Glamglow are too small to significantly move the needle. “Historically you’ve seen some ebbs and flows in the more trendy brands……It’s not that significant. The biggest brands are still most important. Estée Lauder, La Mer, Clinique, Tom Ford.”

In May, the beauty giant once again slashed its full-year forecasts for both the top and bottom lines due to a slower-than-expected recovery in travel retail in Asia, causing the company’s share price to decline around 18 percent to $202.70 that day.

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