Beauty and personal care products maker Estée Lauder Cos., Inc. (EL) Thursday morning announced that current President and Chief Operating Officer Fabrizio Freda has been promoted to the position of president and chief executive officer and named as a member of the board. Freda would succeed William Lauder, who has been named as executive chairman of the company.
Additionally, current Chairman Leonard Lauder would become Chairman Emeritus. All the appointments are effective July 1, 2009, the start of the company's fiscal year 2010.
The New York-based company noted that it has completed the senior management succession plan first announced in November 2007. Freda was expected to become the company's chief executive officer within 24 months, according to the company's succession plan.
In a statement, William Lauder said, Fabrizio is a superb leader. In just one year, he has done a tremendous job in leading the implementation of our Company's long-term strategic plan. Fabrizio expertly balances the need for greater efficiencies and financial discipline while fostering innovation and creativity.
In the new role, Freda would be developing the company's overall vision, strategy, financial objectives and investment priorities. Freda would also be accountable for the company's overall corporate performance objectives, including revenue, profit, and return on invested capital goals.
Freda became president and chief operating officer of Estée Lauder in March, 2008 and reported to Chief Executive Officer William Lauder. Freda joined the company after over 20 years of outstanding career at Procter & Gamble Co. (PG), where he was responsible for various operating, marketing and key strategic efforts.
Freda spent more than a decade in positions of increasing responsibility in the Health and Beauty Care division at P&G. Most recently, Freda was president, global snacks, at Procter & Gamble. From 1986 to 1988, Freda also directed marketing and strategic planning for Gucci SpA.
William Lauder, grandson of the company's founder Mrs. Estée Lauder, would now be the executive chairman and serve as chairman of The Estee Lauder Companies' Board of Directors. Along with Freda, William Lauder would look into creating significant long-term shareholder value. Additionally, the team would help drive and support the company's brand and global expansion opportunities in addition to day-to-day management responsibilities.
William Lauder has been president and chief executive officer of Estée Lauder from July 2004 until March 2008. Prior to that, he was chief operating officer, a position he assumed on January 1, 2003. Previously, Lauder was group president of Estée Lauder and president of Clinique Worldwide. From June 1998 to July 2001, Lauder was President of Clinique Laboratories.
From 1990 to 1998, William Lauder served first as vice president/general manager and later as president of Origins Natural Resources Inc. Lauder joined Estée Lauder in 1986 as regional marketing director of Clinique U.S.A. in the New York Metro area. Earlier, Lauder then spent two years at Prescriptives as field sales manager. Prior to joining Estée Lauder, Lauder completed Macy's executive training program in New York City and became Associate Merchandising Manager of the New York Division/Dallas store at the time of its opening in September 1985.
Leonard Lauder, the son of Mrs. Estée Lauder, would now be the Chairman Emeritus and remain on the board. Lauder served as president of Estée Lauder from 1972 to 1995 and as chief executive officer from 1982 to 1999. Lauder added the title of chairman in 1995. Under his leadership, the company launched many brands, including Aramis, Clinique, Prescriptives and Origins. Leonard Lauder formally joined Estée Lauder in 1958 after serving as a lieutenant in the U.S. Navy.
Last month, Estée Lauder reported a 29.6% decline in profit for the second quarter from last year, hurt by lower consumer spending amid a difficult operating environment. Net earnings dropped to $158 million or $0.80 per share from $224.4 million or $1.14 per share in the year-ago quarter. Net sales declined 11.6% to $2.04 billion from $2.31 billion in the prior-year quarter.
At that time, the company also outlined a four-year initiative in order to reign in costs and increase performance, which included reduction of global workforce by about 6% or 2,000 employees over the next two years. Additionally, the company instituted an immediate company-wide freeze on merit raises and a continuation of the current hiring freeze, the company added.
The company expects these initiatives to deliver annual cost savings of about $450 million to $550 million and anticipates incurring restructuring and other one-time charges of $350 million to $450 million over the next few years.
In Thursday's regular trading session, EL is currently trading at $25.49, up $0.24 or 0.95% on a volume of 8,250 shares. In the past 52-week period, the stock has been trading in a range of $19.81 to $54.75.
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