The Estée Lauder Companies Inc. last week announced a number of initiatives it is undertaking in response to COVID-19 to support its employees, consumers, stock-holders and communities. These include actions to optimize its cost structure, in light of ongoing temporary store closures in many regions, and enhancing liquidity.
Enhancing financial flexibility and liquidity
As the Company prioritizes areas of growth and cash generation among its geographic regions, product categories, brands, and channels of distribution, it has also announced significant executive salary cuts, ranging from a 50% reduction for Executive Chairman William P. Lauder and President & Chief Executive Officer Fabrizio Freda; 30% reduction for the Executive Leadership Team, and cuts from 20%-10% for other management. The reduced salaries are to run from May 1, 2020 through Oct. 31, 2020.
Leonard and Ronald Lauder will forgo nearly 100% of their salaries through November 2020.
The company says that regional decisions are being made for point-of-sale and field employees in locations where retail operations are closed or experiencing slow recovery, which will include unpaid temporary leaves of absence that allow employees to maintain healthcare benefits and access to COVID-19 support where permissible.
Among other actions, the company has also borrowed the full amount under its $1.5b revolving credit facility and suspended the next quarterly cash dividend on its Class A and Class B Common Stock, which would have been paid in June 2020.
Focus on employee safety and philanthropy
Fabrizio Freda, President and Chief Executive Officer, comments: “As COVID-19 has expanded globally in recent weeks, we remain first and foremost focused on the health and well-being of our employees, beauty advisors and consumers. As a company, we are continuing to find meaningful ways to lend our support as the world fights this health crisis.”
The Company, its brands and its foundations have made numerous donations and commitments, including a $2 million grant was awarded to Doctors Without Borders, a grant to support the establishment of The NYC COVID-19 Response & Impact Fund (new $75 million fund, jointly formed through contributions from multiple philanthropic partners), and over $800,000 was awarded to relief efforts in China.
The Estée Lauder brand is donating two million surgical masks for front-line workers in New York. Clinique is donating 50,000 skin care products as a thank you to the doctors and nurses in New York City’s hospitals. M∙A∙C Cosmetics’ VIVA GLAM Fund will be allocating $10 million to 250 local organizations all over the world that are providing essential needs and services to people at higher risk during the COVID-19 pandemic.
The Estée Lauder Companies is also contributing to the broader COVID-19 relief efforts by producing hand sanitizer in its U.S., UK and Belgium manufacturing facilities for high-need groups and populations, including front-line medical staff.
