Barclays Capital analyst Lauren Lieberman determined the outages were “material and global.” Point of sale systems were shut down and manufacturing employees in some regions were sent home for several days, she found. Quarterly sales could take a $300 million hit and Lieberman said the company appears to have under-invested in technology for years.
“We can’t help but worry that these issues are broader and more systematic than we originally described,” she wrote.
The company, headquartered in the General Motors building in Midtown, was founded in 1946 and heirs of the founders control 84% of the voting stock and several serve in executive and director roles. Ronald Lauder, chairman of the Clinique Laboratories division, is one of the city’s leading art collectors, philanthropists, and a major Republican fundraiser. His nephew William Lauder is executive chairman of the company, which didn’t immediately respond to a request for comment.
Even before last week’s hack, bad news had been piling up at Estée Lauder.
“Clearly this fiscal year has proven to be a perfect storm,” Chief Financial Officer Tracey Travis said at a conference call in May.
In that call, the company said that fiscal 2023 results would fall short of targets due to disappointing sales in China and Korea. China accounts for a third of Estée Lauder’s nearly $18 billion in annual sales and while the nation’s halting post-pandemic reopening has made life difficult for many multinationals, other cosmetics giants haven’t been hurt in the same way. Midtown-based Coty raised earnings guidance earlier this month thanks partly to rebounding sales in China.
“EL controversies are specific to Estée,” Evercore analyst Robert Ottenstein said in a report last week, referring to the company’s stock ticker.