The beauty industry now has an answer to when Fabrizio Freda, 66, the longtime CEO of The Estée Lauder Cos., will retire. The company announced Monday morning, August 19, Freda will depart the company he helmed for 16 years at the end of the 2025 fiscal year, which commences in June.

No successor has been named, but the company’s board has been engaged in a search for a new leader, both internally and externally, with those familiar with the situation saying an internal executive is the more likely of the two.

The company made no link to the timing of Freda’s retirement and its recent earnings results, but many observers did. Freda’s departure follows the recent announcement of Chief Financial Officer Tracy Travis retiring. Akhil Shrivastava, currently the company’s Senior Vice President, Corporate Controller, assumes the position.

“He took Estée Lauder to incredible heights,” said CNN’s Jim Cramer on his nightly show, adding that Freda then presided over steep earnings declines over the past several years. Cramer pointed to several missteps including how long it took for Lauder to bring its brands to Amazon, to advertise on TikTok, and to sell in Ulta Beauty, like its contemporaries such as E.l.f. Beauty. “But the real blind side here lies with China and travel. These were their most reliable channels until the pandemic. And they never came back.”

Freda is credited with striking acquisitions such as Deciem/The Ordinary and Tom Ford, and boosting the company’s high-end fragrance portfolio. He built up Estée Lauder’s business in China while the market was hot, but that turned into a hurdle. Bryan Spillane, Managing Director at Bank of American Securities, said in a market report that China, which historically contributed to about one-third of Lauder’s sales, will lead to headwinds in profit recovery for the firm due to weaker-than-expected performance there.

“He served the longest time as a non-family member,” said industry expert Jeffrey Ten. “He tried to use his Procter & Gamble skill set to reframe the company into a more profitable operation. Unfortunately, he faced strong head winds from indie brands. Lauder has established itself as a gazelephant and the industry currently operates like a gazelle.”

Beauty expert Ashley Helgans, an analyst for Jefferies, reiterated the company’s tardiness on Amazon noting that only this year did Clinique, Too Faced, Lab Series, and Smashbox launch on the platform. “That’s a good move that could offset lost points of distribution from department store closures,” Helgans said.

Freda’s successor will step into a role not only challenged by an unrelenting slowdown in China, but also a slowdown in beauty consumption, the need for greater — and faster — innovation, and a challenging beauty landscape for 2025. During the earnings call, Freda said organic net sales are forecast to range between a 1% decline to a 2% increase in fiscal 2025, versus 2024.

Net sales for the fiscal year ended June 30, 2024, were $15.61 billion, down 2% from $15.91 billion in the prior year, which the company attributed to ongoing softness in overall prestige beauty in mainland China and a decline in Asia travel. The latter was driven by actions taken by the company and retailers to “reset” inventory levels along with lower conversion. Growth in Hong Kong SAR, Europe, EMEA, Japan, and Latin America partially offset those declines. The company reported net earnings of $390 million, compared with net earnings of $1.01 billion in the prior year.

According to Helgans’ report, North American sales declined during the quarter, with Americas organic sales down 5%. “An intensifying competition and a slowing prestige beauty category weighed on the business. Brick and mortar was especially soft, weighing particularly on skin and makeup. Consumer inflationary pressures were also a headwind. Online was up mid-single digits driven by retailer.com and the Amazon Premium Beauty store. In the U.S., prestige retail sales decelerated month over month in Q4, but still were up in the mid-to-high single digits. Retail sales returned to growth driven by increased exposure to Amazon and specialty. July retail sales were up mid-single digits driven by fragrance and hair, which were up in the double digits.”

But perhaps Lauder’s stock tells the full story.

Cramer ended his Monday evening show with, “In 2022 Estée Lauder was $370 a share. Today it is below $93. Meanwhile E.l.f. has run from $25 to $160 over the same period. I think Estée Lauder got caught in the same consumer packaged goods dilemma that has affected the whole industry. The company wanted to maintain its high prices in order to protect margins.  While they unveiled a less expensive brand in The Ordinary, I think it was too little too late.”

During Monday morning’s earnings call, Freda said: “I have two primary objectives ahead of my retirement. First, I intend to execute with our strategy reset. It is important to me that our next leader inherits a business with momentum.” His second priority is to work closely with the board of directors and his successor for a “smooth transition.”

Freda referenced the Profit Recovery and Growth Plan, which he hopes returns the company to its luster.

“For fiscal 2025, the Profit Recovery and Growth Plan enables us to offset the pressure to profitability driven by the prestige beauty segment’s ongoing softness in China, yielding a more moderate pace of operating margin expansion than we’d previously expected,” Freda said.

“While our sales and profit outlook for fiscal 2025 is disappointing, this year, we will make important strides as we implement our strategy reset to continue rebalancing regional growth, deliver improved annual profitability, and strengthen go-to-market and innovation capabilities to elevate our execution in response to a more competitive market,” he said. “These efforts, coupled with the strengths of our brands, product portfolio, and talented teams around the world, will position us to both outperform prestige beauty in fiscal 2026 and accelerate profitability expansion.”

Freda highlighted bright spots in the portfolio, including Clinique’s return to share growth in the U.S., skyrocketing sales of The Ordinary, which entered new categories and markets, demand for prestige fragrances and acceptance of its expanded brand storefronts. He also mentioned the use of TikTok Shop, livestreaming, and other short-form videos — all vehicles necessary to attract new shoppers to its venerable brands.

“We are positioning the company for a stronger future,” Freda said.

— with contributions from Andrea Nagel